Fair Trade Commission Approves Tving and Season Merger: "No Concerns Over Price Increase"

[Asia Economy Sejong=Reporter Dongwoo Lee] The Korea Fair Trade Commission (KFTC) announced on the 31st that it has approved the merger between domestic over-the-top (OTT) service providers Tving and KT Season.

The KFTC reviewed the merger involving the absorption of Season by Tving and determined that there is no concern that competition in the relevant markets?such as the OTT service market where the companies compete and the supply market for various content provided to OTTs?would be restricted, thereby approving the merger.

During the review of the merger between Tving and Season, the KFTC focused on concerns including ▲ potential subscription fee increases ▲ the risk that competing OTTs might not receive adequate content supply ▲ the possibility that other content suppliers’ sales channels could be blocked.

As a result of the review, the KFTC judged that there is no concern about subscription fee increases. Since Tving and Season’s combined market share is only about 18%, which is less than half of the leading Netflix, the merged OTT would not be in a position to unilaterally raise subscription fees.

Additionally, CJ affiliates supply various content to OTTs, including original content production and delivery, broadcasting content broadcasting rights sales, and film distribution. Regarding concerns that these affiliates might supply content exclusively to the merged OTT and not to competing OTTs, the KFTC considered that stopping content supply to other OTTs would cause significant revenue losses, so such concerns are low.

Even if CJ affiliates were to enforce exclusive supply, the KFTC found that competing OTTs have numerous alternative suppliers, so the risk of restricted competition in the content supply market is also low. According to the KFTC, there are currently 671 content outsourcing producers, 256 broadcasting content rights sellers, and 56 film distributors.

On the other hand, the possibility that the merged OTT would purchase and receive content only from CJ affiliates and not use content from other suppliers was also examined, but the KFTC judged that such concerns are unfounded. Using only CJ affiliates’ content would disadvantage the merged OTT compared to other OTTs in terms of content diversity.

The KFTC stated, “The merger between Tving and Season does not have an effect of restricting competition, while enabling the merged OTT to more effectively procure high-quality content and invest boldly in content production. Ultimately, this is expected to contribute to increased welfare for OTT subscribers.”

This content was produced with the assistance of AI translation services.