Despite the impact of the global economic crisis on South Korea’s economy and its currency, South Korean IPTV providers finally being allowed to offer linear channels seems to be paying dividends. Media Partners Asia reports that three carriers – KT Corp, SK Broadband and LG Dacom – had around 600,000 real-time linear IPTV users at the end of July 2009, adding close to 130,000 net new subs over the month. Report says that the telcos have been under government pressure to invest more towards subscriber acquisition and channel expansion in spite of limited economic upside at the current time. South Korea had previously been viewed as the only market in which on-demand services were taking off, but it is now felt that the telcos’ commitment to VOD and SVOD stemmed not from an overwhelming faith in those services, but from the fact they had little choice, having been previously precluded from offering linear channels. With big content budgets, and competition driving up content prices, Korean telcos have been good customers to the content providers – licensing a variety of mainstream and niche content for their VOD (video on demand) and SVOD (subscription VOD) services. KT vice president Yoon Jong-lok previously said that the company still expects its IPTV business to break even in 2011. The company has invested over 1 trillion won (US$866 billion) on the new business since 2007 and plans to invest US$1.5 trillion more over the next five years. Doubling its number of IPTV subscribers to 1.5 million was the target by end 2008, KT also expects IPTV subscribers to represent one third of its 6.7 million broadband subscribers after 2011. As of end July 2008, IPTV had 1.53 million subscribers – SK Broadband (formerly Hanarotelecom) leading with 776,000 customers, followed by KT with 720,000 IPTV subscribers; LG had 40,000 as of end-August. Following its acquisition February 2008 by SK Telecom, Hanarotelecom was rebranded as SK Broadband. The company aims to dominate not just in internet protocol (IP) TV, but in high-speed internet, voice-over IP and home-networking services. The Hana TV service, which had in excess of 760,000 subscribers, became broad&tv – other related products and services variations of the broad& branding. The company committed a reported US$84 million into video on demand content funds in 2008, with $502 million to be spent on content by 2012. Joyce Yeung, senior vice president and general manager Asia, sales & distribution at BBC Worldwide (BBCW) says that the Korean market has slowed to some degree during 2009, but there are signs of recovery. “Yes (we are seeing recovery) but slowly as buyers are more careful and looking for good value.” She disagrees that linear TV’s growth is impacting content demand, “There is still a healthy demand for both, with new local channels looking for content and new international channels launching in the market. It is getting competitive for sure.” Yeung’s cautious response may, however, be influenced by the fact that sibling company BBC Worldwide Channels Asia recently announced a deal that saw two of its channels launch on South Korea’s SK Broadband platform. BBC Entertainment and BBC Lifestyle became available from 1 July 2009, marking BBC Lifestyle’s debut in the South Korea market. Also making its Korean debut on SK Broadband’s Broad&tv is 24-hour sports events television channel Eurosport. Sports fans in Korea now have access to a range of live sporting events, including the newly acquired Tour de France cycling tour, as well as the women’s tennis Sony-Ericsson WTA Tour, Tour of Spain cycling major, World Touring Car Championship (WTCC), Porsche Supercup and major world Marathons. As part of Broad&’s basic package, Eurosport becomes available to all subscribers. Korea’s second largest fixed-line operator, SK Broadband’s Broad&tv offers a full range of content from latest dramas, movies and major TV programs to popular cable channels, sports and education/lifestyle channels. The IPTV service offers 80 channels including terrestrial TV, local PP and foreign retransmission channels. “We are excited about Eurosport embarking on our platform to provide viewers with high quality sports programming” said Dr Joo Sik Lee, head of new media business unit of SK Broadband. “SK Broadband, the IPTV market leader in Korea, will make its best effort to provide viewers with various high quality contents and channels.” Asked whether the demand for non-linear content has been affected by IPTV’s newly found freedom to offer linear channels, BBC Worldwide’s Yeung concedes that platforms like QOOKTV and HANATV have been focusing on getting new international and local channels on their platforms. But despite Korea’s weak economy affecting the advertising market and the local currency, Yeung says the opportunities include new channel launches, as well as interest in formats and co-production. “Our blue chip natural history title Life and latest drama series Being Erica have drawn a lot of interest,” she adds. At Sony Pictures Television, executive director, distribution, South Korea, Soojin Chung says that the demand for content remains steady, “But with the economy, budget cuts and the devaluation of the currency, buyers are being extremely cautious about any acquisition. There are certainly signs of some recovery such as the currency, but the recovery will probably be much more gradual than in other parts of Asia.” Asked about the demand for content versus that for linear channels (bearing in mind SPT also has sibling channels in that market), Chung says, “There has definitely been an increase in the demand for linear channels, mostly coming from the IPTV platforms. But many homegrown channels have also been formed lately. With the growth of channels, the demand for content to program those channels with will grow as well so, hopefully, that demand will drive the recovery of the content industry.” And asked whether that IPTV being able to offer channels, but not programme their own, is affecting demand for non-linear content, Chung says they have not yet seen that happen. “Since the IPTV platforms in Korea couldn’t launch with linear channels, they grew and developed based solely on their on-demand content offering. That highly developed on-demand offering remains a unique-selling point for IPTV platforms so the need for on-demand content will continue.” Chung agrees with Yeung that the economy and the ad downturn are the biggest factors impeding growth in South Korea at the moment, adding that severe online piracy is another major problem for content companies. But on the upside, she says, “The fundamentals in South Korea remain strong and being one of the most ‘connected’ markets in the world, opportunities will arise naturally.” According to the Korea Communications Commission (KCC), there were 1.345 million pre-IPTV (TV portal) service subscribers as of February 2008. In addition, telcos decided to make a large investment of 1.5 trillion KRW (US$1.5 billion US dollars) in 2008 on network, platforms, set-top boxes, and content for the commercialization of IPTV. In 2007, the Electronics and Telecommunications Institute (ETRI) ‘IPTV Industry Outlook Report’ forecast that the number of subscribers would surpass two million in 2008, 2.5 million in 2009, and 3.3 million in 2012. It also projected a market size of at least US$540 million in 2008, and US$660 million in 2009. Korean Broadcasting Institute (KBI) researchers, Kwon Ho-young and Kim Young-soo, conducted an in-depth study on IPTV user behavior through the ‘Analysis of the Characteristics and Behavior of IPTV Users and the Comparison between IPTV Users and Non-users.’ 55.3 percent were men and 44.7 percent were women, with the largest age bracket in their 30’s, showing that relatively younger people are using IPTV. 61.7 percent of the respondents answered that they were using IPTV with other services such as cable TV, and satellite TV. The main reason for this seemed to be the fact that terrestrial channels were inaccessible through IPTV. 85.3 percent were subscribed to bundled Triple Play products provided with VoIP and broadband. This is because IPTV service providers, originally telcos, have chiefly marketed IPTV products to their internet subscriber base. However, the other reason is that bundled products come with an attractive discount. The largest discontentment on IPTV came from the excessive amount of pay content. Pay IPTV content surged in number compared to the initial stage of the service, fueling the disgruntlement. Moreover, it then took seven days instead of the original 12 hours after the first broadcast for terrestrial contents to be aired for free on IPTV. This was the result of the renegotiation on the contents supply contract between IPTV providers and the terrestrial broadcasters. Lastly, in the analysis on the preference toward different genres of IPTV contents, genres were grouped into 15. The list showed the greatest inclination toward Korean drama series, followed by movies, comedy shows, overseas drama series, and sports programs. This means that terrestrial TV programs prove the most popular. In contrast, interactive content on on-line game and karaoke programs, home shopping and finance recorded low scores, showing that they are not ready for further promotion.
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