Korea’s IPTV operators attempt to carve out ‘tablet TV’ niche

IPTV operators in South Korea are attempting to nurture a new segment -- “tablet TV” -- to meet growing demand for another TV screen, as more people tend to stay home due to the prolonged COVID-19 pandemic.

Streaming on-demand video via mobile phones and tablet computers is nothing new, as millions of Koreans already enjoy Netflix and other services.

For IPTV operators that rely heavily on fixed-line networks, however, such a “cord-cutting” trend in which viewers ditch cable TV services in favor of streaming platforms poses a grave challenge.

To counter such challenges and cater to families keen to secure more screens, Korea’s three major IPTV operators have decided to carve out a niche by rolling out a combination of IPTV programs and tablet computers.

The first mover was LG U+, a unit of the LG Group. The IPTV and broadband service provider introduced the concept of tablet TV in the local market in 2018. The company rolled out U+tv, delivering its IPTV programs on a tablet computer manufactured by Lenovo.

Since then, LG U+ has been updating the service package and spreading the nascent idea of piecing together a tablet device with IPTV programs. In May, it signed a memorandum of understanding with Lenovo Korea to jointly develop and promote the tablet TV service.

Also in May, KT, one of the leading IPTV providers, joined the fray with olleh tv Tab, offering its IPTV programs on Samsung’s Galaxy Tab A7 handheld device as a software-hardware package.

KT said its device comes with an LTE chip, allowing subscribers to use the tablet computer to watch TV programs without connecting to a Wi-Fi network when they go out with the device.

In late July, SK Broadband launched its tablet IPTV service named Btv Air. The package provides the IPTV operator’s Btv programs on a tablet computer from Lenovo.

All the tablet TV packages are designed to help subscribers watch real-time programs and on-demand video, as well as other IPTV services, by connecting tablet devices to home Wi-Fi networks.

KT, SK Broadband and LG U+ provide not only IPTV service, but also broadband network service, which is often bundled with home Wi-Fi service at a discount.

The mobility based on home Wi-Fi or the LTE network is seen as a crucial element to help retain IPTV viewers. Increasingly, people are shifting from fixed TV sets to mobile devices tailored for individuals who want to move around freely, without restrictions at home or elsewhere.

The rapid adoption of streaming video services like Netflix is a reflection of such changing viewer preferences for unbridled mobility and on-demand content. Introducing IPTV packages based on tablet computers is part of efforts by IPTV operators to bolster their shrinking share in the market.

“As family members are staying longer at home due to COVID-19, the demand for watching IPTV programs wirelessly at home is steadily going up,” said an official from an IPTV operator. “More diverse tablet models and pricing plans will be introduced to expand the subscriber base.”

The rollout of new tablet TV services came after the Korean government took steps to loosen related regulations in January this year. Previously, the definition of a subscriber device for cable TV service was limited to set-top boxes linked to TV sets. Thanks to the revision, the definition has been broadened to encompass any device that supports cable TV service.

Under the new rules, IPTV operators are expected to experiment with not only tablet computers, but also other mobile devices to deliver their programs to subscribers, gaining a foothold to better compete with streaming rivals.

But the road ahead appears rough for IPTV operators facing protracted disputes over the payment of content fees. Earlier, the Ministry of Science and ICT tried to settle the issue by defining tablet TV as part of IPTV services, rather than a kind of streaming service.

IPTV operators, citing the ministry’s interpretation of the service category, argued they do not have to open a separate round of negotiations with content providers over the content fees.

In contrast, CJ ENM, a major program provider that controls a library of popular cable TV programs, claimed that subscriber figures are separately handled for tablet TV and regular IPTV services, as set-top boxes are built into the tablet devices. Profits from additional devices, therefore, should be reflected in the content fee payment scheme, CJ ENM said.

CJ ENM said that it agreed with KT over tablet TV service in advance, but did not talk with the other two operators, claiming the operators should work with program providers before launching a new type of IPTV service.

In line with the global cable TV trend, the cord-cutting phenomenon is expected to accelerate in Korea as well. The number of pay TV subscribers rose 1.6 percent last year, marking a downward annual growth trend from 3.3 percent in 2019 and 3.4 percent in 2018. The value of the Korean streaming market is expected to reach 3.3 trillion won ($2.8 billion) this year, up 15 percent from last year, according to market research firm Statista.

By Yang Sung-jin (insight@heraldcorp.com)