SK Telecom bets big on media content

In a bid to brace for cutthroat competition with global media content platform companies including Netflix, mobile carrier SK Telecom has been trying to beef up its capabilities in the media segment through mergers and acquisitions.

SKT, which wholly owns Internet Protocol TV operator SK Broadband, announced earlier this year that it would take over CJ Hellovision, the No. 1 cable TV firm in Korea.

Following the planned acquisition of the CJ Group affiliate, the mobile carrier will merge the two entities, which will enable it to take the second spot in the pay TV market with a combined subscriber base for TV services reaching 7.5 million -- 4.2 million from SKB and 3.3 million from CJHV. The figure is just 0.9 million fewer than that of KT, the top player in the pay TV industry.
 

“The boundaries of competition between companies in the global telecom and media sectors have become more ambiguous than before,” said an SKT official, adding the cross-industry dog-eat-dog competition is “inevitable,” and companies should try to gain a competitive edge through convergence and change.

Global firms for over-the-top, or streaming services like Netfilx, Google’s YouTube, and Amazon’s Prime, are at least a few steps ahead in terms of speeding up convergence and bringing changes to the traditional media market.

There was just an 8-percent gap between the penetration rate of OTT services, at 71 percent, and the market infiltration of pay TV services, at 79 percent, in the U.S., according to a survey by multiscreen services provider Clearleap. The survey was conducted on 1,111 consumers aged 18 or older.

Netflix, which boasts 65 million subscribers worldwide and accounts for 37 percent of the broadband traffic in the U.S. this year, plans to tap into the Korean market early next year. The streaming giant also plans to expand its services into 200 nations from the current 50 in two years.

The number of subscribers for streaming media service Amazon Prime and premium streaming service Hulu Plus in the global market stand at 40 million and 6 million, respectively, and YouTube takes up around 80 percent of the Korean mobile media market, according to market reports.

These global media platform operators not only stream videos but create their own original media content. Netflix has hit the jackpot by producing TV series “House of Cards,” and has more original series lined up.

Not to be left behind in the media content race, SKT said, the planned M&A deal between SKB and CJHV needs to be realized.

“As seen in other takeover cases such as the one between AT&T and DirecTV, this M&A is highly necessary in order to create new growth momentum,” the SKT official said.

The new services will create new competition and lead to enhanced values for customers, the official added.

By Kim Young-won (wone0102@heraldcorp.com)