Do Korean streaming services stand a chance against Netflix?

Over-the-top media giant Netflix stood out as the most popular OTT platform in South Korea last year, with over half of OTT users here subscribing to Netflix, according to data analyst Consumer Insight.

In a survey of some 40,000 Koreans by Consumer Insight, 46 percent of respondents said they’d paid for OTT services last year with 24 percent subscribing to Netflix. The second-most-popular OTT service was YouTube Premium, with 15 percent of respondents subscribing.

In December, Netflix recorded 8.16 million monthly users in Korea, according to market researcher Nielsen Koreaclick. Domestic OTT services trailed far behind with Wavve at 3.7 million monthly users in the same period, Tving at 2.79 million, Seezn at 1.9 million, Uplus Mobile at 1.76 million and Watcha at 1.5 million.

The rise of Netflix and YouTube in the Korean OTT market has been remarkable. Just three years ago, in 2018, 22 percent of Koreans used Korean OTT services while 12 percent used foreign OTT services. Now, 32 percent use foreign OTT services, while 23 percent subscribe to domestic OTTs. Netflix launched in Korea in 2016.

“I don’t think it will be easy for local OTTs to surpass Netflix users in the near future. The reason is because Netflix invests heavily in original content. Also, one key component of OTT service is that it needs to allow for international expansion. There isn’t much of this among Korean OTTs and the network is only just starting to be built,” said culture critic Jung Duk-hyun.

Netflix’s astronomical investment in localized original content is difficult for Korean OTT services to keep up with. Netflix invested 333 billion won ($302 million) in original content in Korea last year. With other global OTT giants like HBO Max, Disney+ and Apple TV+ preparing to enter the Korean market, Korean OTTs are scrambling to invest in the creation of original content.

The two major Korean OTT services are Wavve and Tving.

Wavve was launched in 2019 by SK Telecom and terrestrial broadcasters KBS, MBC and SBS. It was created by the merger of oksusu, an SK Telecom platform, and pooq, which was run by the three broadcasters. As such, Wavve offers dramas and entertainment shows from the terrestrial broadcasters, in addition to Wavve’s original content. Livestreaming of terrestrial broadcast channels is also available on Wavve.

While the OTTs operated by the other two telcos -- KT’s Seezn and LG Uplus’ Uplus Mobile TV -- performed well in previous years, they saw a decline in users last year with the rise of Netflix.

The cable network equivalent of Wavve is Tving. Originally run by CJ ENM, which owns tvN, Tving became a formidable powerhouse when JTBC joined the platform on Jan. 7. Last year tvN and JTBC produced multiple hit dramas and entertainment shows. In announcing the collaboration, Tving said it will start creating original content exclusively for the platform in addition to offering JTBC and tvN programs. Over 400 million won would be invested over the next three years in the creation of original content, the company said.

Last year, original content from both Wavve and Tving was shown on television as well, diminishing the value of the original content for the platforms.

Tving’s first original entertainment show, “High School Mystery Club,” which premieres Friday, brings together female celebrities for a mystery adventure. Tving is betting that star director Jung Jong-yeon, who directed popular entertainment shows such as tvN’s “Great Escape” and “The Genius,” will create a hit show.

With the domestic OTT market surpassing 780 billion won last year, as the pandemic contributed to its growth, internet portal giants Kakao and Naver are also expanding their OTT platforms.

Kakao launched Kakao TV last year and brought in experienced producers from broadcasters to create multiple examples of original content. Much of the so-called original content from Wavve and Tving last year wasn’t truly original in the sense that it could be viewed on television, but Kakao TV’s content was exclusive to the platform.

Naver also has an OTT platform. Series On allows downloads of Naver Webtoons in addition to movies and shows on the platform. Naver also recently acquired North America’s biggest web novel platform, Wattpad, further expanding possibilities for Series On.

E-commerce giant Coupang launched its OTT platform Coupang Play on Dec. 24. A latecomer to the market, it is offering a much cheaper service with hopes of becoming Korea’s Amazon.

Looking ahead, the quality of their original content is crucial to the success of domestic OTTs.

“The greatest weakness of Korean OTT services is that they are lacking in original content,” said culture critic Jung. “Platforms don’t become the main focus. It’s about creating original content that represents the platform. There hasn’t been any impactful original content in the domestic OTT market yet. That original content needs to emerge.”

By Lim Jang-won (ljw@heraldcorp.com)