Haeundae-gu, Busan, Republic of Korea,
Launchingof Disney, Apple, and HBO
A Feeding Frenzy Between OTTs to Start
Korea, which has ultra-high-speed internet in every household, is a fertile environment for OTT (over-the-top media service) to grow. Also, being the number one country in the world in smartphone ownership creates a friendly condition too. Netflix recognized this and made the move first. In 2016 when Netflix first set foot in the Korean market, the concept of OTT itself was unfamiliar in Korea. In a market which underestimated the potential of OTT, Netflix was able to increase its sales without any competitors. Their strategy was good. After targeting the drama fans with high-quality series such as House of Cards and Narcos, they increased the number of subscribers with Bong Joonho's Okja, a Netflix original. With the success of K-content like the Kingdom series, they were able to securely settle down their roots in the Korean market. The timing was also on Netflix’s side. The COVID-19 Pandemic was an opportunity for Netflix. The number of Netflix subscribers jumped exponentially as people started to spend more time at home. The heyday of Netflix was here.
But will they be able to continue being the top runner? Recently, we can see that the stronghold of Netflix is being shaken left and right. Many are complaining that there is nothing to watch anymore, and the steep increase in new subscribers slowed down, as evident by the figures. According to the market research firm Nielsen Koreanclick, the number of Netflix's monthly activity users (MAU) has been steadily decreasing since it peaked at 8.99 million in January. Is it a temporary slump or a harbinger of a crisis? What is certain is that the prospects are not bright. This is because global OTTs such as Disney+, HBO Max, and Apple TV+ are coming to South Korea. The impact of these latecomers in the OTT market has already been seen in the North American market. Netflix lost 430,000 of its existing subscribers in the American and Canadian markets in the second quarter alone, shrinking in size. Will this trend be reproduced in Korea?
The World of Netflix is Shaking
The most powerful game-changer coming to South Korea's OTT market currently dominated by Netflix is The Disney Company’s Disney+, which heralded the launch of their Korean services this november. Disney is a content monster with various intellectual property (IP) including Marvel, Pixar, 21st Century Fox, and National Geographic. They have over 8,000 original content. Thanks to this, Disney+ has surpassed 100 million subscribers in 16 months since its launch in North America, showing off its terrifying growth. This is why the OTT service industry is keeping a close eye on the launch of Disney+ in Korea. Most of all, Korean viewers have shown high affection and loyalty to Disney’s content. Out of the 26 movies that recorded 10 million viewers at the Korean box office, 6 films are Disney-affiliated.
Of course, we can't determine the success Disney+ will see by their IPs alone. As you can see from what happened with Netflix, what matters in an OTT's success or failure is the kind of content that will target the country. Exclusive content you can only watch on that platform is a huge bait that attracts new subscribers. As a successful company, Disney must know that too. Sure enough, Disney+ has already started producing K-content in line with its Korean launch.
First of all, Disney signed a content partnership with Studio & New, a subsidiary of Next Entertainment World (NEW), which produced the series Descendants of the Sun. Studio & New must present one or more content every year through Disney+ for five years. The first series will be Moving, a Korean superhero drama based on Kang Full's webtoon of the same name. With a total production cost of 50 billion won, Zo Insung will play the main character. Moving shares the worldview with Kang Full's other stories about superpowers such as Timing, Again, and Bridge, so it is easy to expand the series strategically. We can expect the series to develop like how the Marvel Cinematic Universe (MCU) developed. Our Police Class in which a popular idol Kang Daniel plays the lead role, and Grid written by Lee Sooyeon, a popular Korean TV dramatist, will also be released as original content series.
Apple's Apple TV+ is another huge company that also seems serious. With their recent participation in film production, Apple has shown great interest in the entertainment industry and has already established a bridgehead to enter the Korean OTT market. Apple TV+ is heralding their landing in Korea with Dr. Brain directed by Director Kim Jeewoon, who also made A Bittersweet Life and The Last Stand. Lee Sunkyun, who became famous internationally for his role in Parasite, will star in the movie to support the director. Based on the bestseller of the same name written by Korean-American writer Lee Minjin, Pachinko is being produced as a drama series featuring Lee Minho and Youn Yuhjung. The work will be produced in three languages including Korean, Japanese, and English, drawing keen attention from Korea right off the bat.
WarnerMedia’s OTT HBO Max is expected to enter the Korean market too. WarnerMedia owns the IPs of popular TV series such as Game of Thrones and Friends, DCEU films such as Batman, Superman, Wonder Woman, and the Harry Potter series. Like Disney+, WarnerMedia is a powerful competitor in that it is a leading content maker with many IPs. Actually, HBO Max has already laid the foundation for its entry into the Korean market by indirectly releasing a lot of content. Their original content Friends: The Reunion was released through cable TV channels CATCH ON and OCN, while Zack Snyder's Justice League met Korean audiences through wavve, a domestic Korean OTT platform. Just like Disney+, HBO Max is likely to retrieve the content they supplied to other platforms when they’re about to launch in the Korean market.
With HBO Max, Warner Bros. Pictures saw some success using a hybrid release strategy for some of their films such as Wonder Woman 1984 and Godzilla vs. Kong at a time when theatrical releases are risky due to the pandemic. Although Wonder Woman 1984 was released in theaters in Korea, the way WarnerMedia releases films will change once HBO Max lands in Korea. Since Warner Bros. Pictures has experience in producing more than 10 Korean films including The Age of Shadows, ILLANG: THE WOLF BRIGADE and The Witch: Part 1. The Subversion, they have a high understanding of the Korean market. It's only a matter of time before they produce K-content.
Competition in OTT Getting Overheated
While Netflix is on alert, the situation is getting worse for the domestic OTT companies in Korea that were already struggling due to Netflix. South Korean OTT businesses such as TVING, wavve, WATCHA, and Coupang Play are also striving to secure exclusive content with a growing sense of crisis. The most aggressive of them all is CJ ENM's TVING. With the recent release of their original movie Seobok starring Gong Yoo and Park Bogum, TVING plans to produce about 100 original content by 2023 to secure 8 million paid subscribers. On the other hand, wavve announced its long-term plan to spend a total of 1 trillion won on making original content by 2025. Coupang Play is a dark horse too. It was launched in December 2020 by the strongest player in e-commerce, Coupang. It has begun producing a drama series comprised of 8 episodes featuring Kim Soohyun, one of top K-wave stars. The production cost per episode is said to be 1.25 billion won (about $1 million). Coupang Play is also accelerating its production of the original entertainment show SNL Korea.
In the midst of all this, Netflix announced that it will invest 550 billion won ($496 million) in K-content this year to strengthen its library. In other words, it is trying to fight off the OTT monsters challenging it. In addition, Netflix recently announced that it will add a mobile video game service to their OTT packages. As competition is getting fierce, the company is determined to show it will to leap forward again through video games.
Subscribing to an OTT platform is easy, and it means terminating it or transferring to another platform will be just as easy. As the number of OTT service companies increases, the choices customers have will increase too. In this competitive market, there is a difficult but certain way to prevent subscribers from changing platforms. Consistently providing interesting content is the key. A bloody content war has begun to take the lead in the complicated OTT market.