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OTT Pricing Surge in Korea: effective financial treatment or critical backlash?

Feb 23, 2024
  • Source by KoBiz
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OTT Pricing Surge in Korea: effective financial treatment or critical backlash?

 

 

 

As major OTT(Over-The-Top) service providers in Korea concurrently reprint their price tags near the end of 2023, it is anticipated that more customers in search of the momentary hits will be tempted to churn between services. Streaming services are carefully monitoring the net effect of instantaneous revenue enhancement at the cost of customer dissatisfaction.

 

Global OTTs make bold first moves, with TVING naturally joining the raise

 

Korea-based OTT provider TVING has announced a general price increase for new incoming subscribers coming into effect on the 1st of December, 2023. The price adjustment includes an increase from 10,900KRW to 13,500KRW per month for the standard scheme.

 

There is no surprise in facing the controversial move of TVING considering the preceded pricing revisions of global providers. Last November, Disney Plus Korea started providing the usual quality of service only for a premium membership with an additional 4,000KRW. Netflix Korea has also introduced revisions that essentially translate to a price raise: additional fees for extra members and a ban on new subscriptions for basic membership.

 


 

 

The era of ’Streamflation’ and ‘Grasshoppers’ in the Korean OTT market

 

The general price surge in the Korean OTT market, often referred to as ‘streamflation’(a compound of ‘streaming’ and ‘inflation’), will lead to difficulty in maintaining the loyalty of customers. According to the ‘2023 OTT Survey’ by Korea Creative Content Agency, the customers agreed the optimum subscription fee should be 7,006KRW, half the current average. ‘OTT Service Trend Report 2023’ by data platform ‘OpenSurvey’ also discovered that 56.6% of the unsubscriptions were due to expensive fees.

 

What is spreading amongst streaming aficionados is a so-called ‘grasshopper’ subscription pattern, in which they subscribe to an OTT hosting a popular series and then unsubscribe after finishing it. Hence there are increasing worries that such an immoderate price rage is triggering mutual loss of customers between competitors, not to speak of the fact that the market itself is shrinking in size during the post-pandemic culture of 2023.

 

Disney Plus has already suffered the migration of the ’grasshoppers’. According to ‘MobileIndex’ data by IGAWorks, the Monthly Active User (MAU) rate of Disney Plus last November and December was reduced by 15% and 7% respectively. This was right after the decline of the hype of MOVING, the nationwide popular Disney Plus original series. Considering the reduction of newcomers due to pricing stretch in action, it is evident that the subscribers are increasingly abandoning the service albeit a grace period for price revision being granted.

 


 

 

Notable lineups for the first quarter that will elevate the industry

 

After all, it is keeping the very basics that can lead to ultimate revenue enhancement: continuous provision of entertaining series that can attract and retain customers. This is the case of TVING which garnered a 270k increase in MAU last December even with the fee raise. A reincarnation fantasy Death’s Game ranked first in the weekly trend chart of the OTT database KinoLights. The third season of the celebrated dating show EXchange is also trending, hinting that variations of a sound intellectual property are a low-risk cash cow.

 

In a recent interview with a Korean media, an official of TVING pointed out that “the volatile current of a content’s popularity” is a major challenge, stating they will “focus on introducing something new, something well-crafted; something that has a clear target and message to the audience”.

 

Disney Plus is also prepared with strong lineups for the upcoming quarter. Starting with A Shop for Killers now on air, Cannes-awarded actor Song Kang-ho’s TV series debut Uncle Samsik (working title) and many more will call for the return of ex-customers.

 

Written by Sooyong Park

Republication, copying or redistribution by any means is prohibited without the prior permission of KOFIC and the original news source.
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