South Korea's homegrown streaming service operators, like Tving and Wavve, can compete with global media giant Netflix in the local market as long as they have effective plans to deal with rising production costs and viewers' changing preferences, a senior expert of a U.S. market analyst firm has said.
"South Korean local companies have been very strong in producing local content, led by CJ ENM and Studio Dragon," Jessica Fuk, a researcher at S&P Global Market Intelligence, said in an interview with Yonhap News Agency on Tuesday. "So there is still room to catch up (with Netflix) and I think it is not too far, given the right strategy."
Netflix has dominated South Korea's streaming market since its entry in the Asian country in 2016 thanks to a string of global hit titles, including "Kingdom" (2019), "Squid Game" (2021) and "The Glory" (2022).
The number of daily active users reached an average of 2.91 million in August, followed by Tving, run by Korean media and entertainment giant CJ ENM, with 1.26 million, Wavve with 1.11 million and Coupang Play with 710,000, according to latest data by Mobile Index.
The S&P expert said Netflix has opened up the over-the-top market in South Korea, where local broadcasters and content providers had operated video-on-demand services supplementary to their TV-based content until 2019, and cemented its leading position with deep pockets.
The COVID-19 pandemic, however, has changed the industry landscape to some extent, and production costs have been rising sharply, she noted.
"There was a comment (at a Seoul conference) that it would be hard for local players to survive because of the heavy content cost and no one would have that much money as Netflix," she said. "Instead of cutting costs of very expensive titles or premium titles, (local operators in mainland China) are cutting the expenses for not so popular titles."
At this point, Fuk stressed that South Korean players can show their capacity and potential to compete against Netflix.
Recently, Korean streaming companies led by CJ ENM have been moving big to break the yearslong Netflix dominance through strategic partnerships and mergers.
Tving absorbed Seezn, run by KT Studio Genie, the media production unit of telecom operator KT Corp., last year to become the second-biggest player in the market in terms of subscribers and revenue share.
As of end-2022, Tving had been estimated to have 4.3 million paid subscriptions, accounting for 21.2 percent of the country's total, compared with Netflix's 33.9 percent, according to a report provided by S&P Global Market Intelligence.
It also joined hands with Paramount+, a U.S. streaming service run by Paramount Global, offering the Hollywood studio's franchise content to Tving users without extra charge.
And there have been rumors that Tving and Wavve, the homegrown streaming platform run by major TV broadcasters KBS, MBC and SBS, are in talks to merge in a bid to survive the uneven playing field of the South Korean streaming market.
"Netflix is strong, but there are still other advantages that local players can take, I mean like better access to local production resources, for example," she said, referring to attempts to livestream sports games by an Australian operator and focus on animated films in Japan.
"In the long run, if local players can find ways in a certain content category or genre that they want to pursue, I think they still deserve a chance to succeed even though the subscriber base may not be as big as Netflix's."
Source: Yonhap News Agency