In what appears like a well-choreographed move, South Korea leading broadcasters, Seoul Broadcasting System (SBS), Munhwa Broadcasting Corporation (MBC) and Korean
Broadcasting System (KBS), are joining forces with SK Telecom to form their own streaming service similar to the American Streaming Service Netflix.
A memorandum of understanding was signed by these firms to cement the coming together. They intend to launch the unnamed service later this year. Their streaming service will aim to offer and promote original homegrown content.
The timing for this merger seems to be perfect considering that foreign companies such as Netflix and YouTube are gaining more access to the growing Asian market. With Netflix becoming increasingly popular in recent years, Korean largest video streaming services, POOQ and Oksusu, are uniting their resources to produce quality original local content to compete with Netflix.
Oksusu, the largest streaming network in South Korea is owned by SK Telecoms and boasts over 9.5 million subscribers. Their counterparts in the streaming service, POOQ which is owned by both MBC and SBS at 40% shares each while KBS comes in with the remaining 20%, prides its self with 3.7 million subscribers.
POOQ has further partnerships with Malaysia's iFlix and chins iQuiyi, which is why we are terming this merger as the Asian Netflix. The new streaming service, which is yet to be launched has a high likelihood of giving Netflix a run for their money in the Asian Market.
John Lim, a Professor of tech entrepreneurship at Yonsei University and an adviser to
upcoming businesses in Seoul acknowledged that these merging companies have enough
potential in the Korean Media industry to defend their market share.
When Netflix made an entry into South Korea, it didn’t pose a great threat to the local
streaming services since it mostly offered Hollywood content. It based its entertainment that resonates well with the local market. In its efforts to reverberate with the locals, Netflix injected 8 billion dollars into the production of original Korean content. Netflix aims to use local talent to tell country-specific stories.
Netflix's investment in Mr.Sunshine, a South Korean original Netflix Drama, became the
highest rated show last year. They have another upcoming zombie adventure known as
Kingdom which is expected to be a hit.
On the other hand, Oksusu only spent 10 million dollars last year, to produce content. The merger will, however, look to pool together more funds in the near future. SK Telecoms C.E.O, Park Jung. Ho is already looking to raise 180 million dollars to produce new original content for the yet to be launched streaming service.
During the Busan International Film Festival, one of the largest film festivals in Asia, a
Korean programmer for Korean Cinema said that Netflix had been given them freedom
during the creation of content, unlike their own Traditional Studios.
Some Korean content producers are also enjoying various benefits from working with
Netflix. Most of them are having their content on Netflix so that it can be watched worldwide. One of the most popular South Korean Drama Memories of the Alhambra is aiming to garner an international viewership by airing each episode one hour after
broadcasting on local network tv. As South Korean content producers embrace Netflix, local broadcasters have been reluctant.
Although part of the Netflix business plan is to forge a partnership with local companies to deliver their content to viewers abroad, SK Telecom and CJE&M turned down a partnership opportunity proposed by Netflix. They refused to partner with them so that they could prevent it from gaining a large market share in Korea.
Professor Lim from Yonsei University said that other foreign companies like Google have
been with the same degree of hostility in the past by Korean corporations. He noted that a Korean search engine NAVER successfully prevented Google from taking over the Korean Market by making their content searchable by Google crawlers.
Korean firms, however, have great ambitions for their new streaming service. They may be intending to use the Netflix approach in their endeavours. SK Telecom C.E.O called the yet to be launched video service “the Netflix Of Asia” and said that they intend to cover the growing market in the entire South East Asia. Due to cultural similarities and high production quality, some analysts believe that Korean drama has had a good reception in South East Asia, something the new video service is keen on banking on.