MEMBER ONLY
South Korea’s streaming battlefield has develop into so cutthroat that even Netflix Inc., the world’s largest over-the-top platform, is getting bruised.
Because the market matures and subscriber good points gradual, OTT gamers in Korea have unleashed steep reductions, partnerships and even free tiers, dragging down trade income and squeezing Netflix’s profitability in certainly one of Asia’s most subtle streaming markets.
Korea’s OTT market, lengthy one of many fastest-growing in Asia, has begun to stage off.
Paid OTT utilization reached 59.9% in 2024, up solely modestly from 55.9% in 2022, in keeping with the nation’s communications regulator’s latest survey, signaling that family adoption is nearing its restrict.
With development slowing, streaming platforms have turned to aggressive user-acquisition ways.
A MATURING MARKET DRIVES PLAYERS INTO A CASH-BURNING FIGHT
Homegrown gamers comparable to TVing and Coupang Play have rolled out low cost bundles tied to cell and web plans, e-commerce memberships and food-delivery apps.
Particularly, Coupang Play, provided by the nation’s e-commerce large Coupang Inc., intensified the struggle in June by opening its complete platform to all customers without spending a dime, so long as they watch advertisements.
The outcome has been a gradual erosion of common income per person (ARPU), a key indicator of how a lot a streaming platform earns from every subscriber. ARPU has been falling throughout the trade.
Knowledge from Hankyung Aicel confirmed on Sunday that ARPU at main OTT platforms, together with Netflix and TVing, has been declining for months.
Netflix’s estimated month-to-month credit-card spending per person in Korea fell to 14,454 gained ($9.93) in October, marking its second straight decline.
ARPU had recovered briefly after Netflix raised costs in Could, however it resumed its slide as extra subscribers shifted into lower-margin plans and bundled choices.
One of many largest drivers of that shift is Netflix’s partnership with Naver Corp.’s Naver Plus, which gives customers entry to Netflix for 4,900 gained a month.
A survey by Seoul-based market analysis agency Shopper Perception discovered that 27% of Korean Netflix subscribers within the first half of this 12 months got here via Naver’s discounted membership, a share giant sufficient to considerably dilute Netflix’s direct-billing income.
NETFLIX’S KOREA PROFITABILITY TAKES A HIT
The monetary influence is more and more seen in Netflix’s figures.
Hankyung Aicel estimates that Netflix Companies Korea, the native subsidiary of the worldwide streaming chief, recorded 421.1 billion gained in credit-card billings from January via October, a 9.1% drop from a 12 months earlier.
The decline was pushed by a speedy shift away from full-price subscriptions towards cheaper ad-supported and bundled plans.
Netflix Companies Korea has additionally seen total profitability shrink.
The unit generated 17.4 billion gained in working revenue final 12 months on income of 899.7 billion gained, leading to an working margin of simply 1.9%.
That compares with 2.7% in 2021, earlier than the corporate launched its ad-supported tier and commenced rolling out discounted partnerships.
Analysts say the margin strain stems from a shrinking base of high-value prospects.
“The shift towards discounted bundles has led to a noticeable drop in high-margin, immediately billed subscriptions,” stated Park I-kyung, an analyst at Hankyung Aicel.
“The aggressive enlargement by Coupang Play and TVing leaves Netflix little room to boost costs within the close to time period.”
LOCAL RIVALS GAIN MUSCLE WITH SPORTS AND BUNDLES
Over the interval, home rivals have quickly gained floor.
In accordance with Seoul-based app evaluation agency Cell Index, Coupang Play attracted 7.96 million month-to-month energetic customers in latest months, whereas TVing drew 7.65 million. Their mixed attain now exceeds Netflix’s 15.04 million customers in Korea.
TVing skilled a surge in the course of the baseball postseason, changing into the primary home OTT platform to surpass 8 million month-to-month energetic customers in the course of the 2024 KBO League season, for which it holds unique broadcast rights.
The corporate has additionally invested closely in authentic programming and accelerated its enlargement abroad to keep up momentum past the sports activities calendar.
Coupang Play is doubling down on premium sports activities content material that has begun to reshape Korean viewing habits.
The service paid 420 billion gained final 12 months for six seasons of English Premier League broadcasting rights and has since added Formulation 1, the NBA beginning in 2025, and the digital rights to MLS membership Los Angeles FC, house to Korean star Son Heung-min.
These expensive licensing offers have boosted Coupang Play’s person base however intensified the trade’s money burn.
TVing’s financials really feel the pinch of the escalating struggle.
In accordance with its mum or dad firm CJ ENM Co., TVing’s third-quarter income fell 18.7% year-on-year to 98.8 billion gained, whereas working losses widened from 7.1 billion gained a 12 months earlier to 16.2 billion gained this 12 months.
POLICY TAILWINDS AND A LOCAL MEGA PLATFORM
Trade analysts anticipate that two main forces, comparable to upcoming coverage help for homegrown platforms and the potential creation of a Korean mega OTT, might reshape the aggressive panorama within the coming 12 months.
The Korean authorities has floated new measures geared toward strengthening home streaming firms, a coverage path that might contain numerous types of trade help.
Any such shift would add strain on overseas platforms at a time when their margins are already beneath pressure.
The long-discussed merger between TVing and Wavve stays in limbo but in addition continues to loom giant over the market’s future.
If accomplished, it will mix Korea’s largest cable-channel catalog with its most intensive broadcast-library providing.
Cell Index knowledge present that the 2 platforms collectively draw practically 12 million month-to-month energetic customers, nonetheless trailing Netflix, however giant sufficient to change content material bargaining energy and intensify competitors for native subscribers.
Analysts say the mix of stronger coverage backing and the emergence of a consolidated home platform might meaningfully reshape the market.
“Rivalry has intensified sharply as TVing and Coupang Play have quickly expanded since 2024,” stated Kim Gyu-yeon, an analyst at Mirae Asset Securities.
“Every participant’s differentiated methods and the federal government’s help for home OTT platforms are anticipated to be a key turning level for the market.”
