South Korean over-the-top (OTT) media service platforms are on alert as the new pricing policy of the industry’s top Netflix Inc. to block free sharing of accounts between acquaintances is expected to take effect soon.

Industry insiders note that local OTT service users that have turned shy in subscribing to the services may abandon their membership of local OTT services to join Netflix if the world’s top streaming platform blocks shared accounts.

According to app market data tracker Mobile Index Insight on Sunday, Netflix had 11.73 million monthly active users (MAU) in April, up by 200,000 users from 11.53 million in the same month a year ago.

Korean online streaming service TVING, on the other hand, saw its MAU stand at a mere 4.9 million in April, down 8 percent from 5.3 million. TVING was expected to become an unrivaled leader in the OTT platform industry in Korea following the merger with KT Corp.’s OTT platform seezn last year.

Wavve, another streaming platform owned by Korea’s three terrestrial broadcast stations and SK square Corp., also saw its MAU drop as much as 530,000 to 3.8 million this year from 4.33 million a year earlier. The MAU of Watcha also fell 34 percent to 740,000 from 1.12 million during the same period.

The three local platforms face deteriorating profitability as the number of users decline sharply.

TVING logged an operating loss of 119.1 billion won ($90.92 million) last year. Its cumulative operating loss between 2020 and 2022 reached 201.4 billion won.

Wavve also posted an operating loss of 121.3 billion won last year, with a cumulative loss over the three years reaching 194 billion won.



Wavve, which had maintained relatively stable finances, raised emergency funds for operations worth 115.1 billion won through two rights offerings in the last six months.

It plans to use the proceeds to invest in original content and widen its presence in the global market.

The strategy of the dominant player Netflix to improve profitability even further is also squeezing local players dry.

Netflix introduced an ad-supported plan in the Korean market at the end of last year and drove up the number of users in the local market by 2 percent in one year.

The three local platforms, on the other hand, saw their number of users nosedive during the same period.

Netflix is expected to raise an additional annual revenue of approximately 300 billion won in Korea as the ad-supported plan gains traction among local advertisers.

Netflix is also expected to adopt a new pricing policy of blocking shared accounts soon in the domestic market, which will threaten the survival of local companies in a red ocean of intense competition among OTT platforms.

“Once the shared accounts of Netflix are blocked, users who can no longer watch Netflix content for free will leave local OTT services for Netflix’s low-cost ad-supported plan,” said an unnamed official from the OTT industry.

Another industry official noted that Netflix has increased the price of content production with a large supply and led the expansion of low-cost plans, pushing local services to the edge and making it difficult for them to retain existing users.

By Lee Jae-cheol and Choi Jieun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]