Global streaming giant Netflix is seeking to offer cheaper and wider price packages on top of unmatched content titles to reach out to more viewers, delivering another upset to the over-the-top (OTT) service market in Korea where local telecommunications players and content providers have already become intimidated by its fast encroachment.
Netflix is currently testing a mobile-only subscription plan in select countries, including South Korea, Malaysia and India, which lets viewers watch only on their smartphones or tablets at a considerably lower cost.
The new offering is available only to a limited number of Korean users as it’s still in the trial stage. It’s priced at 6,500 won ($5.72) per month, 30 percent off Netflix’s current cheapest plan in the country and less than half its premium plan.
Since entering Korea in 2016, Netflix has been expanding its user base at a rapid clip, with subscribers jumping from 300,000 in late 2017 to 2.4 million as of February 2019.
Netflix’s lower-priced tier would make it more price-competitive against local pay-TV services, which have so far commanded the dominant market share in Korea with their affordable monthly subscriptions of around 10,000 won.
Its aggressive new subscription plans are also expected to appeal greatly to Korean consumers at a time of fast-changing media consumption habits.
The convergence of devices and platforms has sparked a rapid transition from TV to mobile, with smartphones now the primary screen for most viewers, especially in Asian countries. This largely explains why Netflix has tapped Asia’s emerging markets as the target for its new pricing model experiment, reducing prices in certain markets to broaden access and accelerate growth. At home, the company has flexed its pricing power by hiking fees for American users by 13 to 18 percent this year.
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South Korea is the world’s most wired society, with people spending a record amount of time on handheld devices. This has made the country a prime testbed for all types of video platforms for both local and multinational players.
Korean platform companies and mobile carriers have been making swift moves to fend off threats from Netflix and other streaming services.
SK Broadband, a subsidiary of the country’s top mobile operator SK Telecom, is in the final stages of combining its mobile video streaming app Oksusu with Pooq, a streaming service under Korea’s three major broadcasting stations. Together, they are expected to become the largest homegrown video streaming service in Korea, with a combined 13 million subscribers. Armed with the resources to create their own original contents, they are expected to defend the home market against the flood of new offerings from Netflix and other streaming giants.
Some companies have joined hands with Netflix to enjoy a boost in their own subscriptions. LG Uplus became the first local mobile carrier to team up with the American tech titan, allowing subscribers to watch Netflix on its IPTV platform.
KT is considering partnering with the Japanese carrier NTT Docomo to leverage its business ties with Disney and other services. The Korean operator has recently worked with Disney Korea when releasing a special augmented-reality app Catch Heroes using the characters from the movie Avengers: End Game.
Competition in the already crowded streaming market is expected to become even fiercer as more big names are readying to join the fray.
The world’s largest online retailer Amazon is churning out more original contents on its Amazon Prime Video service. Google-owned YouTube is also pushing its live TV streaming service to replace the traditional cable. Disney recently announced it would launch its own streaming service called Disney Plus in the U.S. in November. The entertainment giant, which owns Marvel, Pixar and the Star Wars franchise, closed its $71.3 billion deal for 21st Century Fox last month and holds the largest share in Hulu, the third largest streaming service in the U.S.
Apple’s planned entry into the streaming landscape is also a game changer. The maker of the iPhone, with its 1.4 billion loyal user base around the globe, has become increasingly more reliant on its service business, which includes iTunes, Apple Music and App Store. Its combined services revenue soared 19 percent last year, offsetting its slowing handset sales. Last month, the company finally unveiled its streaming ambitions when its chief executive, Tim Cook, announced the launch of a new video subscription service called Apple TV Plus this fall in over 100 countries.
By Lee Yong-ik and Kim Hyo-jin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]