Korea Communications Commission

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Title	KCC ANNOUNCES CURRENT STATUS REGARDING OTT AND RESULTS OF ANALYSIS OF ITS IMPACT ON BROADCASTING MARKET
Date	2024-12-17	Read	2690
Fiercer competition in the broadcasting market due to the growing influence of OTT services Broader impact of OTT services with increased sales and usage Stronger prominence of OTT as a replacement for Pay TV among individual subscribers and their viewing time Heated competition in content trading between service providers of OTT and broadcasts Growth in online advertisement such as OTT services and a decline in broadcast advertisement The Korea Communications Commission (KCC, Acting Chairperson Kim Tae-ku) and the Korea Information Society Development Institute (KISDI, Acting President Jeong-Eon KIM) announced the major current status of online video services (OTT services) and the results of their analysis of the impact of OTT services on the broadcasting market on Friday December 13. Typically, the results of their analysis of the impact of OTT services are announced as part of the results of the broadcasting market competition evaluation (Competition Evaluation). However, this time, they were announced ahead of the ‘2024 Competition Evaluation’ (to be released in 2025), considering the impact of OTT services on the broadcasting market, and the need to provide timely data. The analysis related to OTT services this time has been conducted based on the declaration of broadcasting service providers’ property status, a survey on the usage pattern of broadcasting mediums, audit reports on service providers, and IR reports (all for 2023), survey on users and service providers conducted in July, 2024, and more. It is shown that the influence of OTT services in the broadcasting market has been on the rise. - The total broadcasting business sales for the year of 2023 decreased by 4.7% compared to the previous year, while sales of major OTT services (Netflix, Wavve, Tving, and Watcha) increased by 6.4% year-on-year (YoY). - While the upward trend in the use of OTT services has continued, as shown in the statistics (69.5% in 2021 → 72.0% in 2022 → 77.0% in 2023), the proportion of paid OTT subscribers has continued to increase from 50.1% in 2021 to 55.9% in 2022 and 57.0% in 2023. According to the 2024 survey, multiple subscrptions remain high, with an average 2.8 subscrptions per paid OTT service subscriber. Moreover, the payment amount is on the rise as 40% of the respondents answered the payment amount increased compared to the previous year, and 52.5% answered it is at a similar level. - Smartphones top the list of devices that respondents have used to watch OTT services, while TV usage as a medium has been continuously on the rise. (Smartphones: 50.1% in 2023 → 45.6% in 2024, TV: 25.6% in 2023 → 29.36% in 2024) In the meantime, MAU * (Monthly Active User) of major paid OTT services sharply increased until 2021 and showed a moderate growth with fluctuations since 2022. In addition, the MAU and viewing time * of YouTube, a free advertisement-based service, has consistently increased. * MAU of major paid OTT services such as Netflix, Wavve, Tving, Watcha, Coupang Play, and Disney+: 30.39 million (December 2021) → 30.19 million (December 2022) → 34.58 million (December 2023) → 32.39 million (June, 2024) MAU of YouTube: 43.65 million (December 2021) → 45.14 million (December 2022) → 45.65 million (December 2023) → 46.25 million (June, 2024) * Average daily viewing time on YouTube (daily average): 68.7 min (December, 2021) → 72.1 min (December 2022) → 79.7 min (December 2023) → 80.8 min (June, 2024) It is considered that the increasing popularity of OTT services is putting significant pressure on competition in the Pay TV market, as evidenced by a decline in the number of subscribers to pay TV, viewing time, and the number of channels. - The number of individual subscribers to Pay TV services* (mostly regular households) has consistently decreased since 2021 and the sales amount from VOD of pay TV, which is similar of OTT services, has dropped to a great deal from 815.1 billion won in 2018 to 484.5 billion won in 2023. The individual number of subscribers to pay TV has declined on average in the second half of each year, from 16.56 million in 2021 to 16.50 million in 2022 and 16.43 million in 2023. - In addition, the 2024 survey has found that 40.5% of the respondents answered the amount of time to watch real time broadcasts through pay TV has been down since using OTT services, and 33.9% answered the number of channels down. - In the future, the effects from OTT services replacing Pay TV are likely to grow, due to differentiation of content of OTT services, exclusive broadcasting of sports, and expansion of real time broadcasting. It is shown that free advertisement-based OTT services such as YouTube are being chosen more frequently than pay TV services as a platform replacing paid OTT services. - Between 0% and 5.9% of respondents answered they would replace their current paid OTT services with Pay TV, if they were not able to use them, depending the paid OTT services that they use. - Between 24.4% and 46.8% of respondents answered that they would choose YouTube as a replacement, depending on the paid OTT services that they use. This shows that it is worth considering advertisement-based free OTT services such as YouTube when analyzing the use of paid OTT services. It is shown that competition between service providers of OTT and broadcasts is intensifying to secure content of quality, as OTT service providers are providing original content. - Meanwhile, the similarity between OTT original content and broadcast programs is growing due to the increasing number of cases where OTT original content has been scheduled as broadcast programs or vice versa. - According to the survey conducted in 2024, 38.2% of 34 producers trading with OTT service providers are also trading with broadcasting service providers. This shows producers find it easier to switch between platforms. - In addition, producers answered they prefer OTT service providers over Program Providers when it is impossible to provide content to territorial broadcasters. This shows a significant substitutability between services providers of OTT and broadcasts in terms of demand for video content. * The proportion of platforms preferred by producers when it is impossible to provide content to terrestrial broadcasters: OTT (75.5%), Program Providers (12.5%) / OTT (42.1%), Program Providers (34.2%) Meanwhile, it appears that the demand for Korean content on Netflix would remain high for the time being as Korean content ranks second following the US in terms of the total viewing time on Netflix (based on TV series in the global market). - It is considered that the influence of Netflix will grow stronger in the market for trading domestic video content, coinciding with the weakening demands for video content produced by domestic service providers. Note: Proportion of Netflix viewing time by major countries (first half of 2024): US (54.5%), Korea (11.4%), UK (6.6%), Japan (5.6%), Spain (3.4%), France (1.9%) The proportion* of online advertisement has continued to increase in the domestic advertisement market while the proportion** of broadcast advertisement has consistently declined. * 51.6% (end of 2021) → 52.7% (end of 2022) → 56.3% (estimated at the end of 2023) → 57.1% (estimated at the end of 2024) ** 26.1% (end of 2021) → 24.3% (end of 2022) → 20.7% (estimated at the end of 2023) → 19.8% (estimated at the end of 2024) - The 2024 survey shows that the proportion of choosing OTT advertisement over broadcast advertisement is expected to rise as a higher number of advertisers (34.3% in 2016 → 40.2% in 2024) recognize that advertising via OTT platforms such as YouTube is more effective than broadcast advertising. The introduction of paid subscrption-based OTT services such as Netflix and Tving is expected to continuously reduce the influence of broadcast advertisement in the future, as competitive pressure from OTT advertisement on broadcast advertisement is growing stronger and the content distribution medium to program advertisement is being diversified. The influence of FAST (Free Advertising Supported Streaming Television) appears to be still limited in the domestic Korean market, considering its utilization rate (34.5% of Pay TV users), frequency of use (47.7% of FAST users use it once or twice a month), and the recognition of service quality (content quality, diversity, screen quality, etc. are lower than those of other services). - However, the possibility for the influence of FAST to grow in the domestic market cannot be ruled out if enhanced and varied content is provided through FAST and the prices of replaceable services such as Pay TV rise. Also, its growth potential deserves attention, as domestic platforms and content service providers are using FAST as a gateway for their overseas expansion. The KCC plans to incorporate the results of their analysis of the OTT impact into the 2024 Competition Situation Evaluation in order to evaluate these results. Also, the KCC plans to announce the results of the 2024 Competition Situation Evaluation in the first half of 2025, after deliberation by the Broadcasting Market Competition Evaluation Committee and the decision-making process by the KCC. ### The Korea Communications Commission
File	241213 (보도자료) 방통위, “OTT 관련 주요 현황 및 방송시장 영향분석 결과 발표”.hwpx 20241213_News_Release_OTT current status.docx

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Title

KCC ANNOUNCES CURRENT STATUS REGARDING OTT AND RESULTS OF ANALYSIS OF ITS IMPACT ON BROADCASTING MARKET

Date

2024-12-17

Read

2690

Fiercer competition in the broadcasting market due to the growing influence of OTT services
Broader impact of OTT services with increased sales and usage
Stronger prominence of OTT as a replacement for Pay TV among individual subscribers and their viewing time
Heated competition in content trading between service providers of OTT and broadcasts
Growth in online advertisement such as OTT services and a decline in broadcast advertisement

The Korea Communications Commission (KCC, Acting Chairperson Kim Tae-ku) and the Korea Information Society Development Institute (KISDI, Acting President Jeong-Eon KIM) announced the major current status of online video services (OTT services) and the results of their analysis of the impact of OTT services on the broadcasting market on Friday December 13.

Typically, the results of their analysis of the impact of OTT services are announced as part of the results of the broadcasting market competition evaluation (Competition Evaluation). However, this time, they were announced ahead of the ‘2024 Competition Evaluation’ (to be released in 2025), considering the impact of OTT services on the broadcasting market, and the need to provide timely data.

The analysis related to OTT services this time has been conducted based on the declaration of broadcasting service providers’ property status, a survey on the usage pattern of broadcasting mediums, audit reports on service providers, and IR reports (all for 2023), survey on users and service providers conducted in July, 2024, and more.

It is shown that the influence of OTT services in the broadcasting market has been on the rise.

- The total broadcasting business sales for the year of 2023 decreased by 4.7% compared to the previous year, while sales of major OTT services (Netflix, Wavve, Tving, and Watcha) increased by 6.4% year-on-year (YoY).
- While the upward trend in the use of OTT services has continued, as shown in the statistics (69.5% in 2021 → 72.0% in 2022 → 77.0% in 2023), the proportion of paid OTT subscribers has continued to increase from 50.1% in 2021 to 55.9% in 2022 and 57.0% in 2023.

According to the 2024 survey, multiple subscrptions remain high, with an average 2.8 subscrptions per paid OTT service subscriber. Moreover, the payment amount is on the rise as 40% of the respondents answered the payment amount increased compared to the previous year, and 52.5% answered it is at a similar level.

- Smartphones top the list of devices that respondents have used to watch OTT services, while TV usage as a medium has been continuously on the rise. (Smartphones: 50.1% in 2023 → 45.6% in 2024, TV: 25.6% in 2023 → 29.36% in 2024)

In the meantime, MAU * (Monthly Active User) of major paid OTT services sharply increased until 2021 and showed a moderate growth with fluctuations since 2022. In addition, the MAU ** and viewing time *** of YouTube, a free advertisement-based service, has consistently increased.

* MAU of major paid OTT services such as Netflix, Wavve, Tving, Watcha, Coupang Play, and Disney+: 30.39 million (December 2021) → 30.19 million (December 2022) → 34.58 million (December 2023) → 32.39 million (June, 2024)

** MAU of YouTube: 43.65 million (December 2021) → 45.14 million (December 2022) → 45.65 million (December 2023) → 46.25 million (June, 2024)

*** Average daily viewing time on YouTube (daily average): 68.7 min (December, 2021) → 72.1 min (December 2022) → 79.7 min (December 2023) → 80.8 min (June, 2024)

It is considered that the increasing popularity of OTT services is putting significant pressure on competition in the Pay TV market, as evidenced by a decline in the number of subscribers to pay TV, viewing time, and the number of channels.

- The number of individual subscribers to Pay TV services* (mostly regular households) has consistently decreased since 2021 and the sales amount from VOD of pay TV, which is similar of OTT services, has dropped to a great deal from 815.1 billion won in 2018 to 484.5 billion won in 2023. The individual number of subscribers to pay TV has declined on average in the second half of each year, from 16.56 million in 2021 to 16.50 million in 2022 and 16.43 million in 2023.

- In addition, the 2024 survey has found that 40.5% of the respondents answered the amount of time to watch real time broadcasts through pay TV has been down since using OTT services, and 33.9% answered the number of channels down.

- In the future, the effects from OTT services replacing Pay TV are likely to grow, due to differentiation of content of OTT services, exclusive broadcasting of sports, and expansion of real time broadcasting.

It is shown that free advertisement-based OTT services such as YouTube are being chosen more frequently than pay TV services as a platform replacing paid OTT services.

- Between 0% and 5.9% of respondents answered they would replace their current paid OTT services with Pay TV, if they were not able to use them, depending the paid OTT services that they use.

- Between 24.4% and 46.8% of respondents answered that they would choose YouTube as a replacement, depending on the paid OTT services that they use. This shows that it is worth considering advertisement-based free OTT services such as YouTube when analyzing the use of paid OTT services.

It is shown that competition between service providers of OTT and broadcasts is intensifying to secure content of quality, as OTT service providers are providing original content.
- Meanwhile, the similarity between OTT original content and broadcast programs is growing due to the increasing number of cases where OTT original content has been scheduled as broadcast programs or vice versa.
- According to the survey conducted in 2024, 38.2% of 34 producers trading with OTT service providers are also trading with broadcasting service providers. This shows producers find it easier to switch between platforms.
- In addition, producers answered they prefer OTT service providers over Program Providers when it is impossible to provide content to territorial broadcasters. This shows a significant substitutability between services providers of OTT and broadcasts in terms of demand for video content.
* The proportion of platforms preferred by producers when it is impossible to provide content to terrestrial broadcasters: OTT (75.5%), Program Providers (12.5%) / OTT (42.1%), Program Providers (34.2%)
Meanwhile, it appears that the demand for Korean content on Netflix would remain high for the time being as Korean content ranks second following the US in terms of the total viewing time on Netflix (based on TV series in the global market).
- It is considered that the influence of Netflix will grow stronger in the market for trading domestic video content, coinciding with the weakening demands for video content produced by domestic service providers.
Note: Proportion of Netflix viewing time by major countries (first half of 2024): US (54.5%), Korea (11.4%), UK (6.6%), Japan (5.6%), Spain (3.4%), France (1.9%)

The proportion* of online advertisement has continued to increase in the domestic advertisement market while the proportion** of broadcast advertisement has consistently declined.
* 51.6% (end of 2021) → 52.7% (end of 2022) → 56.3% (estimated at the end of 2023) → 57.1% (estimated at the end of 2024)
** 26.1% (end of 2021) → 24.3% (end of 2022) → 20.7% (estimated at the end of 2023) → 19.8% (estimated at the end of 2024)
- The 2024 survey shows that the proportion of choosing OTT advertisement over broadcast advertisement is expected to rise as a higher number of advertisers (34.3% in 2016 → 40.2% in 2024) recognize that advertising via OTT platforms such as YouTube is more effective than broadcast advertising.
The introduction of paid subscrption-based OTT services such as Netflix and Tving is expected to continuously reduce the influence of broadcast advertisement in the future, as competitive pressure from OTT advertisement on broadcast advertisement is growing stronger and the content distribution medium to program advertisement is being diversified.

The influence of FAST (Free Advertising Supported Streaming Television) appears to be still limited in the domestic Korean market, considering its utilization rate (34.5% of Pay TV users), frequency of use (47.7% of FAST users use it once or twice a month), and the recognition of service quality (content quality, diversity, screen quality, etc. are lower than those of other services).
- However, the possibility for the influence of FAST to grow in the domestic market cannot be ruled out if enhanced and varied content is provided through FAST and the prices of replaceable services such as Pay TV rise.
Also, its growth potential deserves attention, as domestic platforms and content service providers are using FAST as a gateway for their overseas expansion.
The KCC plans to incorporate the results of their analysis of the OTT impact into the 2024 Competition Situation Evaluation in order to evaluate these results. Also, the KCC plans to announce the results of the 2024 Competition Situation Evaluation in the first half of 2025, after deliberation by the Broadcasting Market Competition Evaluation Committee and the decision-making process by the KCC.

###
The Korea Communications Commission

File

241213 (보도자료) 방통위, “OTT 관련 주요 현황 및 방송시장 영향분석 결과 발표”.hwpx

20241213_News_Release_OTT current status.docx

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