First Step of the 'Tving Allied Forces'... Infinite Competition in OTT

CJ ENM to Approve Tving Spin-off Plan at General Meeting on 27th

[Asia Economy Reporter Joeslgina] The 'Tving Alliance' formed by CJ ENM and JTBC has taken steps toward launching a joint venture in the first half of this year, marking the beginning of an intense competition phase in the domestic online video service (OTT) market. Amid the surge in OTT demand due to the COVID-19 pandemic, a significant shake-up centered around native OTT platforms is underway. Additionally, Disney Plus, known as the 'content kingdom,' is preparing to enter the Korean market, highlighting the urgent need for survival strategies among domestic OTT providers.

According to the Financial Supervisory Service on the 24th, CJ ENM will approve a spin-off plan for its OTT business unit, Tving, at the shareholders' meeting scheduled for the 27th. The spin-off date is set for June 1, with the registration date expected on June 8. Following the launch of 'WAVVE,' an integrated OTT platform by the three terrestrial broadcasters and SK Telecom in the second half of last year, a competing CJ ENM-JTBC OTT joint venture is expected to be established as early as the first half of this year. Industry insiders believe JTBC will likely invest in the spun-off company.

◆Will Additional Members Join to Counter WAVVE? = The launch of the Tving Alliance's joint OTT is expected to pose the greatest threat to WAVVE, the leading native OTT platform. Since its launch last year, WAVVE has maintained the top spot in domestic user numbers but has recently been overtaken by Netflix.

One point of interest is whether domestic telecom companies such as KT and LG Uplus will join the Tving Alliance. KT refers to its own OTT, Season, as an 'open platform' and is actively pursuing partnerships with both domestic and international OTTs. LG Uplus, which has a partnership with Netflix, is also open to collaboration. The recent decision by LG HelloVision to terminate its OTT services Viewing and Stick by the end of this month is seen as a step toward cooperation between LG Uplus and CJ ENM. An industry insider stated, "We have been holding multiple discussions with KT and LG Uplus, and gradual progress is being made."

Considering CJ ENM's subsidiary Studio Dragon's equity alliance with Netflix, the possibility of Netflix joining the alliance has also been raised. Netflix, currently airing the second season of 'Kingdom,' which has gained attention as a K-zombie series, has repeatedly expressed its intention to use Korea as a base for its Asian market strategy.

◆Content War: Disney Plus Is Coming Too = The launch of the Tving Alliance is expected to ignite fierce competition in the rapidly growing OTT market. According to mobile big data platform company IGAWorks, in February, Netflix led domestic OTT user numbers with 3.17 million users. Among native OTTs, WAVVE had the highest with 2.75 million users, followed by U+ Mobile (1.83 million), KT Season (1.26 million), and Tving (1.25 million). This structure means the competitive landscape can change anytime depending on partnerships.

Given the very low subscriber loyalty characteristic of OTT platforms, future competition will inevitably focus on content. Global OTT providers like Netflix and Apple Plus are expanding their original content, while native OTT providers are increasing the supply of popular overseas dramas. WAVVE plans to invest a total of 300 billion KRW in securing its own content and aims to achieve sales of 500 billion KRW by 2023.

In particular, Disney Plus, which surpassed 28 million global subscribers within three months of its market entry, is expected to further intensify this content war. Disney Plus will begin services in European countries such as the UK and France starting today. In Korea, its launch is anticipated as early as this year or by next year at the latest, with domestic companies including SK Telecom on high alert. An industry insider commented, "Differentiation strategies and alliances for survival will continue."