OTT Pie Grows... Will Content Stocks Ride the Wave?

[Asia Economy Reporter Eunmo Koo] As the growth of the online video service (OTT) market accelerates, market interest in stocks responsible for content production and distribution is rising day by day.

According to the Korea Exchange on the 21st, the stock price of J Contentree closed at 32,600 KRW on the 18th, up 0.31% (100 KRW) from the previous trading day. J Contentree's stock price began to rebound since last month and rose 32.8% until the previous trading day, outperforming the KOSPI return of 22.3% during the same period. During the same period, Ace Story surged 158.1%, and SBS also rose 28.9%. Studio Dragon (6.3%) and CJ ENM (3.0%) also showed a slight upward trend.

It is interpreted that the market's attention is increasing as it is the peak season for content at the end of the year and next year's Disney Plus (Disney+) entry into Korea is becoming visible. Although competition among OTT operators will intensify further with the addition of Disney+, the media market is expected to accelerate its shift to streaming video platforms by strengthening content for each operator, and investors are focusing on the expansion of the OTT market pie rather than competition.

Since Netflix began revealing the 'Top 10 Content of the Day' in various countries earlier this year, the competitiveness of Korean content has been visually confirmed. As there are more contents capturing the attention of people worldwide, including Asia, the U.S., Europe, and Australia, the price competitiveness of domestic content has increased, and production opportunities and activity scope have expanded. Minha Choi, a researcher at Samsung Securities, predicted, "The supply and demand competition in the domestic and international media industry for Korean content is expected to intensify further, and the domestic content industry will enter a phase where it fully enjoys the benefits of increased sales prices and production opportunities."

In particular, J Contentree is continuing its upward trend with expectations of synergy in the broadcasting business by announcing the launch of the integrated JTBC Studio. If JTBC Studio succeeds in pre-IPO investment attraction early next year, the broadcasting business is expected to take a step forward.

On the 15th, J Contentree announced through a disclosure that its subsidiary JTBC Studio decided to merge by absorption with J Contentree Studio. Through this merger, J Contentree is expected to unify the value chain of drama planning, investment, production, and distribution to maximize synergy effects in the broadcasting business sector and increase corporate value through strengthened control over its subsidiary.

Hyunji Lee, a researcher at Eugene Investment & Securities, analyzed, "As the production cost per drama episode rises and dramas become larger in scale, and amid fierce content supply and demand competition among global OTT operators, unification of the business model is necessary to quickly respond to the changing market. JTBC Studio, by reorganizing its business structure into an independent studio form, will make content transactions with various operators easier."