WarnerMedia and Other Content Divisions
Declared Entry into OTT Market Last Year
Market Disruption Expected if Two Companies Merge
Domestic Platforms Face Growing Concerns
[Asia Economy Reporters Kwon Jaehee and Cha Minyoung] AT&T, the American telecommunications company that owns WarnerMedia, is planning a merger with Discovery, a cable TV channel operator. This move is expected to cause a major shakeup in the online streaming service (OTT) market, heralding the birth of a media giant following the overwhelming leader Netflix and its fierce pursuer Disney Plus.
According to Bloomberg and other sources on the 16th (local time), AT&T is reportedly discussing a plan to merge its content division, including WarnerMedia, with Discovery. Although specific acquisition methods or prices have not been disclosed, it is speculated that AT&T, with a market capitalization of $230 billion, will acquire Discovery.
◆Creation of a Giant Worth 170 Trillion Won= Discovery's market value, including debt, is approximately $30 billion. If the deal is finalized, a new AT&T subsidiary worth $150 billion (about 170 trillion won) will be created. This is larger than AT&T's 2018 acquisition of the American media conglomerate Time Warner for $108.7 billion (about 122.7766 trillion won).
CNBC reported, "The merger negotiations are being conducted privately and could be announced as early as tomorrow," adding, "Since the merger discussions have not reached a final agreement, there is still a possibility of failure."
Previously, AT&T acquired Time Warner (the predecessor of WarnerMedia) in 2018, gaining a powerful entertainment brand. Time Warner is the largest Hollywood production company holding rights to Harry Potter, Batman, Game of Thrones, Friends, and more. Last year, it launched the streaming service HBO Max, marking its entry into the OTT market. Discovery, which specializes in producing various reality and documentary content such as cooking, nature, and science, recently entered the OTT market with the launch of Discovery Plus.
Bloomberg analyzed, "AT&T and Discovery aim to build a strong business model through their merger that can compete with Netflix and Disney."
The merger of AT&T and Discovery is expected to cause a significant shift in the OTT market. Despite the rapid growth of the OTT market, concerns have arisen that the growth may be reaching saturation due to the emergence of numerous OTT companies.
◆Korean OTT Companies on Edge=In the domestic OTT market, expectations and concerns are mixed. Although the Korean OTT market has shown an average annual growth rate of 26.4%, it is saturated with numerous OTT companies such as Netflix, Wavve, TVING, Season, and Watcha. With Disney Plus expected to launch in Korea in the third quarter of this year, Apple TV Plus and Discovery are also reportedly eyeing the Korean market. Domestic OTT companies, still in the early stages of growth, will face global giants head-on without any protective barriers.
Disney, which holds strong intellectual property (IP) rights worldwide, has already stopped supplying its content to domestic OTT platforms early on. Netflix also announced a large-scale investment of 500 billion won in the Korean content market this year alone, intensifying the competition for content acquisition. This poses a significant challenge for domestic OTT companies, which have relatively weaker financial power. An industry insider pointed out, "The presence of foreign OTT companies is positive for revitalizing the Korean content market, but it is also important to note that the popularity of Korean Wave content could fade suddenly. If native platforms do not remain strong, the entire domestic market could easily be swayed according to the preferences of global giants."
Meanwhile, Netflix, which currently dominates the OTT market, has an overwhelming 270.6 million subscribers worldwide, ranking first. Walt Disney's Disney Plus follows with over 100 million subscribers. WarnerMedia's HBO and HBO Max currently have 63.9 million subscribers globally. Discovery's streaming service Discovery Plus, launched in January, has 15 million members.
According to PwC's ‘Global Entertainment & Media Outlook 2020-2024,’ the OTT market grew by 26% last year compared to the previous year. This trend is expected to continue, reaching $86.8 billion (about 95.48 trillion won) by 2024.
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