Terrestrial Broadcasters with General Broadcast Rights
Resale of Online Broadcast Rights
Negotiations Underway with Naver, Kakao, etc.
OTT Platforms Eye Opportunity to Increase Customers
Concerns Over Excessive Broadcast Rights Fees
[Asia Economy reporters Cha Min-young and Bu Ae-ri] IT and online video service (OTT) companies are fiercely competing behind the scenes for the domestic online broadcasting rights of the Tokyo Olympics, scheduled to be held on the 23rd. However, due to the spread of COVID-19 and anti-Japanese sentiment, public interest in the Tokyo Olympics is not high, and it is reported that these companies are hesitant to spend excessive broadcasting fees.
Naver, Wavve, etc. in Negotiations
According to the industry on the 13th, companies such as Naver, Kakao, Wavve, AfreecaTV, and KT Season are reportedly negotiating with the three terrestrial broadcasters. The online broadcasting rights are resold by the three terrestrial broadcasters who hold the general broadcasting rights. The negotiation targets include online live broadcasting rights and clip videos containing key highlight scenes. However, as Coupang Play initially proposed a high amount and then gave up the broadcasting rights, causing the price of online broadcasting rights to rise somewhat, some companies like Kakao are reportedly hesitating to participate. A Kakao official stated, "We are reviewing whether to broadcast or not," adding that no decision has been made yet.
Initially, Coupang Play tried to secure exclusive online broadcasting rights by offering broadcasting fees ranging from 40 billion to 50 billion KRW, but the plan fell through. When it became known that Coupang Play had secured exclusive broadcasting rights, controversy arose over the 'universal viewing rights.' Coupang Play is a service provided free only to Rocket Wow members who pay 2,900 KRW per month. There were criticisms that national events like the Olympics should be easily accessible, but viewing rights were restricted. After a series of setbacks including the fire at the Deokpyeong logistics center, Coupang eventually gave up the contract.
An OTT industry official said, "Broadcasting big events like the World Cup and Olympics is a rare opportunity even among sports broadcasts," and added, "I understand that negotiations started sequentially from portals."
Industry: "We Need to Seize the 'Opportunity' but..."
IT and OTT companies are entering negotiations because sports broadcasting is an opportunity to increase customers in a short period. Sports broadcasts tend to have passionate fan bases, making it easier to secure users and play a role in increasing market dominance in the long term. An OTT industry official said, "During the European football season, the influx of male customers in their 20s and 30s is clearly visible," adding, "This is why sports events cannot be easily given up."
Sports events also have significance as exclusive content. As the OTT market heats up, led by Netflix, competition to attract exclusive content as a differentiation strategy has intensified. According to the Software Policy Research Institute, Netflix holds the number one market share in the domestic OTT market (40%), showing a large gap compared to domestic companies like Wavve (21%) and TVING (14%).
For Naver, Kakao, and Daum, which operate sports sections, live broadcasting of the Tokyo Olympics can increase traffic in a short period and generate revenue through advertising based on the increased users. Naver and Kakao have put effort into attracting users by creating special pages and providing ranking services every Olympic season.
However, there is a consensus across the industry that they should not drink the 'poisoned chalice' by spending excessive broadcasting fees. The 40 billion to 50 billion KRW level of online broadcasting fees proposed by Coupang Play is known as the highest resale amount ever for terrestrial broadcasters. Given the negative domestic public opinion toward the Tokyo Olympics and uncertainties such as COVID-19 variants, the industry consensus is to avoid reckless betting. Another industry official hinted, "In the past, companies would have jumped in without hesitation for the Olympics, but this time, the tone is strong that they will not overextend in negotiations."
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