[The Editors' Verdict] Minimal Regulation and Maximum Promotion for OTT Platforms

Seong-Yeop Lee, Professor at Korea University Graduate School of Technology Management and Director of the Technology Law Policy Center

Recently, the Netflix original series Squid Game has been a phenomenal hit, and on November 12, Disney Plus, the online video service (OTT) of the world's largest content company Disney, will launch its service in Korea. Disney Plus is a powerful OTT platform that, in less than two years since its global launch, has secured 120 million paid subscribers, posing a threat to Netflix, which had 209 million subscribers as of the second quarter.

According to the OTT user survey conducted by Nielsen KoreanClick on September 27 in Korea, Netflix ranked first with 7,558,292 users, which was more than the combined total of second-place Wavve with 3,879,730 users and third-place TVING with 2,325,586 users. The Korea Consumer Agency's survey also showed that among multiple OTT users (964 respondents), 57.7% used Netflix alongside other services, followed by Wavve at 23.5% and TVING at 22.9%. Netflix's market dominance is strengthening, and the domestic launch of Disney Plus, which has strengths in children's and educational content, is expected to further accelerate the concentration on foreign OTT platforms.

In June 2020, the government established a comprehensive inter-ministerial plan for the development of the digital media ecosystem, setting principles of minimal regulation and maximum promotion for the OTT industry. To realize the minimal regulation principle, it proposed a self-rating system for video content distributed online via OTT as a task, and for maximum promotion, it promised support for OTTs' overseas expansion and various industrial policy support for related content industries.

However, the current reality and policies of the domestic OTT industry have yet to reach a satisfactory level. Although there is an OTT policy consultative body composed of the Ministry of Science and ICT, the Ministry of Culture, Sports and Tourism, and the Korea Communications Commission as a government-wide OTT control tower, regulatory legislative movements by each ministry continue. The Ministry of Science and ICT classifies OTT as a special type of value-added telecommunications business and intends to support innovation and growth of the domestic OTT industry through tax credits and the introduction of a self-rating system. The Ministry of Culture, Sports and Tourism plans to include OTT in the Video Media Content Industry Promotion Act and pursue promotional measures. The Korea Communications Commission intends to enact the 'Audiovisual Media Service Act,' which will replace the existing Broadcasting Act and include OTT as a regulatory target.

Such attempts by multiple ministries to regulate OTT within their respective domains of telecommunications, broadcasting, and content can be seen as contrary to the principle of minimal regulation. In other words, when designing the status of media operators for OTT or entry regulations, the principle of a single law and a single regulatory agency must be observed. However, before introducing OTT regulations, it is necessary to review whether OTT can be considered the same service as existing paid broadcasting and whether the regulations would only become shackles for domestic OTT providers.

From the perspective of maximum promotion policy, domestic platforms need to secure competitiveness through economies of scale, but due to their significantly smaller size compared to global platforms, a strategy to grow through alliances among operators is necessary. Fortunately, the competitiveness of K-content has been confirmed with hits like Squid Game, but there is an issue where global OTTs acquire content copyrights without domestic producers receiving additional revenue, so measures to address this are also needed.

The direction OTT policy should take is minimal regulation under a single law and a single agency, coordinated by a control tower, along with maximum promotion tailored to the characteristics of each ministry.

Seong-Yeop Lee, Professor at Korea University Graduate School of Technology Management and Director of the Technology Law Policy Center