[Asia Economy Reporter Eunmo Koo] The online video service (OTT) market is heating up with the successive domestic launches of ‘Apple TV Plus (Apple TV+)’ and ‘Disney Plus (Disney+)’. As the OTT market enters a period of intense competition, the transition of paid broadcasting operators such as Internet Protocol TV (IPTV) and cable TV to open operating system (OS) set-top boxes to secure various OTT services is also accelerating.
"Let's attract various OTTs" Paid broadcasting operators increasing open set-top boxes
According to industry sources on the 13th, LG Uplus’s IPTV set-top boxes based on Google Android TV OS account for more than 95%. Compared to KT, the number one paid broadcasting operator, whose Android set-top box share is known to be around 30%, LG Uplus holds an advantage in terms of scalability.
Leveraging its high proportion of Android set-top boxes, LG Uplus signed an exclusive IPTV partnership with Disney+, which launched its service in Korea on the 12th. LG Uplus introduced a combined IPTV and OTT subscription plan in conjunction with the Disney+ partnership. The newly launched IPTV-only plan, ‘Premium Disney+’, is characterized by allowing unlimited enjoyment of U+tv, internet, and Disney+ content for 24,600 KRW per month (based on a 3-year contract and internet bundle).
LG Uplus revamped the user interface (UI) to enable its customers to conveniently enjoy Disney+ on IPTV and developed a dedicated remote control. Disney+ is provided through automatic updates on the U+tv set-top box, and users can access it with one click via a shortcut button on the remote control. The company explained, “This was possible because we have the highest proportion of Android OS-based set-top boxes among domestic IPTV operators.”
The competitiveness of set-top boxes is also reflected in actual performance. LG Uplus reported that its IPTV revenue and cumulative subscribers in the third quarter of this year increased by 12.4% (329 billion KRW) and 8.8% (5.265 million subscribers), respectively, compared to the same period last year. The company attributed this to “the impact of the speaker-type set-top box ‘Soundbar Black’ and the partnership expectations with the global OTT service Disney Plus.”
KT has also launched a counterattack with its latest set-top box. On the 8th, KT released the ‘Giga Genie A’ set-top box for Olleh TV, which is the first set-top box in Korea equipped with the latest Android TV OS 11. The rental fee is 3,300 KRW per month based on a 3-year contract. A KT official said, “Recently, as OTTs have gained popularity, demand for open set-top boxes that can access various OTTs has increased, and this is a response to that. We plan to continue adopting set-top box strategies that flexibly respond to market conditions, consumer needs, and usage patterns.”
SK Broadband partnered with Apple to exclusively launch the ‘Apple TV 4K’ set-top box in Korea on the 4th. The Apple TV 4K, running on Apple tvOS, comes pre-installed with the ‘Apple TV application’, through which users can subscribe to and use Apple’s OTT Apple TV+, as well as Disney+, Wavve, Watcha, Btv, and other streaming services. SK Broadband offers the Apple TV 4K at 6,600 KRW per month on a 36-month installment plan (sale), and even if customers do not purchase the Apple TV 4K, the Apple TV app is supported on the existing ‘Smart3’ set-top box to provide the same service.
The introduction of open set-top boxes is not limited to IPTV. Cable TV operator D’Live launched the ‘OTT Box (OTTv)’ set-top box in July 2016. Currently, it comes pre-installed with Netflix, Wavve, Watcha, and others, and as of the end of last month, it has recorded cumulative sales of 560,000 units. D’Live stated, “With the emergence of various new platforms, subscriber decline could not be prevented by existing services alone. We view the recent expansion of open set-top boxes positively as it broadens the market pie.”
From defending existing subscribers to attracting new ones... also advantageous in terms of cost
The reason paid broadcasting operators are focusing on open set-top boxes is undoubtedly to ‘lock in’ existing subscribers and attract new ones. With paid broadcasting subscriptions reaching saturation, customers are turning their attention from traditional paid broadcasting to new services such as OTT.
Lee Sang-won, Dean of the Graduate School of Media Communication at Kyung Hee University, predicted, “As the number of multiple OTT users steadily increases, creating an environment where various OTTs can be viewed on paid broadcasting platforms will be an important competitive factor for the next few years.”
Open set-top boxes are also advantageous in terms of cost. Closed set-top boxes require operators to develop, maintain, and manage the OS themselves, which entails significant cost burdens. Kim Yong-hee, Open Route Specialist (Professor at Soongsil University), explained, “Android and Apple TV OS offer excellent performance and stable service at a low price. Additionally, their scalability allows for various experiments, which is why they are being adopted.”
However, the future of the set-top box market is not entirely bright. As smart TVs become more widespread, it is expected that smart TVs will incorporate most of the functions of set-top boxes. Professor Kim said, “Ultimately, the set-top box and TV markets are expected to merge, and TVs will function like large tablet PCs.”
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