KCC Proposes to New Government
Transition Team Holds Industry Meeting
Companies Plan Overseas Expansion
"Respect Autonomous Decisions"
[Asia Economy Reporter Cha Min-young] The Korea Communications Commission (KCC) is reported to have submitted a plan to integrate domestic online video services (OTT) as one of the national tasks to the Presidential Transition Committee in order to compete against Netflix. Not only is it notable that a previously failed policy was proposed to the new government, but there are also reports that the transition committee is positively reviewing the plan, raising concerns within the related industry.
KCC: "Integrate OTTs to Expand Overseas"
According to industry sources on the 4th, the KCC submitted a plan for overseas expansion of K-content through a 'public-led OTT integration platform (tentative name)' as one of the re-reported items to the transition committee on the 30th of last month. In response to the transition committee's request during the initial briefing to supplement regulation-centered policies such as the 'Audiovisual Media Service Act,' the KCC proposed a private OTT integration plan. The transition committee is also reportedly reviewing it positively. On the 1st, the transition committee held a meeting with five companies including Wavve, TVING, Watcha, Kakao Entertainment, and Coupang Play. Although it was a session to listen to grievances, there is speculation that it might be a move considering OTT integration.
Since his inauguration, KCC Chairman Han Sang-hyuk has advocated the logic of creating a Netflix rival by achieving 'economies of scale' through corporate mergers. At the National Assembly confirmation hearing, Chairman Han stated, "If the three domestic OTTs collaborate and fund content production without merging companies, domestic OTTs will gain competitiveness," emphasizing this argument. The claim is that if the three domestic OTTs (Wavve, TVING, Watcha) jointly invest in content, which requires enormous funds, they could compete with Netflix.
"Why Revive a Failed Policy?"
In response to KCC policies, Wavve, a joint venture of SK Telecom and the three terrestrial broadcasters, engaged in cooperation talks with CJ ENM and JTBC in 2020, but CJ ENM launched TVING and took an independent path. At an OTT meeting led by Chairman Han at the time, Kim Hoon-bae, Head of KT Customer Business Division (Executive Director), and Yang Ji-eul, CEO of TVING, expressed reluctance toward corporate mergers and requested focus on legal and institutional support and ecosystem development.
The three OTT companies have already set this year as the inaugural year for global expansion and have completed their blueprints. Wavve has entered the Southeast Asian and U.S. markets, and Watcha is providing services in Japan. CJ ENM conducted a paid-in capital increase targeting TVING, formed a partnership with U.S. ViacomCBS, and acquired Endeavor Content, the producer of the film 'La La Land,' for 920 billion KRW. An industry insider commented, "It seems they believe OTT can enhance competitiveness through integration just as the broadcasting industry, a regulated market, succeeded in improving competitiveness through consolidation," adding, "Just as increasing production costs does not guarantee content success, it is necessary to respect companies' autonomous decisions."
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