OTT is struggling... Still, the main government ministries are fighting

Ongoing Conflict Among Ministry of Science and ICT, KCC, and Ministry of Culture, Sports and Tourism
Attention on Minister Lee Jong-ho's Success in Traffic Coordination

[Asia Economy Reporter Cha Min-young] ‘Hundreds of billions of won in deficits again this year.’

Amid the sighs of the domestic online video service (OTT) industry, disputes over the policy-related ministries continue to repeat even under the new government. As conflicts persist among the Ministry of Science and ICT, the Korea Communications Commission, and the Ministry of Culture, Sports and Tourism over the control tower, attention is focused on whether Minister Lee Jong-ho, the new head of the Ministry of Science and ICT, will succeed in organizing governance.

On the 25th, Minister Lee said at the 3rd Digital Media Content Promotion Forum held under the theme of ‘Seeking OTT Policy and Implementation Plans of the New Government,’ "It is meaningful to review the OTT promotion policy, a core task of the Yoon Seok-yeol administration, and discuss global expansion at today’s forum," adding, "We will support the overseas expansion of domestic OTTs." He also mentioned, "The three ministries will meet soon to discuss this." The Korea Communications Commission is also unlikely to easily step back from the competition over the lead ministry. Ahn Hyung-hwan, Vice Chairman of the Korea Communications Commission, emphasized, "We plan to establish integrated media legislation including OTT, not fragmented bills," and added, "We will introduce a horizontal classification system and boldly improve outdated regulations to resolve regulatory uncertainties."

The Ministry of Science and ICT and the Korea Communications Commission clashed head-on earlier this year, creating discord. Following the Ministry of Science and ICT’s paid broadcasting system and regulatory improvement forum held on February 16, the Korea Communications Commission held a policy forum on February 17 on reforming the audiovisual media regulatory system with similar content. The Ministry of Culture, Sports and Tourism has also claimed its legitimacy as the lead ministry by viewing OTT as a ‘bridgehead for the export of Korean Wave content.’ Although the three ministries formed a consultative body last year, the absence of a control tower continues.

The OTT industry sharply criticized, saying, "There is a 99% chance that disputes among ministries will repeat." As the COVID-19 endemic (periodic epidemic) situation begins, the domestic OTT industry is under urgent pressure. The combined deficit of the three OTT companies?Wavve, TVING, and Watcha?reached 150 billion won last year, with concerns over a decline in fixed subscribers. All three companies have set global expansion as their goal, but timely responses are difficult in the rapidly changing media environment. Professor Kang Jae-won of Dongguk University pointed out, "The government and the National Assembly must acknowledge that they cannot go against market demand and technological changes and boldly implement a policy paradigm shift," adding, "The adjustment and integration of government organizational governance (government reorganization) must be promptly executed."

The OTT industry also appealed for the necessity of similar levels of regulation and promotion policies to compete well in the domestic market, which has become a stronghold for global OTT companies such as Netflix and Disney Plus. Seo Jang-won, Vice President of CJ ENM, said, "Overseas OTT companies overcame early business difficulties with substantial support such as 25-40% tax credits, but globally recognized K-content receives only about one-tenth of that support," urging, "Seed funding such as tax incentives is needed." Lee Tae-hyun, CEO of Content Wave, also stated, "The OTT industry is still at a complementary level rather than a substitute," and added, "Promotion policies are necessary in a situation where success is impossible without distributing content globally."