[Exclusive] Korea's 3 OTT Companies Take Legal Action Against Daily Pass Providers

OTT 3 Companies to Send Certified Letter to Paysense for Selling Single-Day Passes Split

Screenshot of the 'Paysense' service screen. Paysense is a web-based service that sells daily OTT passes.

[Asia Economy Reporter Minyoung Cha] Three online video service (OTT) providers?Wavve, TVING, and Watcha?are cracking down on the OTT version of the ‘Bong-i Kim Seondal’ scam, where content they do not own is sold without authorization. The issue is considered serious because it involves a business entity, not individual customers, subscribing to multiple OTT accounts and reselling them in parts.

According to industry sources on the 10th, the three OTT companies plan to send a certified letter requesting service suspension to Paysense Co., Ltd., which operates a business model focused on selling ‘OTT daily passes,’ within this month. An industry official stated, "We are considering whether each company should send the official letter individually or jointly," adding, "Since this is a legitimate business entity promoting such a business model as its main operation, the matter is regarded as serious."

‘Paysense,’ operated by Paysense Co., Ltd., sells daily passes for six OTT services including Netflix, TVING, Wavve, and Watcha at 400 to 600 KRW per person. Unlike existing sites that only support account sharing, this company directly owns the IDs and shares them with its members. Since a premium pass allows use by up to four people, the company can generate monthly revenue of 48,000 to 72,000 KRW per account. The monthly subscription fee for OTT services is about 17,000 KRW for Netflix, the most expensive, meaning the company earns a minimum middle profit margin of over 40,000 KRW.

Paysense claims that their service is legal, stating, "We have not violated any laws," but this directly contradicts the terms of use of OTT companies. The OTT industry clearly states in their terms that "members may not engage in any commercial activities using paid services without explicit approval from the company." Netflix, in particular, prohibits sharing accounts with third parties outside the family. A Netflix representative said, "We clearly inform users through our terms that sharing with individuals who are not family members is prohibited."

Unauthorized resale of OTT content is also pointed out as an act that could damage the industry ecosystem in the long term. An industry insider explained, "Companies offer movies and dramas at much cheaper rates under a subscription model than through individual sales," adding, "This structure allows stable recovery of content investment costs through long-term secured customers." Most of the revenue generated is reinvested in content. Last year, the combined revenue of Wavve, TVING, and Watcha reached about 430 billion KRW, but operating losses exceeded 150 billion KRW due to increased costs. This is because content licensing fees are soaring amid competition with global OTT platforms.

Attorney Min Lee from Yulchon LLC stated, "It clearly appears to be a violation of the terms of use," adding, "Subscription rights can be seen as a type of bond, and the creditor (Paysense) cannot transfer it without the consent of the debtor (OTT companies). Since OTT companies specify this in their terms of use, such services are likely impossible."