TVING-Season Merger Creates Largest Domestic OTT... Taking on Netflix

[Asia Economy Reporter Lim Hye-seon] The largest domestic online video service (OTT) in South Korea, set to rival Netflix, is about to be born.

According to the telecommunications industry on the 13th, CJ ENM's TVING and KT Studio Genie will each hold board meetings on the 14th to approve the merger of the TVING and Season services. If the merger is successful, the combined user base will reach 5.6 million, surpassing Wavve to become the number one OTT operator in South Korea. As of last month, the leading domestic OTT operator was Wavve, with approximately 4.23 million active users. Wavve is an OTT established through a partnership between SK Telecom and the three major terrestrial broadcasters. Overall, Netflix leads with 11.17 million users. TVING was spun off from CJ ENM in 2020, while KT Studio Genie, which oversees Season, was launched by KT in March last year to actively pursue content business.

The merger is likely to take the form of Season being absorbed into the TVING platform, with the TVING app pre-installed on smartphones of KT telecom service users.

Since early this year, the two companies have formed a business cooperation committee attended by key executives to discuss ways to strengthen collaboration in media and content sectors. In March, CJ ENM announced a 100 billion KRW equity investment in KT Studio Genie and agreed to cooperate in various areas including drama production, music, and immersive media. CJ ENM and KT appear to view OTT integration as one of the strategies for mutual 'win-win' benefits.

TVING can realize economies of scale by absorbing Season’s demand and KT users, thereby enhancing competitiveness. With the recent intensification of competition in the content market, it is difficult to surpass overseas OTTs through individual company investments alone. From KT’s perspective, the increased capacity for content investment is a positive factor. This year, KT has been focusing on expanding its media content business. The original drama produced by KT Studio Genie, "Extraordinary Attorney Woo," has gained high popularity. "Woo Young-woo" ranked first among the most-watched non-English TV series in about 190 countries from April 4 to 10, according to Netflix’s announcement on the 13th. This achievement came just two weeks after its release on KT’s ENA channel, Season, and Netflix. If KT’s content is also released on TVING, it will be more advantageous in attracting viewers.

Earlier, TVING received external investments worth 250 billion KRW in February, valuing the company at about 2 trillion KRW. KT estimated Season’s value at around 1 trillion KRW.