'OTT 1-day Pass' Paysense Sales Halted... Will OTT 'Splitting Sales' Controversy Continue?

OTT 1-Day Pass Sales... Usable for About 400 to 600 Won
Profit from Splitting Sales Reaches 55,000 Won
Domestic OTT Industry: "Sales Violating Terms of Service"
Foreign OTTs like Netflix Still Selling 1-Day Passes

Paysense has suspended the sale of 1-day passes for OTT services. Currently, Paysense has removed the 1-day pass usage information for the three major domestic OTT platforms from its website. Photo by Paysense website capture

[Asia Economy Intern Reporter Kim Gun-chan] Paysense, which provides a 1-day pass service for OTT (Over The Top ? services that offer various videos such as movies and dramas over the internet), has stopped selling 1-day passes for the three major domestic OTT platforms. This comes two months after the OTT industry raised concerns over Paysense's so-called "splitting sales" practice and launched a joint response. However, 1-day passes for foreign OTT platforms like Netflix are still being sold, so related controversies are expected to continue.

According to industry sources on the 5th, Paysense recently sent official letters to the three domestic OTT companies (Wavve, TVING, Watcha) stating that it would cease selling OTT subscriptions, which are monthly passes, as 1-day passes. Currently, Paysense has removed the 1-day pass usage information for the three domestic OTT platforms from its website.

Launched in June, Paysense has been offering a service that sells monthly OTT subscriptions as 1-day passes. Users can access their chosen OTT platform for a day by paying approximately 400 to 600 won.

OTT users responded positively to Paysense's emergence. There has been a consistent demand among users for 1-day passes. A university student, Mr. A, who frequently uses OTT services, said, "I became interested in Paysense after hearing that they sell OTT 1-day passes for about 500 won," adding, "I'm considering canceling my existing OTT subscriptions."

The reason OTT users favor Paysense is that they often need to subscribe to multiple OTT platforms simultaneously to watch the content they want. Except for some overlaps, each OTT platform has different content. For example, a TVING subscriber must subscribe to Netflix to watch "Squid Game," and a Netflix subscriber must purchase a TVING pass to watch the tvN drama "Yumi's Cells." According to the Korea Creative Content Agency's "2021 Content Usage Trends in the Digital Transformation Era" study, the average number of paid online video platforms, including OTTs, used by consumers is 2.69.

At Paysense, you could use the selected OTT for one day by paying about 400 to 600 won./Photo by Paysense website capture

Subscribing to multiple OTT platforms simultaneously means that users face a significant monthly subscription fee burden. According to a report by the Korea Creative Content Agency, the number one inconvenience felt by OTT users is "economic burden," accounting for 42.6%. The average cost of using the top three most popular OTT platforms simultaneously was found to be about 30,000 won.

OTT users often complain about the burden of subscribing to various OTT platforms every month. University student Kim said, "I recently wanted to watch a drama that wasn't available on the OTT I subscribe to, so I had no choice but to subscribe to another OTT," adding, "The fixed monthly cost increased, so it was inevitably burdensome." Currently, Netflix's monthly subscription fee ranges from 9,500 won to 17,000 won depending on the plan. TVING's fees range from 7,900 won to 13,900 won depending on the plan.

However, Paysense's sale of OTT 1-day passes has sparked controversy over so-called "splitting sales." This is because the service shares OTT IDs directly owned by Paysense with members. For example, a Netflix Premium subscription, which allows four simultaneous users, costs 17,000 won per month. Paysense can split this into 600 won per day for four users over 30 days. Through this, Paysense earns 72,000 won, making a profit margin of 55,000 won. This has led to criticism that Paysense is making more profit than the OTT platforms that produce original content and manage the platforms themselves.

Paysense gains a profit of 72,000 won through the split-selling method, resulting in a margin of 55,000 won.
Photo by Paysense website capture

In this regard, the domestic OTT industry views Paysense's sales practices as violating the terms of service specified by the OTT platforms. According to the terms of service of Netflix and domestic OTT platforms, "commercial activities without approval" are prohibited. In fact, the three domestic OTT companies jointly filed for an injunction to halt Paysense's service at the Seoul Central District Court on the 1st of last month. A hearing on the injunction request against Paysense is scheduled to begin on the 10th.

In response, Paysense stated in an interview with a media outlet in June, "This is a unilateral and arbitrary interpretation," and added, "Paysense, as one of the users who legitimately pay subscription fees and use the service, has no reason to prove otherwise." The exact reason behind Paysense's sudden suspension of 1-day pass sales has not been clearly disclosed.

Paysense continues to sell 1-day passes for foreign OTT platforms such as Netflix and Disney+, excluding the three domestic OTT platforms, so related controversies are expected to persist. Netflix and Disney+ are aware of Paysense's sales activities and are reportedly reviewing the matter internally.