“Not illegal,” they said... OTT day pass sales finally surrender

Domestic OTT 3 Companies and Netflix Followed by Disney Plus Service Termination

Paysense Notice Capture

[Asia Economy Reporter Oh Su-yeon] "Netflix 600 KRW per day, Wavve and TVING 500 KRW per day"

'Paysense,' which was illegally selling 1-day passes for major subscription-based online video services (OTT), has finally backed down. After insisting that it had "never broken the law" regarding its business model, Paysense ceased its services when Wavve, TVING, Netflix, and others took legal action, and ultimately stopped selling 1-day passes for Disney Plus, the last remaining service it offered.

According to industry sources on the 27th, Paysense announced the previous afternoon that it will suspend the Disney Plus 1-day pass service starting at 10 a.m. on the 29th. Disney Plus had previously sent a certified letter on the 16th requesting Paysense to stop selling 1-day passes. Paysense yielded within ten days. Following the domestic OTT trio?Wavve, TVING, and Watcha?and Netflix, Disney Plus is also ceasing service, leaving only Bflix available through Paysense. However, with all the top domestic OTTs withdrawing, this is a critical blow to customer acquisition.

Paysense began selling 1-day passes for major OTT services at prices ranging from 400 to 600 KRW in May. However, except for Bflix, it sold passes without any revenue-sharing agreements with OTT providers, prompting domestic and international OTT companies to strongly oppose and take firm countermeasures.

The three domestic OTT companies sent certified letters in June requesting Paysense to stop selling 1-day passes. After receiving no response, they filed injunctions to suspend the service and pursued legal action. Subsequently, Paysense halted sales of 1-day passes for these three companies last month. As the three companies took a tough stance, Paysense retreated, prompting Netflix and Disney Plus, which had been cautious, to act. Netflix service ended on the 21st after receiving a certified letter requesting suspension, and now Disney Plus is also ceasing service.

It is reported that Paysense submitted a pledge to prevent recurrence after the three OTT companies withdrew their injunctions. Therefore, it seems unlikely that similar services will reappear in the future. This is the result of OTT companies' swift response to concerns that Paysense's business model could fundamentally disrupt their revenue streams.

Major OTT providers have expanded their user base by allowing up to seven profiles per account. However, as market growth has recently slowed, there is a growing trend of no longer tacitly permitting account sharing as before. Netflix has tested charging an additional fee of $1.70 to $2.99 per month (approximately 2,560 to 4,276 KRW) in some Latin American countries if an account is used outside the registered residence for more than two weeks.

The Korea Creative Content Agency reported in its 'Analysis of OTT Service Changes and Usage Prospects' that 52% of OTT users share their accounts with others. According to the 'Consumer Insight 2022 First Half Mobile Communication Survey Report,' 40% of OTT users either have others pay their fees or share the payment with others.

Previously, it was common for friends to split monthly subscription fees or recruit account sharers through sharing platforms. Although sharing accounts with people outside the family is a violation of most OTT terms of service, enforcement is difficult, and there has been a tacit acceptance to facilitate initial service expansion. However, Paysense, which sold 1-day passes as a business model, is widely regarded in the industry as close to freeloading.

An OTT industry insider said, "There have been services where four people share an account, but they still recruit users on a monthly basis and do not significantly violate the terms of service. In contrast, Paysense's sale of 1-day passes involved reselling OTT services by splitting accounts into daily units and leasing (transferring) them to unspecified many, which is a business model with serious legal issues."