Tving Chasing Netflix... Killer Content is 'Pro Baseball' [Win-Win Game①]

TVING's 3-Year Exclusive KBO Online Broadcast Rights
Abandoning Original Content Focus for Cost-Effectiveness
The Only Domestic OTT with 7 Consecutive Months of Growth
The Origin of the Contrarian Approach is Coupang Play... K League Popularity Rising

Editor's NoteMoney is pouring into popular domestic sports associations. The net profit of the Golf Association, which used to be around 2 to 4 billion KRW, surged to 24.1 billion KRW last year, ten times higher than before. The Korea Baseball Organization (KBO) secured about 100 billion KRW in broadcasting rights fees this year. In 2015, when the KBO League was established with the current 10-team structure, the broadcasting rights fees were 44.3 billion KRW. The era when professional baseball teams operated at a loss and were sustained by their corporate owners ends this year. It is highly likely that all teams will turn a profit this year. The entities pouring in the money are domestic OTT (Over The Top) companies. The choice to compete with global giants like Netflix is popular sports.

The OTT competition landscape is shaking up professional sports broadcasting. It is enough to shake the dominance of the absolute leader, Netflix.

[Image source=Yonhap News]

The eye of the storm is Tving and Coupang Play. The former has exclusive online broadcasting rights for Korean professional baseball (KBO) for three years until 2026. The investment scale is 135 billion KRW, averaging 45 billion KRW per year. This exceeds twice the previous contract (5 years, 110 billion KRW, averaging 22 billion KRW per year) jointly signed by a consortium including Naver. The latter secured the K League wired and wireless broadcasting rights until next year. Although the contract amount is undisclosed, it is known to be around 11 billion KRW annually.

OTT platforms have grown by leveraging original content. For example, Netflix attracted subscribers with killer content like 'Squid Game,' and Disney+ with 'Moving.' As these strategies collide, the competition in quality has intensified. Production costs have skyrocketed to the point of shrinking the entire industry.

The average production cost per episode of dramas, which was about 100 million KRW in 2011, approached 1 billion KRW last year. Hundreds of billions of KRW were invested in blockbuster productions focusing their capabilities. Representative examples include Disney+’s 'Samsik Uncle' (about 40 billion KRW) and Netflix’s 'The Eight Show' (about 24 billion KRW) and 'Parasyte: The Grey' (about 20 billion KRW).

For OTTs, which are increasingly required to improve profitability, this is a huge burden. As a desperate measure, they enforced account sharing restrictions and subscription price increases, but only saw subscriber churn increase. They reached a situation where they had to cut costs and consequently reduced original content production.

Professional sports are attractive content to fill this gap. Above all, they offer high cost-effectiveness. Although the investment scale seems substantial, it is equivalent to producing just one or two original content pieces. Except for the broadcasting staff and commentators, labor costs are almost negligible.

In dramas or variety shows, even spending the same amount does not guarantee success. Cases like 'Samsik Uncle,' which was ignored, are common. On the other hand, professional sports have a fixed viewer base, so the risk is not high. The duration of sustained interest is also relatively long. Dramas or variety shows may attract attention, but the effect lasts at most two to three months. Professional sports maintain interest for at least twice as long. Especially, professional baseball runs for about eight months from spring to early winter, creating an excellent 'lock-in effect.' Portal sites like Naver have risen to prominence by offering free news alongside it.

Tving is also poised to achieve comparable results. According to the data analysis platform Mobile Index, the average DAU (daily active users) last month was 1.97 million. It is the only domestic OTT to show growth for seven consecutive months. This is a 50.9% increase from December last year (1.3 million).

The most notable growth period was from the first week of April to the fourth week of May, about two months. The weekday DAU gap with the undisputed leader Netflix decreased from 720,000 (1,706,266 / 2,423,537) to 240,000 (2,046,407 / 2,289,954). The gap in total usage time narrowed even more. In December last year, it was 70 million hours (44,321,094 / 115,000,000), but in June it was one-tenth of that, 7 million hours (65,267,166 / 73,216,062).

This is the result of combined interest in dramas like 'Queen of Tears' and 'Running with Seonjae' and professional baseball broadcasts with up to five games per day. According to Tving, a significant portion of viewers drawn by professional baseball also watched original content such as 'Running with Seonjae' and 'Pyramid Game.' Many also enjoyed baseball variety shows like 'Strongest Baseball.' The subscriber base is expanding beyond the core target of women in their 20s and 30s to include sports fandom.

Tving also pays attention to being a catalyst that attracts women in their 20s and 30s to professional baseball. A representative example is 'Jjin Fan Zone,' where celebrities appear and compete in cheering battles. It enhances accessibility by adding an entertainment aspect. At the same time, it allows the production and distribution of short-form videos (under 40 seconds), contributing to the formation of a digital baseball culture. It increases exposure frequency of game highlights and crowd sketches on social media, YouTube, etc., to generate buzz. In fact, the number of YouTube subscribers for the ten teams, KBO, and Tving Sports surged by 610,000 from 1.73 million on March 23 to 2.34 million on the 14th. A significant portion of these are women in their 20s and 30s.

Fueled by increased interest, professional baseball set a new record for the highest attendance in a single season this year. According to the KBO, it attracted 9,671,340 spectators as of the 9th. The average attendance this season is 14,879. If there are no variables such as rain cancellations, surpassing 10 million spectators is highly likely.

This is an achievement that was not expected earlier this year. When Tving won the broadcasting rights, many pointed to reduced accessibility due to paid conversion as a concern. Even the teams worried about the environment where universal viewing rights were not guaranteed and the broadcasting system. Tving erased these risks by activating short-form content and improving the broadcasting system. They enhanced broadcast quality by integrating various statistics and technologies such as pitching tracking data (pitch speed, spin direction, etc.) and ABS zone pass analysis. Features like 'Multi-view' (watching multiple games simultaneously on one screen) and 'Tving Talk' (group chat) were introduced to increase viewing enjoyment.

[Image source=Yonhap News]

The origin of this counterintuitive approach is Coupang Play. Since joining as a latecomer in 2020, it has put sports broadcasting front and center. The strategy was to secure a fixed fandom and maintain a certain scale of viewers. The content they focused on most was the K League, whose status was declining. Coupang Play broke the existing broadcasting mold and boldly transformed it. They highlighted players’ performances from multiple angles using seventeen cameras and racing drones, added entertainment elements with preview shows, and conducted various marketing activities such as merchandise production and sales.

Thanks to this, the paid attendance for K League 1 and 2, which was only 563,448 in 2021, more than doubled to 1,402,08 in the first year of the contract the following year. Last year, it exceeded 3 million. This year is no different. In the first division, attendance surpassed 1 million after just 91 games, the fastest record since the introduction of promotion and relegation in 2013. An OTT industry insider said, "Without Coupang Play’s efforts, the K League’s success would have been impossible," and added, "It is no exaggeration to say that it opened a new era of coexistence between OTTs and professional sports associations." They also predicted, "Professional sports will establish themselves as killer content for OTTs."