Overall Broadcasting Business Revenue Down 4.7%... OTT Performs Well
Increased OTT Usage Raises Competitive Pressure on Pay TV
While total broadcasting business revenue is declining, revenue from online video services (OTT) increased by 6.4% compared to the previous year. The proportion of paid OTT users is also continuously rising.
On the 13th, the Korea Communications Commission and the Korea Information Society Development Institute announced that last year’s broadcasting business revenue decreased by 4.7% compared to the previous year, whereas revenue from OTT services such as Netflix, Wavve, TVING, and Watcha increased by 6.4%. The Commission and the Institute analyzed the key status of OTT and its impact on the broadcasting market and made this announcement.
The usage rate of OTT services has steadily increased from 69.5% in 2021 to 77.0% in 2023.
The proportion of paid OTT users also rose from 50.1% in 2021 to 55.9% in 2022, and 57.0% in 2023. These users subscribed to an average of 2.8 services, and most respondents reported that their payment amounts either increased (40%) or remained similar (52.5%) compared to the previous year.
Among devices used, smartphones had the highest share, but TV usage also increased.
The monthly active users (MAU) of paid OTT services surged until 2021 but have shown moderate growth with fluctuations since 2022. The MAU and usage time of free ad-supported services like YouTube have continuously increased.
The Commission and the Institute analyzed that the increase in OTT usage exerts significant competitive pressure on the paid broadcasting market. Individual paid broadcasting subscribers have been declining since 2021, and video-on-demand (VOD) sales dropped from 815.1 billion KRW in 2018 to 484.5 billion KRW in 2023.
According to this year’s survey, 40.5% of respondents reported a decrease in real-time broadcast viewing time via paid broadcasting after using OTT services. Additionally, 33.9% reported a decrease in the number of viewing channels.
With OTT services differentiating content, exclusive sports broadcasting, and expanding real-time broadcasts, the substitution effect of OTT services for paid broadcasting is expected to increase.
Platforms that could replace paid OTT services showed a higher selection rate for free ad-supported OTT services like YouTube (24.4?46.8%) than for paid broadcasting (0?5.9%, depending on the service).
The emergence of OTT original content has intensified competition with broadcasting operators. However, as content sharing between the two industries has increased, content similarity has also risen.
Among 34 production companies dealing with OTT operators, 38.2% also transact with broadcasting operators. Producers responded that when terrestrial content supply is not possible, they prefer OTT operators over broadcasting channel usage operators (PP).
Korean content accounts for the second-largest share (11.4%) of total Netflix viewing time after the United States (54.5%), indicating that demand for Korean content on Netflix is expected to remain high for the time being. Domestic producers’ demand is decreasing, which suggests that Netflix’s influence in the video content market will strengthen.
The share of online advertising in the domestic advertising market increased from 51.6% in 2021 to 57.1% in 2024, while the share of broadcasting advertising decreased from 26.1% to 19.8% during the same period.
As more advertisers perceive OTT advertising to be more effective than broadcasting, the proportion choosing OTT advertising over broadcasting is expected to rise. The introduction of advertising rate plans is likely to accelerate competitive pressure on broadcasting advertising.
The influence of free ad-supported streaming TV (FAST) services domestically was found to be low. FAST channels were used by 34.5% of paid broadcasting users, and among these users, 47.7% used the service 1?2 times per month. Regarding service quality, content quality, variety, and video resolution were perceived to be lower compared to other services.
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