Fair Trade Commission Grants Conditional Approval for Business Combination
Launch of 'Integrated Subscription Plans' Expected to Ease Consumer Burden
Government Support for Global Expansion Efforts
On June 10, the Fair Trade Commission conditionally approved the business combination of Tving and Wavve, signaling a major shift in the domestic online video service (OTT) market, which has been virtually monopolized by Netflix. It is expected that bundled products allowing users to access both platforms will be launched, and that domestic OTTs will attempt to expand into global markets. President Lee Jaemyung has also pledged to support domestic OTTs as part of his commitment to strengthening the competitiveness of the content industry.
Tving and Wavve Surpass Netflix in Viewing Time
According to the data analytics platform Mobile Index, Netflix led the OTT market last year in terms of user numbers, with a 33.9% share. Tving followed with 21.1%, Coupang Play with 20.1%, and Wavve with 12.4%. If the market shares of Tving and Wavve, which are in the process of merging, are combined, they reach 33.5%, just 0.4 percentage points behind Netflix. In terms of total viewing time during the same period, the combined share of Tving (26.8%) and Wavve (19.9%) easily surpasses Netflix’s 39%.
Although K-content is globally recognized, foreign platforms such as Netflix currently dominate distribution and revenue. As a result, domestic production companies have struggled to reinvest, which has been a significant issue. In this context, the merger of Tving and Wavve has been seen as a potential turning point that could break Netflix’s monopoly. In an official statement, the two companies said, "By combining management expertise and platform capabilities, we will provide users with a wider variety of content and an enhanced viewing experience," adding, "We will focus on strengthening the competitiveness of domestic OTTs and take the lead in creating a sustainable K-content ecosystem."
However, the Fair Trade Commission expressed concerns that the combination of the second-largest (Tving) and fourth-largest (Wavve) OTT providers in terms of domestic user numbers could lead to subscription fee increases and limit consumer choice. Therefore, both companies are required to maintain their current pricing until December 31 of next year and ensure that any bundled products do not result in effective price increases.
KT, Tving’s Second Largest Shareholder, Holds the Key to the Merger
The Commission’s approval of executive dual appointments between Tving and Wavve means that board members can now be dispatched between the two companies, marking a preliminary step toward integration. At the end of last year, CJ ENM (Tving’s largest shareholder and holder of Wavve convertible bonds) and Tving signed an agreement with Wavve to appoint five of Wavve’s eight directors, including the CEO, and one auditor from their own executives and staff, and reported this to the Fair Trade Commission.
With this decision, both companies can now align their business directions toward shared goals. Not only will the launch of various bundled products expand consumer options, but the companies will also be able to enhance their original content production and broaden the mobile streaming experience for professional baseball. A Wavve representative stated, "We expect to create synergies through increased content investment, platform operation efficiency, and strengthened global competitiveness." Last year, Tving and Wavve posted operating losses of 71 billion won and 18.9 billion won, respectively, raising the question of whether they can escape the red.
However, several hurdles remain before the merger can be completed. A Wavve representative commented on the final integration of the platforms, saying, "Procedures such as shareholder approval remain, so close cooperation among shareholders is necessary." Although Tving and Wavve signed a memorandum of understanding for the merger in December 2023, the process has been repeatedly delayed because unanimous shareholder consent is required for the merger to proceed.
Tving and Wavve signed a memorandum of understanding for the merger in December 2023. However, KT Studio Genie, Tving’s second-largest shareholder, has not clearly expressed support, causing the process to be delayed for a year and a half. Since KT derives a significant portion of its revenue from its IPTV business, the emergence of another major OTT player alongside Netflix could result in a loss of subscribers and other negative impacts.
KT remains negative about the merger. Recently, KT stated, "We are reviewing the merger by considering not only its impact on the entire domestic pay-TV industry, but also its effect on the strategic partnership between KT Group and Tving, and whether it will enhance shareholder value."
The New Administration Backs Domestic OTTs
However, some observers believe that if KT changes its stance in response to the new administration’s pledge to support domestic OTTs, the situation could enter a new phase. The Lee Jaemyung administration has announced support measures including tax incentives for OTT content investors, promotion of overseas expansion for K-OTT content and platforms, and support for securing intellectual property (IP) and preventing copyright infringement of K-OTT content. An industry insider predicted, "By reducing domestic production companies’ dependence on foreign platforms such as Netflix and establishing platform sovereignty, we could even achieve increased exports of K-content."
No Changhee, head of the Digital Policy Industry Research Institute, said, "This will lay the foundation for both companies to secure competitiveness and enter the global market," adding, "The key challenge will be how much synergy they can create in the content sector." He also noted, "Government support is needed in terms of innovative technology and services."
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