SK Telecom and the three major broadcasters here have received the green light to start a new online video service called Wavve, which is expected to be the strongest home-grown contender to challenge Netflix's fast growth in the country, industry officials said Tuesday.
The Fair Trade Commission (FTC) said it had approved SK Telecom's acquisition of a 30 percent stake in CAP, which runs the POOQ online video service. CAP is a joint venture of the three broadcasters ― MBC, KBS and SBS ― and POOQ streams content created by them.
CAP will absorb SK Broadband's video service Oksusu, and merge it with POOQ to create Wavve, an "over-the-top" service platform. Wavve is expected to be the largest home grown online video service provider, given Oksusu has approximately 9.5 million subscribers and POOQ has 3 million. Their combined market share reached 44.7 percent last year.
Following the transaction, SK Telecom becomes the largest stakeholder of CAP, and CAP will run the Wavve service by transiting Oksusu subscribers to Wavve. Wavve is expected to begin its service on Sept. 18.
Officials said the two platform's merger will create a massive online video service provider which can check the fast growth of Netflix in Korea.
Though Netflix's share in the domestic online video service market remained at 4.7 percent last year, but it is showing a rapid growth as the U.S. company makes heavy investments in creating its own shows and streaming Korean TV shows.
According to market tracker Wise App, the number of Netflix's paid subscribers in Korea is estimated at 1.84 million as of June. This is a threefold growth compared to 630,000 a year earlier.
"We will do our best for the new service to play the role of protecting the domestic media and contents industries," an SK Telecom official said.
Industry officials said, however, a number of conditions which FTC placed on the Wavve may hamper the new service's competitiveness.
While approving of the merger, the FTC prohibited the three broadcasters from ending or changing content providing contracts without a "proper reason," and obliged Wavve to negotiate with its rivals "in a diligent manner" when requesting the broadcasters' content.
"Let's say Netflix wants to stream content created by SBS and Wavve wants a Netflix show," an industry official said. "Netflix can dismiss the request, but Wavve has to negotiate the request. This means the advantage of having exclusive content will not be applicable for Wavve."
The SK Telecom official said it could have been better if the FTC approved Wavve unconditionally, but it respects the antitrust agency's decision.
Source: http://www.koreatimes.co.kr/www/tech/2019/08/133_274257.html
