Battle of OTT: Strategies of Domestic OTT Platforms for Success

Over-the-top (OTT) services are media platforms that offer streaming television or film content that suit the interests and requests of individual consumers. OTT is a significant industry in Korea, with over 66% of Koreans using OTT services or video streaming platforms in 2020, according to the Korea Communications Commission. Netflix is currently the predominant player in Korea's OTT market, with 8.31 million users recorded in June 2021. However, there is an increasing number of new players in the competition, including domestic and global OTT platforms. Domestic OTT platforms such as Watcha, Wavve, Tving, Seezn, and Coupang Play are rapidly growing, though relatively late to enter the OTT market compared to its global competitors. Global OTT platforms, such as Amazon Prime and Disney+ are preparing to officially launch in Korea. Compared to domestic platforms, global OTT platforms have the advantage of a more stable fanbase and higher investments. With the increasing entrance of foreign OTT services, Korean OTT platforms must differentiate themselves from competitors to survive.

Low subscription prices and discounts no longer stand as a competitive edge in the OTT market, as shown by Netflix, which has the highest starting price yet the highest number of viewers in the Korean market. To counter this problem, domestic OTT companies are making clever strategies to secure their position in the competition against global OTT giants.

The first strategy is monopolizing content distribution and screening rights. One OTT platform, Watcha, has gained popularity with a vast collection of exclusive foreign films and series called 'Watcha exclusive' and 'Watcha Premiere.' Watcha grew its fanbase with exclusive content, and the company revealed they had reached 10 million downloads of the app in February 2021. Watcha goes further to explicitly promote its content using a category called ‘net-ops-wat-is,' which means ‘what Netflix doesn’t have and Watcha has.' Other platforms are increasing their exclusive content as well, such as Coupang Play’s exclusive streaming rights of the National Football League (NFL) as the only licensed distributor in Korea and Wavve’s exclusive contract with HBO.

The second strategy is creating original content. With the success of series including Transferring Love (Tving), You Raise Me Up (Wavve), and SNL Korea 2021 (Coupang Play), domestic OTT platforms are realizing that original content is what attracts new consumers. In fact, Tving, which has reached 3.87 million users through its original series, has set its goal to produce more than 100 new original content by 2023. For the same reason, Wavve announced that they would invest 100 billion KRW by 2022 for its original content, and Seezn also declared its participation in the original content war starting from the second half of 2021.

Another strategy for OTT platforms is cooperating with network providers and other internet media. From relatively simple cooperation like that of Tving and Naver Plus Membership, which discounts subscription fees for a higher level of cooperation, such as Wavve being included in mobile carrier SKT’s subscription service ‘T-universe,' OTT platforms can also use partnerships to attract new consumers. OTT services can also draw in consumers by improving technical features on their platforms. OTT users are often unable to locate the content they want to see because of its vast amount. Because of the content recommendation system, the benefit of using AI history tracking technology is limited. If platforms could improve their user interface and recommendation system, this would be a motive for viewers to continue using their services. Furthermore, unique features such as Watcha Party (Watcha), which allows viewers to communicate with others in real-time while streaming, can also attract users. Watcha Party was a success, with 3870 parties created on a daily average during its beta service.

Despite their efforts and growth, there are still challenges domestic OTT platforms must overcome. The biggest challenge is insufficient investment compared to global enterprises. Netflix stated they plan to invest 550 billion KRW in original content this year alone, unmatched by any other OTT platform. As a result, despite the global success of Korean movies and series, all that success is attributed to foreign OTT platforms and threatening domestic services. To counter this issue, companies should better understand the interest of Korean viewers and make use of an existing intellectual property (IP) so that they can effectively invest in productions that would attract the most users. Furthermore, experts suggest creating a K-OTT alliance to counter problems with the industry and advocate for policies to benefit domestic OTT platforms. Though such an alliance would be helpful, the media industry sees this creation unlikely due to the non-negotiable interests of different companies and a lack of policy and relevant government authorities to support the alliance. With the growing interest in personalized media services, the future for the OTT market is bright. If domestic companies can better allocate limited resources and effectively cooperate amongst themselves and with policymakers, they will see themselves thriving in the competitive OTT market.