South Korea’s media and entertainment are vibrant. Its K-pop, K-drama, and other initiatives (collectively known as Hallyu) are well known not just in the region but globally, resulting in exports of USD11B in 2020, and they are expected to continue to appeal to their fans.
However, little is known about the advanced infrastructure within South Korea that has supported the media and entertainment industry domestically.
What is that advanced infrastructure?
The advanced infrastructure that underpins South Korea’s media and entertainment industry covers PayTV, OTT, and telecoms.
In what way?
Firstly, PayTV is driven by IPTV.
Whilst Pay TV is in decline in many markets, the Korean Pay TV market has grown over the past five years, with the growth mostly driven by IPTV technology (see chart below). The market size of IPTV was USD3.4B in 2020 and it is expected to reach USD3.9B by 2024, according to GlobalData. The key reasons for this growth are:
1. World-leading broadband infrastructure in the country
2. Growing adoption of multi-play packages with integrated IPTV services
Source: 2021 Korea Media Industry Annual Report, MSIT + KCC
Secondly, the OTT sector growth results from the hyper-connected South Korean society, intense competition, and lenient content regulations (relative to PayTV).
Consumers in South Korea have a choice of leading global and local OTT services to choose from. And, as leading OTT players e.g. Netflix features award-winning Korean shows, local audiences have access to top-quality shows in their preferred language.
With increasing competition, telcos continue to introduce attractive packages with bundled IPTV services, partnering with OTT content players to enhance their differentiation. By adding OTT content to their bundles, telcos are seeking to boost customer engagement and induce higher data usage.
Additionally, due to the rapid growth and expansion of the influence of OTT services, the issue of disparity in regulation between OTT operators and conventional pay TV operators has risen in South Korea. This has resulted in Pay TV operators complaining that (stringent) broadcasting content and other regulations that apply to them do not apply to OTT operators.
Lastly, we now see telecom operators, which provide the IPTV and internet infrastructure, exploring the next innovation – the Metaverse.
Recently, all three telcos have also launched their metaverse offerings: Ifland for SK Telecom, Metalounge, Genieverse for KT and U+ Virtual Office, and U+ Kids Zoo for LG U+. Additionally, South Korea will spend at least USD187M to create its metaverse ecosystem (Source: South Korea’s Ministry of Science and Information and Communications Technology). These efforts will continue to drive the media entertainment industry as the metaverse takes media beyond its traditional TV and streaming services.
The South Korean government has actively supported the nation’s media and entertainment industry and will continue to do so. With the vision of becoming a “digital media powerhouse that drives innovative growth”, a reference made by the Ministry of Science and ICT (MSIT) on 22 June 2020, the government is encouraging domestic players to become globally recognized.