Can Online Movie Release Service Be Successful?
By Kim Yoo-chul
Staff Reporter
Cho Ah-ra, a 32-year-old office worker, plans to watch the latest movies on her Internet-enabled 47-inch LCD TV from September after Korea's biggest movie studio agreed to provide its movies exclusively to the nation's biggest Internet portal.
But the success of the new model depends on their ability to persuade users to drop their habit of illegal downloads.
Under the agreement, CJ Entertainment ― which has about a 25-percent share as a movie distributor ― will offer its movies to NHN, the operator of Naver. The company's market share in the local Internet portal market is about 70 percent.
That means general consumers who have Internet-enabled TVs such as Cho can watch the latest high-definition (HD) Hollywood or local movies for 3,500 won ($2.75) a pop ― less than half the price of a regular movie ticket.
"IPTVs are getting higher momentum and the prices for flat-screen TVs are falling. The alliance is a win-win strategy for portals and movie studios," said Cho.
Experts and industry watchers say the market for online movies is expected to get bigger as struggling studios discover the new source of income.
Daum Communications and SK Communications are also engaged in negotiations with several unnamed local movie studios to jump into the online movie market.
The new and ambitious business by CJ and NHN, however, faces hurdles because of illegal downloads. Nowadays, Internet users can easily download an illegal movie file from online storage houses for about 300 won.
"This puts the new service in direct competition with illegal downloads," said Park Jin, an analyst at Woori Investment & Securities.
The size of the underground online movie market reached 571 billion won in 2007, with unfulfilled income dramatically rising.
"I don't want to pay 3,500 won for CJ's movie. I would rather use web-hard for illegal files. Price is always the top concern," a 25-year-old undergraduate said on condition of anonymity.
In order to minimize the unfulfilled income, the Digital Content Network Association (DCNA) ― a group of 48 online storage operators ― plans to apply stricter monitoring systems.
The web companies will install filters based on the video fingerprinting tools of Enswers and Mureka, the two Web technology firms that were chosen by the Korea Film Producers Association (KFPA).
The online networks will jointly operate a 24-hour monitoring center to block illegal files that manage to escape the filtering programs.
"Peer-to-peer sites that continue to fail to prevent users from trading unauthorized copies will see swift legal action," according to an official from the KFPA.