Netflix faces tough road ahead here
The photo shows the user interface for Netflix, which debuted in Korea last week. Its failure to find local partners causes the video streaming service operator to offer only a limited amount of content here. / Courtesy of Netflix
By Lee Min-hyung
Netflix is facing a tough road ahead in Korea due to a lack of content because of its failure to partner with local providers and mobile carriers, sources say.
The world’s largest video-streaming service provider debuted here last week, but market insiders say the company needs to be more aggressive in increasing its range of programs available to Korean customers.
The service here is limited to some 600 programs compared with more than 14,000 for the U.S. market.
“It is urgent for Netflix to partner with local content business operators, as its content lineup here is less than one tenth of that in the U.S. market,” said an SK Telecom official. “The service is short of not just U.S. content but Korean content. The company will have to partner with local content business operators as soon as possible.”
Unresolved licensing issues also add to concerns for the service. Popular programs such as “House of Cards” and “Walking Dead” are unavailable to Korean customers.
Kim Joon-seop, an analyst at Eugene Investment & Securities, said in a report: “Local content producers have failed to reach agreement with Netflix over revenue-sharing issues and its demand to use the local Internet Data Center (IDC) for free.” He also said Netflix will not be a game changer in the local content market because it cannot take advantage of price competitiveness here.
“The local Internet protocol TV (IPTV) service costs around 15,000 won ($12.30) per month, with cable TV priced at some 10,000 won each month,” he said. Netflix’s monthly charge ranges from $7.99 to $11.99, depending on picture quality. “This means Netflix does not have price competitiveness in the Korean market,” he said.
An official from KT, the nation’s dominant fixed-line operator, said: “Most of Netflix’s contents are the U.S. dramas. But IPTV users here can also enjoy U.S. dramas. The local IPTV service is cheap enough to compete with Netflix, so we do not think of Netflix as a serious threat for our service.”
On Thursday, Netflix said it would toughen measures to block proxy users from accessing content unavailable in their country.
“Some members use proxies or ‘unblockers’ to access titles available outside their territory,” said David Fullagar, vice president at Netflix’s content delivery division. “To address this, we employ the same or similar measures other firms do. In coming weeks, those using proxies and unblockers will only be able to access the service in the country where they currently are.”
The company executive admitted it will take time for Netflix to offer other countries a similar level of service to that in the U.S. “As of last week, we are offering the Netflix service in 190 countries, but we have a way to go before we can offer people the same films and TV series everywhere.”