Home-shopping channels struggle with falling profits

Hosts of Hyundai's home-shopping show Hmall present home appliances and sports apparel in this 2022 file photo. Yonhap

By Kim Jae-heun

Domestic home-shopping channels are grappling with a prolonged business slump as the number of people watching television decreases and middle-class consumers spend less due to soaring inflation and rising interest rates, industry officials said Thursday.

According to the Korea Communications Commission, Koreans' average TV usage time on a daily basis increased briefly to 3 hours and 9 minutes in 2020 during the pandemic. However, it decreased again to 3 hours and 3 minutes in 2022 after the pandemic was declared to be in an endemic phase here.

“In order for home-shopping firms to grow, it is very important that people keep watching television. However, over the past few years, the country has seen falling consumption of TV programming, not only for the home-shopping channels, but in general,” a local home-shopping company's official said.

Hmall, Hyundai's home-shopping platform's 2022 sales increased 0.3 percent to 2.1 trillion ($1.56 billion), from 2021, but its operating profit plunged 20.5 percent to record 111.4 billion won.

CJ OnStyle revenue and operating profit both decreased 1.7 percent and 39.7 percent to mark 1.3 trillion won and 72.4 billion won, respectively, over the same period.

Lotte Homeshopping's sales and operating profit in 2022 also declined 2.3 percent and 23.5 percent, respectively, to show 1.7 trillion won and 78 billion won, year-on-year.

CJ OnStyle show hosts introduce products on an online live-commerce platform, Sept. 22, 2022. Screencaptured from CJ OnStyle YouTube channel

The top-three TV home-shopping firms' business performance in the first quarter of this year have yet to be announced, but they're said to have shown losses due to increased interest rates and rising living costs.

“The outlook of the domestic TV home-shopping industry looks depressing this year too. Some companies are seeking a breakthrough with live-commerce service online, but that is not enough,” another TV home-shopping firm official said.

There are growing voices in the industry to cut the transmission fee paid to broadcast firms, which has been raised every year.

The proportion of transmission fees to sales of broadcasting businesses increased from 36.6 percent in 2016 to 58.9 percent in 2021. TV home-shopping firms argue that transmission fees should not be increased any further in the face of their worsening business conditions.

“As paid broadcasters are highly dependent on home-shopping companies in their business, they will have to deeply consider our situation and decrease transmission fees, which the two parties will meet to discuss in August, at the earliest,” the official added.