TV home shopping channels unlikely to rebound amid declining viewership

TV home shopping channels are unlikely to recover from the continuing drop in their sales as more people are spending time with mobile devices instead of television, according to industry watchers, Monday.

The companies had drawn increasing attention at the onset of the COVID-19 pandemic in 2020 when people were discouraged from going outside and spent more time at home. But as the pandemic subsided and social distancing regulations were lifted, demand for home shopping ceased to grow.

With more people now relying on smartphones for virtually all everyday activities and less people watching television, the structural shift is unlikely to change course, according to experts. This means the dropping sales for TV home shopping channels will likely continue indefinitely.

The prediction comes as the country's major TV home shopping channels last year saw their annual sales drop. CJ Onstyle registered sales of 1.34 trillion won ($1 billion) last year, a 1.3 percent year-on-year drop, and a net profit of 69.3 billion, a 4.1 percent fall from the previous year. Both figures have been in continuous decline since 2020, with last year's net profit even less than half that of 2020 when the figure set a record of 176 billion won.

GS Shop under GS Home Shopping last year notched 1.13 trillion won in sales and a net profit of 118 billion won, down by 8.7 percent and 17.3 percent, respectively, from 2022. Hyundai Home Shopping also saw its sale decline last year by 2.5 percent to 1.74 trillion won and net profit fall by 60.2 percent to 44.9 billion won. The company had kept its net profit over 100 billion won for the previous 10 years.

The worst performance of last year was demonstrated by Lotte Home Shopping. It totaled sales worth 942 billion won and a net profit of 8.3 billion won, year-on-year plummets of 12.6 percent and 89.4 percent, respectively.

In addition to declining viewerships, the companies are suffering rising airwave streaming fees from cable TV channel providers. Having risen by more than 8 percent each year on average, the fees the companies paid altogether in 2022 were more than 65 percent of their overall sales, according to Korea TV Homeshopping Association.

"TV home shopping companies are scrambling to transition their businesses to mobile platforms but at the same time they seem reluctant to give up their traditional platform," an industry analyst said. "Negotiations between the companies and TV channel providers began last month for this year's airwave streaming fees. But with the dropping performances and prospects not looking good, it's apparent the negotiations won't reach an agreement any time soon."