Netflix may pay for KT's network
Ellen DeGeneres attends the premiere of Netflix's “Green Eggs and Ham,” on Nov. 3, 2019, in Los Angeles. / AP-Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
Global content giant Netflix may pay for KT's network in return for providing customized content to KT users, although KT says it has no official comment for the time being.
On Friday, KT confirmed it struck a content partnership deal with Netflix recently. The partnership means KT's internet protocol TV (IPTV) subscribers will have wider access to Netflix content on the Olleh TV platform starting Aug. 3.
The key point is whether or not Netflix agreed with KT to pay for using KT's network. Regarding the specifics of the agreement, KT officials declined to comment because of a non-disclosure agreement (NDA). The KT-Netflix partnership came after LG Uplus ended its two-year exclusive contract with Netflix recently.
Critics argued that Netflix and other foreign internet platform operators should be subject to the same network usage fees as local content providers.
But KT said the two companies agreed to make joint concerted efforts to improve network stability and to abide by “related law.” Current telecom laws require global content providers to be responsible for network stability and to set up servers in Korea.
“Installation of cache servers doesn't mean the two parties will work together to improve network quality, as KT is looking to discuss possible network payments with Netflix after reviewing related laws thoroughly,” KT said.
KT is also discussing new content partnerships with HBO and Disney Plus. Given the amount of content and proven quality that Netflix owns, the alliance is expected to help KT boost its share in the local pay-TV market. KT is the country's dominant fixed-line operator and its Olleh TV platform services 210,000 video-on-demand and 250 real-time channels.
Olleh TV subscribers have three options if they want to access Netflix content ― 9,500 won, 12,000 won or 14,500 won monthly.
Netflix has had substantial growth in Korea, surpassing 2.8 million subscribers in March this year compared to 400,000 in 2018. In the case of the previous LG-Netflix partnership, LG had significant revenue growth last year, adding about 450,000 subscribers last year alone for a total of 4.45 million.
The country's top three mobile carriers, including market leader SK Telecom, have been competing fiercely for a larger share in IPTV and over-the-top (OTT) platforms in recent years, but are under pressure to differentiate their products to increase their appeal to prospective customer bases.
Netflix's success in Korea is attributed to the scores of original Korean productions.
KT leads the IPTV market by a small margin and it is in its best interest to widen the gap through partnerships with global content providers.
In June, KT led the IPTV market with 31.52 percent followed by LG with 24.91 percent and SK Broadband with 24.17 percent. KT's affiliate KT Skylife was recently named preferred negotiator for a controlling stake in Hyundai HCN.