Will Tving-Wavve merger prompt local streaming services' recovery?

A poster for Tving and Wavve's integrated subscription plans / Courtesy of Tving

The upcoming merger of Korea's homegrown streaming services Tving and Wavve is drawing keen interest over whether they can survive the industry’s cutthroat competition and narrow the gap with dominant player Netflix.

The merger is expected to bring major changes to the landscape of Korea’s streaming service market. While the new platform is expected to stage a rivalry against Netflix, Watcha, one of the market’s first movers, has entered court receivership, raising concerns among its remaining users over a possible shutdown.

Wavve’s largest shareholder, SK Square, announced Thursday that it will purchase Wavve's convertible bonds worth 75 billion won ($53.9 million), while Tving’s majority owner, CJ ENM, will acquire 50 billion won worth of Wavve’s convertible bonds from SK Square.

Wavve also announced a leadership change, naming Seo Jang-ho, CJ ENM senior vice president of the content business division, as the new head of the company.

Seo, who has long headed CJ ENM’s global distribution strategy for K-content, has a deep understanding of both the structure of the K-content industry and the dynamics of key global content markets, Wavve said.

“We will accelerate efforts to diversify our content through efficient distribution strategies and targeted investments, and will spare no effort in building a K-content platform with global competitiveness by introducing innovative initiatives and differentiated services,” Seo said.

The recent moves are seen as a sign that the merger has gained momentum after receiving a green light from the antitrust regulator in June.

The merger is widely seen as a survival strategy amid Netflix’s growing dominance, which has increasingly squeezed domestic streaming competitors.

CJ ENM announced Thursday that Tving posted revenue of 99.5 billion won in the second quarter, with an operating loss of 24 billion won. Revenue declined 8.4 billion won year-on-year, while operating losses widened by 12.3 billion won, building on its yearslong streak of deficits.

Tving, which was spun off from CJ ENM in 2020, has seen deficits every year since its launch; it lost 6.1 billion won in 2020, 76.2 billion won in 2021, 119.1 billion won in 2022, 140.2 billion won in 2023 and 71 billion won in 2024.

Content Wavve, the operator of Wavve, is also reeling from continued losses. The company's operating revenue, which is similar to sales, declined to 331.3 billion won in 2024 from 333.9 billion won in 2023.

The situation is tougher for Watcha. On Aug. 4, a Seoul court approved a court receivership program for the streaming service, after one of its major creditors filed for one in fear of default. The decision comes as the platform, struggling with liquidity issues, failed to extend the maturity of 49 billion won in convertible bonds or secure additional funding.

Watcha’s revenue dropped to 33.8 billion won last year, down 22.83 percent from the previous year. It reported an operating loss of about 1.85 billion won and a net loss of 8.3 billion won, with current liabilities exceeding assets by 90.7 billion won.

A scene from Wavve's original series "ONE: High School Heroes" / Courtesy of Wavve

Industry officials note that the merger between Tving and Wavve will likely signal the two platforms' recovery.

Based on the current user base, the merged Tving-Wavve platform could command over 11 million monthly active users, potentially becoming the top local service. As of June, Netflix leads with 13.9 million active users, taking up around 40 percent of the market share, with Tving and Wavve taking up 17 percent and 7 percent, respectively. With the two services combined, the new entity would capture over 20 percent of the market.

Tving aims to boost its subscriber numbers, rolling out bundles, including through an SK Telecom partnership, and restricting account-sharing, while focusing on improving profitability with original content releases.

The platform noted that the integrated subscription plan with Wavve and joint membership with food delivery platform Baedal Minjok helped drive a rebound in new subscribers in June and July.

According to data analysis service Mobile Index, Tving’s monthly active users in July rose 2.9 percent from the previous month to around 7.5 million, placing it second among local streaming services, but still behind Netflix, which had 14.8 million.