Global streaming newcomers to Korea struggle to win over local consumers

Apple TV+ fails to make it into top seven list here

By Lee Gyu-lee

The streaming platform industry has experienced a significant boom in recent years, further fueled by the pandemic that has pushed people to go digital and increasingly seek online consumption.

The global over-the-top (OTT) market is expected to double in size this year to $141 billion, compared to $76 billion in 2018, according to a report by the Boston Consulting Group. In Korea alone, the Export-Import Bank of Korea reported that the OTT market saw an average of 28 percent annual growth since 2012, surpassing 780 billion won ($654 million) in 2020.

With the growing number of digital consumers in the country, three global streaming giants ― Disney+, Apple TV+ and music streaming service Spotify ― entered the emerging market last year, joining the heated competition among existing global and homegrown platforms.

Despite their hopes of bolstering their presence in the new market, the newcomers have been struggling to secure their stakes so far.

According to mobile data analysis platform Mobile Index this month, Netflix scored the highest monthly users by far in December with 12.48 million. Wavve, a local service run by broadcasters KBS, SBS, MBC and SK Telecom, came in second with about 4.74 million, followed by CJ ENM and JTBC Studios' platform, Tving, with 4.17 million, retail giant Coupang's OTT service, Coupang Play, with 3.59 million, and Disney+ with 2.02 million.

Apple TV+ failed to make it into the top seven list, pushed out by the two local services, Seezn and Watcha.

Mobile Index's market share report on Korea's music streaming industry in December showed that Spotify, the world's largest music streaming service, took the smallest slice of the cake: 1.46 percent. The number is surprisingly low compared to the top four platforms ― Melon, Genie Music, YouTube Music, and FLO ― which took 37.28 percent, 19.24 percent, 19.22 percent and 13.31 percent, respectively.

Experts say the reason behind the disappointing performances is a lack of localization or competitive advantage to draw the interest of local consumers.

Kim Yong-hee, a researcher at Openroute and a business professor at Soongsil University, pointed out that the new OTT platforms need to stream a larger number of locally produced content to make themselves more appealing.

"The demand (for an OTT platform) increases if it includes popular local content like reality shows or dramas," Kim told The Korea Times. "For about the same price, people will be more likely to choose other platforms that stream a variety of local content, like Netflix, Tving and Wavve. This also means that [Disney+ and Apple TV+] would need to provide local content along with their originals to increase accessibility and create buzz to appeal to local consumers."

A scene from the Disney+ Korean original series, "Rookie Cops," starring Kang Daniel / Courtesy of Disney+

Entertainment conglomerate Disney's streaming service landed in Korea on Nov. 12 with high expectations to become a major competitor to Netflix, the dominant player in Korea's streaming war.

The service, which hit over 10 million first-day sign-ups on its U.S. launch in 2019, was expected to be a huge success here as well, especially due to its strong fan base for its studios, Marvel, Pixar, and Star Wars.

On its launch day, Disney+ garnered about 593,000 users. However, it did not take long for the service to fall significantly short of expectations, even garnering negative sentiments from its users for the poor quality of its subtitles, customer service communication and user-unfriendly interface. The daily user number slipped to about half in the 20 days since its launch.

For Apple TV+, the biggest issue is accessibility for Android users and a lack of promotional activities, such as ad campaigns, Kim noted.

The service that houses Emmy-winning shows like "Ted Lasso" and "The Morning Show" kicked off in Korea on Nov. 4 with its first Korean-language original, "Dr. Brain." However, neither the series nor the launch made much of an impression on local consumers.

Music critic Jung Min-jae pointed out that one of Spotify's issues is the fact that it is subscribed to as a separate service, which gives it little to no competitive advantage over other existing audio streaming platforms here.

"Top music platforms like Melon and FLO rapidly expanded their share of the market by offering promotional subscription plans through mobile carriers. But that hasn't been the case for Spotify," he said.

"Of course, Spotify has a much more extensive list of foreign songs, but most of the Korean public wants only a small part of that, which is already available on other local streaming platforms … Spotify tends to be more expensive (as it is subscribed to separately) compared to other audio streaming platforms (which may come in bundled packages offered by mobile carriers), so it's harder for it to expand (in Korea)."

In Korea, Spotify, which landed on Feb. 2 of last year, offers only single or duo account subscription plans for either 10,900 won or about 18,000 won per month. In the U.S. however, there is a free service, along with premium single, duo, student and family subscription plans. The latter is available for up to six accounts for $15.99 a month.

Spotify accounts for the biggest share of the global music streaming market. Korea Times file.

Kim and Jung both also emphasized the need for killer content to stand out from the competition.

"Consumers are willing to switch platforms but only if they have a reason. It needs to have killer content, which not only requires financing, but also an understanding of the local market, strategic planning and an appropriate production studio," Kim said.

Jung added that Spotify would benefit from rolling out its key service ― podcasts ― in Korea.

"If Spotify launches the podcast service here and brings out original content that appeals to consumers' interests, it might have a chance to distinguish itself," he said.

Disney+ plans to release five Korean-language original series in the coming months, including K-pop star Kang Daniel's acting debut, "Rookie Cops."

Apple TV+ is also expected to release its major project, "Pachinko," the adaptation of Min Jin Lee's best-selling novel, starring Oscar-winning actress Youn Yuh-jung and actor Lee Min-ho.

Adding these new original releases might give a boost to the platforms, but Kim stressed that there's still a need for partnerships with local businesses to gain a further foothold.

"If the platforms are attempting to create content in-house or outsource the original series productions on their own, they probably might not have the comprehensive analysis of the local market," the researcher said.

"Similar to how Netflix joined hands with Studio Dragon and JTBC Studios for production and distribution (in 2019), Disney+ and Apple TV+ also need to find a partner that has a deep understanding of the local content industry. Otherwise, there's a high chance they will continue to muddle on," Kim said.