US company seeks partnership with mobile carriers, broadcasters



By Kim Yoo-chul



BERLIN, Germany — Netflix will make its debut in Korea in January 2016 in what officials say will influence significantly the Korean TV industry.



The U.S.-based content and media giant Netflix is seeking to form strategic partnerships with Korean mobile carriers and leading terrestrial broadcasters as Netflix prefers to pursue customized strategies according to markets, said two sources during this year's IFA fair last week in Germany.



"Netflix will make its debut in Korea in January 2016. The official announcement will be made sometime next week," one of the sources knowledgeable about the issue told The Korea Times, Sunday (KST).



The sources asked not to be identified as they were not authorized to officially talk with the media.



"Korean carriers and broadcasters are underway to discuss licensing their content to Netflix in Korea. For Netflix, the main issue is how to cut costs in content delivery and lower its spending for network usage," he said.



Netflix succeeded greatly in North America and Europe. And it recently started doing business in Japan.



Digital services, from Netflix to Amazon, have lured viewers from traditional broadcast and cable networks with affordable pricing and strong original content such as House of Cards, triggering fundamental changes in TV viewing habits.



According to Netflix, it operates in more than 50 countries with a subscriber base of 65 million, of which 23 million are outside of the United States.



"Conditions in Korea are as favorable or better than they are in Japan for acceptance of Netflix's on-demand services because the infrastructure in networks in Korea is already in place with households having easy access to broadband lines and mobile services," said the other source.



Representatives at SK Telecom, KT and LG Uplus, Korea's three telecom carriers, declined to comment about Netflix's updated business plans.



"When you see more data traffic, then Netflix will pay more for the delivery of content. However, charges of its main services were low, and that's why Netflix needs substantial help from Korean carriers which operate networks," he said on the sidelines of the trade fair. "Netflix is on track to narrow differences over content licensing," he added.



But it remains to be seen how many Korean customers are ready to pay more for online video content as awareness of paying for content in Korea isn't that high.



For instance, another leading VOD provider in the United States, Hulu, entered the Japanese market before Netflix did. However, Hulu's Japanese service was sold because it struggled to gain customers.



Also, the percentage of VOD purchases are accounted for by foreign dramas, but conceded the number is low.



Therein lies another challenge for Netflix despite its promises of local content, the unique tastes of Korean consumers mean demand for Netflix' signature programs will likely be less than in other international markets, said a media expert based in Germany.



"Netflix's advance in Korea will be helpful to local carriers to help them set up strategies in content business and also allow Korea's media content to reach a global audience," they said.



"One final thing is that Netflix will compete strongly with broadcasters in the digital environment. If broadcasters fail to catch up with such changes, their existence will be challenged in the coming years."



