Domestic OTT Players Record Deficits as Netflix Continues to Invest in Korean Content Production

Tving, Wavve's logo photo

South Korean domestic online video service (OTT) companies are struggling to compete with the massive investment by Netflix in Korean content production. Despite recording a deficit of 100 billion won ($84 million) last year, the streaming giant announced a 3.3 trillion won investment in Korean content over four years. This has left domestic OTT players, including TVing, with no chance of winning in the competition for investment amount and expected to take measures for investment efficiency.

TVing, the largest OTT in Korea, reported an operating loss of 119.1 billion won last year, a 56% increase from the previous year, while Wave doubled its loss to 121.7 billion won. However, industry insiders argue that the planned deficit was to secure competitiveness, as domestic OTT invested heavily in original content production. 

▲ Tving, Wavve's logo photo

The increased amortization of intangible assets for investment content and reduced OTT viewers due to the pandemic contributed to the industry's losses. Meanwhile, Netflix continues to invest in Korean content production, with the economic profit of "Squid Game" estimated at $900 million (approximately 1.2 trillion won).

An official from the domestic OTT industry predicted that broadcasters and production industries would become increasingly dependent on Netflix due to rising production costs. Domestic OTT companies are expected to improve performance by increasing the efficiency of content investment, expanding affiliate channels, developing advertisement-combined products, and expanding business in the global market.

Lee Tae-hyun, CEO of Wavve, acknowledged that the market environment is not easy and that he plans to change his strategy with selection and concentration. While the domestic OTT industry faces tough competition from global giants like Netflix, experts suggest that improving profitability through investment efficiency is the way forward. There is also speculation that Watcha may be up for sale due to continuous losses.

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