Video Services of Korean Portals — Content Securing War
Most Korean broadcasting companies stopped providing their video clips on YouTube on December 1, 2014. While the official domestic broadcasting content has been suspended through the YouTube channel in Korea, it is still available in foreign countries.
Starting with the 2 percent market share in 2008, YouTube reached an 80 percent share in the video streaming service market by October 2014, thanks to the explosive growth of the Korean Wave and video content with proliferation of mobile devices.
What brought about that contract suspension between content providers and the big power of the domestic market was the issue of advertising revenue sharing. Smart advertising — the bi-directional and multi-customized service provided by digital, interactive devices such as smartphones, smart TV, Internet, IPTV and digital signage — is showing rapid growth in Korea’s communications advertising market.
Two Korean terrestrial broadcasting companies, MBC and SBS, have established a digital advertising agency called “Smart Media Rep” to cope with the changes in the advertising market. They have engaged in a content supply contract with Naver, the largest portal site in Korea, and now broadcast video clips on “Naver TV cast.”
Compared to the former terms and conditions of advertising fees between broadcasters and YouTube (the profit ratio of 55 to 45), Naver offered an exceptional distributing condition to SMR: business rights on program scheduling and advertising sales, as well as guarantying 90 percent of the advertising revenue. The agreement allows broadcasters to get enough compensation for content delivery costs and Naver to be able to secure quality video content.
Effect gets visible.
Since 2013, the number of Naver TV cast users has increased more than 52 percent (by December 2014 PC-based, Koreanclick). While the PC-based retention time of Naver TV cast is fast-growing, that of YouTube has dropped by 7 percent. However, YouTube is still ahead in the total retention time of the mobile users.
Naver has reinforced its video services since content has become more mobile movie-centered, and movies are an effective method to attract users.
Other domestic and international online/mobile platforms such as Facebook and DaumKakao are also putting forth all their strength to ensure that the video content attracts users. Any company that wants to raise brand awareness in Korea should focus on the production of striking video contents and platform strategy.