Largely a non-starter in the United States, premium VOD has gained traction in South Korea with consumers renting new-release movies in the home four weeks after their theatrical debut.
New data from Futuresource Consulting finds that eight years of Premium VOD distribution has propelled South Korea (an early hotspot for the coronavirus) to become one of the top transactional VOD markets in the world.
With the majority of cinemas around the world closed in response to the COVID-19 outbreak, studios (including in the U.S.) are now testing the opportunities in straight-to-home early digital video delivery. The Korean market remains a relevant global case study for countries now looking to adopt similar learnings within the home entertainment space, according to Futuresource.
“Super Premium VOD in South Korea has allowed for early monetization by capitalizing on existing hype and marketing spend around each film,” market analyst Tristan Veale said in a statement. “However, throughout 2019 we saw some studios pulling out of these early windows altogether, with others reducing the number of titles offered. In light of the current global situation, this practice will see renewed interest.”
Despite transactional VOD strength in South Korea, the SVOD market is also set to soar, with consumer spend increasing 61% since 2019, almost equal to transactional home video. Veale said that’s because South Koreans are comfortable with subscribing to access premium content, paired with the well-supported infrastructure that already exists.
“When it comes to the key players, Netflix accounts for nearly half of SVOD consumer spend and service subscriptions in the country,” Veale said. “Its focus on acquiring local-language content to develop a strong library of Korean content to build and retain a local audience, has led to this success, providing a near-continuous release of new series, movies and additional seasons, with Korean content also appealing to international territories.”
To combat Netflix’s rapid growth, major IPTV players such as Korea Telecom, SK Broadband and LG U+ are taking a variety of strategic stepsto improve their SVOD offerings, either through partnerships with Netflix or local SVOD players and broadcasters.
“SK Telecom has combined its video streaming service Oksusu with mobile on-demand service Pooq, owned by three local broadcasters, to create Wavve,” Veale said. “Wavve has a significantly advanced SVOD offering as a result of the backing of four major players.”
The high demand for exclusive content means that the outlook for SVOD in South Korea remains promising, according to Veale. South Korea’s pay-TV operator-dominated market will continue to forge local partnerships in a bid to generate the best home-grown video service possible.
“In this current climate, where people are forced to spend more time indoors, we expect to see a further rise in Premium VOD, buoyed by international support, along with rapid uptake of the new and existing SVOD services,” Veale said.