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The IPTV Growth in South Korea

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Paul Budde

At the beginning of 2008, the South Korean government passed a law that allowed telecoms operators to broadcast programmes in real-time over their broadband networks. The KCC awarded IPTV licences to KT Corp, Hanaro Telecom and LG Dacom.

KT was banking on real-time Internet TV services because growth in the traditional broadband and telephone markets had slowed. The company planned to invest more than KRW1.7 trillion (US$1.5 billion) in IPTV services by 2012 as part of efforts to cultivate new sources of revenue.

Competing in what is already a saturated pay-TV market, with more than 15 million households signed up to cable television, proved to be a difficult challenge. Despite these initial problems, IPTV was starting to take off by mid 2010. By mid 2010 KT had a 54% market share, having overtaken SK Broadband’s previous market dominant position in early 2009. LG Telecom has experienced steady growth but has gained market share over SK Broadband as well.

Broadband penetration figures are high in South Korea and the operators are keen to find new revenue streams, in particular to offset losses from traditional PSTN lines. IPTV will help them develop bundled packages with mobile and broadband services and as such the number of subscribers is expected to reach 3.34 million by end 2010.

The increase in IPTV subscriptions is partially driven by the operators’ offsetting declining PSTN revenues, but also due to the government pushing for the services to become more popular. The government has urged the companies to market the IPTV services more. These services still account for less than 15% of the cable TV subscriber base.

New 3D technology is a big bet both for the television industry and the broadcasting segment looking for the next big thing, but the lack of content, high prices and the required use of glasses remain big hurdles. KT, LG Telecom and SK Broadband are however desperate to secure market share at expense of profitability in the short term. Already KT and SK Broadband plan to double their investments in IPTV services in 2010. These budgets would have to be further boosted for 3D deployments.

By Paul Budde, Managing Director of Paul Budde Communication. Paul is also a contributor of the Paul Budde Communication blog located here.

Related topics: Broadband, IPTV, Policy & Regulation, Telecom



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