KT Lee Sang-mo, established’Korean version of Netflix’ to fight Naver and Kakao

Input 2021.01.28 16:34

KT launches’Studio Genie’… full-fledged content business
President Yong-pil Yoon was appointed as the first representative director
Competitors Naver and Kakao are leading K-contents
“Transfusion of external funds to create masterpiece contents”

The business boundaries between telecommunications and portal companies broke down as KT Jae-in Moho (formerly) began a journey to create a Korean version of Netflix. Based on the competitiveness of a media platform based on 12 million subscribers, it will set up a content specialized company that covers from securing intellectual property rights (IP) to production and distribution, and will fight against Naver and Kakao. As Naver and Kakao, who have grown content services based on 4G mobile communication (4G, LTE) infrastructure in the past 10 years, gave market leadership, they are determined not to repeat this in the 5G mobile communication (5G) era.

◇ Full-fledged content business based on paid broadcasting capabilities… Promotion of recruitment of external talent

KT(030200)Announced on the 28th that it will establish’KT Studio Genie’ that combines media content capabilities within the group. KT explains that Studio Genie promotes synergy between KT Group’s media platform and content capabilities, and takes on the role of leading the group content business.

An official from KT explained, “With Studio Genie, content-related subsidiaries will not be merged right away, but (for the time being) these companies will take on the role of control towers.” KT’s main content services include Genie Music (music), StoryWiz (web novel, webtoon), and season (online video service, OTT).

As the first CEO, Yong-pil Yoon, a content expert within the KT Group, has been appointed, and plans to recruit content experts from outside and appoint them as joint representatives.

Until now, KT has stayed in the role of simply delivering content through a pay-TV platform. As of November of last year, KT pay TV platform subscribers reached 8.73 million Internet TV (IPTV), 2.57 million satellite broadcasting, and 1.29 million cable TV, reaching 12.59 million. However, with the recent diversification of platforms, IP competitiveness is directly linked to media competitiveness, giving up market leadership.

KT unveiled its plan to build an independent ecosystem from securing IP → production → broadcasting by gathering long-term scattered content businesses in one place and putting the No. 1 position in paid broadcasting ahead. From the stage of linking KT media subscribers and content usage data, scenario development, and content production/investment, a big data-based AI box office prediction model is applied. The goal is to secure influence in the OTT market through this.

KT’s new business direction is similar to the global OTT Netflix and Disney Plus models. The two companies have built a virtuous cycle system by investing and producing enormous original (own) content to increase subscribers and reinvest the profits back into creation.

Currently, KT has partnered with Netflix and is negotiating a service alliance with Disney Plus, which is scheduled for domestic service in the second half of this year. In the future, it is expected that 5G core services such as virtual reality (VR) and streaming game contents will be linked in the future for service differentiation.

◇ Will I be able to follow Naver and Kakao overseas?

Already, domestic rivals Naver and Kakao have emerged as content powerhouses in both domestic and overseas markets. You can tell just by looking at the performance. Naver recorded 138.9 billion won in content sales in the fourth quarter of last year, up 20.9% from the previous quarter. The content division’s annual sales were 4602 billion won, up 48.8% from the previous year. Kakao also recorded 54 billion won in content division sales in the third quarter, up 19% from the previous quarter and 26% from the same period last year.

It is not Naver and Kakao to be satisfied here. First, Naver is focusing on producing movie and drama contents using the IP of Naver Webtoon, the representative service. Representatively,’Sweet Home’, which was sold to Netflix, took first place in 13 countries within 4 days of its release. Recently, it even acquired’Whatpad’, the world’s largest web novel distributor.

Naver has decided to cooperate with BTS’ agency, Big Hit Entertainment, to enhance not only content but also its own platform competitiveness. It will launch a new global live community platform by integrating Naver’s V Live and Big Hit’s Weverse. The goal is to gather users, contents, and services of each platform on a new platform to establish a position as a global service.

Kakao also has over 8500 IPs, including webtoons and web novels through Kakao Page, and is called the largest IP company in Korea. Recently, Kakao Page’s IPs such as’Itaewon Class’ and’Wonderful Rumors’ have been successfully produced as dramas and movies. Since the end of last year, it has been showing customized original series through its own content platform, Kakao TV.
In addition, Kakao decided to merge Kakao Page and Kakao M, which has dozens of entertainment companies, music labels, and movie performance production companies, to expand and diversify the content business.

◇ Every year, 10 to 20 large-sized contents are produced…

In response, Studio Genie visualizes the source IP through StoryWiz and performs IPTV’s original content production in parallel. KT said, “Since it has a strong distribution platform such as IPTV, it is possible to secure stable profits when distributing contents produced and secured by KT Studio Genie.” “Storywiz has original IPs such as web novels and webtoons. There is a great possibility of continuous connection to the content.”

KT decided to create content through fund creation and external investment. The production will be expanded to the level of 10-20 series, which will open large-scale own content by 2023.

However, some in the industry point out that it will not be easy to have original (exclusive) content competitiveness like Naver or Kakao right away. An industry insider said, “It is that we will produce content with external resources, not our own, but from the perspective of external investors, there are many competitive content producers to invest in,” he said. .

It is expected that KT will continue to sell its subsidiaries to raise additional financial resources. On the 22nd, a board meeting was held and a decision was made to sell KT Powertel, an affiliate of the radio business, to IDIS, a security company, for 40.6 billion won.

A KT official said, “Based on the strong media platform KT Group has, we will strengthen collaboration with leading domestic production companies to grow Studio Genie into the best content provider in Korea.” We will lead content development and ecosystem expansion, and use content as a new growth engine.”