LG U+ isolated from broadcasters after Netflix cooperation
To be victorious in the Internet Protocol Television (IPTV) market, LG U+ teamed up with the media company from Scotts Valley, California. SK Telecom countered by joining with the big three domestic broadcasters.
Now, the lines of attack are firming. An LG U+source on Monday said that SBS and KBS, two of the big three, stopped providing services to LG U+ on March 7 and 11 respectively. MBC, the other big three broadcaster, is also ending its provision of services.
LG U+ customers will be cut off from regular programming.
It is being portrayed as a battle between Netflix and anti-Netflix forces.
“The three main television companies are discontinuing services,” said a source from the industry.
The consolidation of the big three in the SK camp is just the beginning though, and domestic interests are rallying to fight foreign encroachment.
SK Telecom is forming a company to combine its over-the-top (OTT) Oksusu service and Pooq, which delivers programming from the three main TV companies. OTT refers to content that is delivered directly to users over the internet without going through intermediaries.
SK Telecom is aiming to strengthen its domestic offerings with original entertainment and Hallyu (Korean wave) programming.
In January, the company announced its plan to invite 200 billion won ($176.5 million) of domestic and international investment in order to reinforce the competitiveness of the new entity. It is also cooperating with Singtel. The Singaporean company will invest in SK’s new Oksusu-Pooq entity, and SK will invest in Singtel’s Hooq, its venture between Sony Pictures and Warner Bros.
Some industry analysts believe that the reason the big three stopped providing content to LG U+ was to support SK’s new venture.
Despite the circling of the wagons and huge sums of investment, views are mixed as to whether the home-grown programming will be able to meet the Netflix challenge.
“Oksusu has produced around 120 original programs, like drama and comedy shows. Pooq, from main TV companies, has kept the balance in the black,” said Kim Hyun-yong, an eBest Securities analyst.
“After integration, and when SK Telecom’s marketing is added in, there is a high possibility that Oksusu can fight against Netflix.”
However, due to Netflix’s success, the market has changed. Where new production ability is needed, the integration between existing TV companies and mobile carriers could face some limitations, some analysts said.
BY KIM GYEONG-JIN [email@example.com]