Netflix's role in the South Korean over-the-top-video market

The distribution of Korean media content in a global context

Term Paper, 2019

16 Pages, Grade: 1,0


Table of contents

1 Introduction
1.1 Literature Review
1.2 Rationale, Thesis and Approach
1.3 Theoretical Framework

2 The Korean OTT Market
2.1 Netflix in Korea

3 Korean Media Content in a Global Context

4 Conclusion


1 Introduction

This final paper discusses, on the hand, the South Korean (hereafter Korea) OTT (over-the-top) video market and the struggles of foreign SVOD (subscription-video-on-demand) services in Korea. On the other hand, it looks at the distribution of Korean media content in a global context through digital platforms. The primary example chosen is Netflix. First, I will briefly review the selected literature, then list the rationale and thesis before explaining why a political economy approach is used, and what theoretical framework is applied in the analysis. In the main section, the objects of analysis are the highly competitive Korean OTT market, and the role of Netflix in the distribution of Korean content outside of Korea. Finally, in the conclusion, I will reiterate the rationale, and state how I have argued the thesis statement. Additionally, the main findings will be summarized, and the usefulness of the selected theoretical framework evaluated.

1.1 Literature Review

Hallyu (translated as “Korean Wave”) is currently in its second stage. According to scholars such as Jin (2016), Kim (2013) and Lee (2017), the rapid spread of Korean cultural products outside of Korea is attributed to new digital technology and social media. While all authors discuss cultural flows from Korea to other countries, Jin also acknowledges that Korean cultural products are influenced by the West. Berg (2018) argues that global pipeline channels led to the diversification of knowledge flows.

Park (2018) analyzes the highly competitive Korean online video market. She finds that established media companies changed their business models and thereby controlled the emergence of OTT services in Korea, which further strengthened their market positions. According to Park, terrestrial broadcasting and pay TV are still widely popular due to low cable prices, and OTT video services are only used as a complement, often provided for free as part of a product bundle. Therefore, the author doubts that independent OTT providers such as Netflix can succeed. Similar to Park, Dwyer, Shim, Lee, and Hutchinson (2018) found that although Netflix has started to challenge the television industry in South Korea, it is not yet established. Reasons are supposedly industrial features, e.g. the competition between traditional pay TV and OTT video services, and with this Netflix's non-competitive subscription fees. Kim, Kim, Hwang, Kim and Kim (2017) also analyzed that while the Asian OTT markets have a significant growth potential, it is necessary for OTT companies to adjust their pricing strategies.

Web dramas are a recent development in digital content in Korea. Oh and Nishime (2018) examined the web drama Dramaworld, a transnational co-production, which they consider a result of successful Korean contraflow .

1.2 Rationale, Thesis and Approach

This paper's rationale is that the US-American company Netflix is a mainstream media service provider in the West, but is struggling to succeed on the Korean OTT video market. Nonetheless, by mainly offering American content, it is increasing the influence of Western culture in Korea. At the same time, Netflix is adding to the popularity of Korean media content on a global level and, thereby, possibly challenging the hegemony of the US. How does this fit together?

The thesis of this paper claims that media convergence enables Western OTT video service providers, such as Netflix, the simultaneous distribution of Western dominant flow and Korean contraflow of media content.

A political economy approach is used in this paper. This is suitable as the aim is to analyze the Korean OTT market, and Netflix's role in the global distribution of Korean contraflow, rather than the representation of Korean popular culture.

1.3 Theoretical Framework

The main theories applied in this analysis are media flows, namely dominant flow and contraflow. Most media products that are consumed globally are created in the West, especially the US, which means that these few countries have a significant cultural influence on the rest of the world. This is what Thussu (2019) calls dominant flows of information. However, Thussu also stresses that there is not just a one-way flow of information. Instead, there is a noticeable reverse flow of media products from non-Western countries to other parts of the world, which is called contraflow ( Audenhove, Iordache, & Loisen, 2018, p.4; Thussu, 2019, p.191).

Another aspect considered is media convergence. Many definitions of convergence are available, but in this paper it describes the merging of new and old technologies as well as media content. Therefore, convergence can either enable the usage of several services on one digital platform or device, or it can make services available on different platforms or devices.

This technological occurrence entails continuous social, cultural, and economic shifts (Dwyer, 2010, pp.2-3, 8). For example, the convergence of traditional television and the Internet resulted in online video streaming. On the one hand, new digital innovations continue to reinforce US dominance. On the other hand, they also enable contraflows and help to challenge the traditional hegemony of Western media. Consequently, media convergence and contraflow can possibly change the power structures in the global media economy (Thussu, 2019, p.191).

2 The Korean OTT Market

The objects of analysis are the Korean OTT (over-the-top) market and the role of Netflix, as an exemplary Western OTT video service, in the distribution of Korean content in a global context. These are chosen to show that Netflix is distributing dominant flow of information in Korea, and Korean contraflow to other parts of the world.

The Korean OTT market emerged in 2004 with the introduction of online video services (Dwyer, Shim, Lee, & Hutchinson, 2018, p.4555). These Internet-based OTT video services distribute television shows and movies on demand from any location by using the already existing network infrastructure (Dwyer et al., 2018, p.4554; Park, 2018, p.4649). 99.7% of the Korean population use mobile phones and 82% use the Internet (Park, 2018, p.4652), which led to an increased consumption of digital content and pressured established media and telecommunication companies to offer their content on mobile platforms (Jin, 2016, p.162; Park, 2018, p.4660). By changing their business models they could control the emergence of OTT video services and further strengthened their market position (Park, 2018, p.4662).

Evidently, the development of OTT video services would not have been possible without the convergence of traditional television and the Internet. Moreover, the established value chain has been altered due to the emergence of OTT services. Although content producers, distributors, and hardware producers originated in individual sectors, all of them have converged in regards to content, platform, network, as well as device (Park, 2018, p.4650).

Pay TV providers are worried about losing customers due to OTT video services, which led them to providing OTT services themselves. Different service providers, such as traditional access and content providers, IT companies, and device manufacturers have done the same. (Park, 2018, p.4647). These providers usually offer OTT services as part of bundled subscription packages, which could include video, Internet, telephone and mobile services (Park, 2018, p.4654). Although almost half of the Korean population was subscribed to a streaming service in 2013, not even 5% of all subscribers paid a monthly fee (Dwyer et al., 2018, p.4561; Park, 2018, p.4653). This implicates that OTT video services work as a bait to attract new and retain existing customers, and are not an actual threat for established broadcast or telecommunication companies. As Korean consumers are often not willing to pay for digital content, the market environment is not ideal for a stand-alone OTT video service such as Netflix. Thus, suitable pricing strategies are necessary for companies to succeed on the Korean market (Kim, Kim, Hwang, Kim, & Kim, 2017, p.204; Park, 2018, p.4659).

2.1 Netflix in Korea

Consequently, it has been a challenge for stand-alone OTT business models to succeed in Korea (Dwyer et al., 2018, p.4556). The American subscription-video-on-demand (SVOD) service Netflix has been offered in Korea since January 2016 and was the first service of its kind. It was expected that Netflix would not be able to succeed in Korea due to price competitiveness, comparatively low cable prices, and bundle packages (Dwyer et al., 2018, p.4560; Park, 2018, p.4661). Indeed, in 2016, Netflix had less than a million subscribers in Korea and a very low usage rate compared to Korean OTT video providers (Dwyer et al., 2018, p.4554). A few months after Netflix, the Korean SVOD service WATCHA PLAY was launched, which costs a third less than a Netflix subscription. In addition, this service offers more than 20,000 videos, including a large amount of local content, which Netflix lacks. The Western competitors Amazon Video and Youtube Red also launched in December 2016 (Dwyer et al., p.4561). Nevertheless, a significant growth rate is projected for Netflix, from 1.7 million users in 2017 to almost four million in 2020 (Canada Media Fund, 2017, p.10).


Excerpt out of 16 pages


Netflix's role in the South Korean over-the-top-video market
The distribution of Korean media content in a global context
University of Tubingen  (Institut für Medienwissenschaft)
Global Media Theory
Catalog Number
ISBN (eBook)
ISBN (Book)
Netflix, global media theory, OTT video market, SVOD, South Korea, media content, hallyu, flows of information, contraflow, dominant flow of information, media flows, media convergence, digitalization
Quote paper
Mara Kasten (Author), 2019, Netflix's role in the South Korean over-the-top-video market, Munich, GRIN Verlag,


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