Video services

Koreans Tune In to IPTV

Only a few months after the initial launch of real-time broadcast TV services over broadband (IPTV) in South Korea, the country's three main carriers had amassed more than 220,000 IPTV subscribers between them, according to statistics compiled by Pyramid Research .

Regulatory conditions and TV programming rights issues had kept IPTV off telecom operators' video services menus until late 2008, leaving the country's cable operators to dominate the digital TV sector. KT Corp. , LGDacom Corp. , and SK Broadband (formerly Hanaro Telecom) were restricted, in terms of video content, to offering on-demand services -- in a market renowned for the high penetration of high-speed fiber access connections that are so suitable for IPTV service delivery. (See FTTH Global Ranking Update and Asia, Europe Still Dominate FTTH.)

The trio's video-on-demand (VoD) services had proven popular, though, showing there was an appetite for video content delivered over broadband. At the end of 2008, KT (with its MegaTV service), LGDacom (myLGtv), and SK Broadband (Broad&TV, formerly hanaTV), had more than 1.5 million VoD customers between them.

Following a lengthy process that eventually saw the regulatory hurdles removed and negotiations with TV content rights owners settled, national operator KT launched its full IPTV service (real-time broadcast TV over broadband, as well as VoD) in late November.

By the end of December 2008 that service, MegaTV Live, had already attracted nearly 46,000 customers; by the end of March, those ranks had swelled to 153,400.

LGDacom and SK Broadband launched their full IPTV services in January. By the end of March this year, LGDacom had amassed more than 50,200 subscribers for its myLGtv Live service, while SK Broadband had attracted just over 19,000 customers to its IPTV service, Broad&TV Live.

That means the South Korean IPTV services market grew from zero to 222,600 customers in less than four months. (See table below.)

Table 1: IPTV Subscriber Growth in South Korea
December 2008 January 2009 February 2009 March 2009
KT 45,800 79,600 111,800 153,400
SK Broadband 0 2,600 8,100 19,000
LG Dacom 0 12,100 27,700 50,200
Total 45,800 94,300 147,600 222,600
Source: Pyramid Research, regulator

Those numbers are set to continue growing as each operator upgrades its VoD customers to a full IPTV service. At the end of March the three operators had, in total, 1.34 million pure VoD (or "pre-IPTV") customers, with that total shrinking each month as more customers sign up for the combined IPTV plus VoD packages. (See table below.)

Table 2: VoD-Only Subscribers On The Wane in South Korea
December 2008 January 2009 February 2009 March 2009
KT 706,500 633,000 580,200 541,600
SK Broadband 775,400 772,800 758,600 737,100
LG Dacom 65,100 68,100 65,700 60,200
Total 1,547,000 1,473,900 1,404,500 1,338,900
Source: Pyramid Research, regulator

If the market continues to add 70,000 IPTV subscribers per month, the South Korean IPTV market will end 2009 with more than 850,000 users, a total that would make it one of the biggest IPTV markets in the world after just one year of service availability. The introduction of linear TV has had a notable impact on LGDacom's video services customer base. Prior to the launch of its IPTV offering, the operator had been growing its myLGtv customer base by anything between 10,000 and 27,000 new customers per quarter. As the table below shows, that number shot up to more than 45,000 during the first three months of 2009 following the addition of linear TV services to the operator's offering.

Table 3: IPTV Boosts LG Dacom's Video Subs Base
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
VoD subscribers 9,277 27,067 37,750 65,084 60,143
IPTV (real time TV) subscribers NA* NA* NA* NA* 50,217
Total video service subscribers 9,277 27,067 37,750 65,084 110,360
Net additions in the quarter - 17,790 10,683 27,334 45,276
* = Not applicable as IPTV not launched until January 2009
Source: LG Dacom

Now each operator will be looking for ways to make its services more attractive than the others, and to counter the fightback from cable operators, which are exploring IP-based ways of delivering interactive video services. (See Koreans Take Cable IPTV for a Spin .)

A report from Korean Website KBS notes that KT has been testing an interactive IPTV advertising platform called Clear Skin that, in theory, will allow users to click on images (clothes, cars etc) on their TV screens to launch advertising information. The Clear Skin technology has been developed by a Korean specialist called Sofnics, a joint venture between KT and finance house Korea Firstec.

— Ray Le Maistre, International News Editor, Light Reading

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