All three of South Korea’s major operators are investing millions in content creation, hoping to capitalise on a new and growing revenue stream as traditional revenues dry up
The 2020s are a shaping up to be a decade of change for telco business models. While connectivity itself is more important in all facets of our lives than ever before – as highlighted throughout the coronavirus pandemic – traditional voice and data service revenue are not growing in time with the surging demand. Combine this with the expenditure telcos face with the pricey rollout of new technologies like 5G and fibre, and the telecoms industry at large is looking for its next money-maker.
For many operators, this search has led for a shift in direction towards targeting the enterprise market, often through the deployment private networks, while for others the shift will be towards transforming into technology integrators and aggregators, offering customers suites of supporting services alongside connectivity.
In South Korea, however, a new trend is emerging that could also prove surprisingly profitable: content creation.
In fact, it is not content giants like Netflix or Amazon that are behind the latest smash hit South Korean TV series, but rather KT’s content creating subsidiary, KT Studio Genie.
The show, ‘Extraordinary Attorney Woo’, which focusses on an autistic lawyer, is currently the most watched non-English TV series on Netflix in 190 countries and it is perhaps this potential to reach an enormous international audience that makes content creation so alluring to the operators.
The timing also could not be more perfect, with South Korean TV and cinema having begun to receive widespread critical acclaim in recent years, with award winning films like Parasite and TV series like Squid Game helping to make the country’s entertainment industry much more approachable for Western audiences.
KT first set up Studio Genie back in March 2021 and Extraordinary Attorney Woo’ is only its second production, following the slightly lacklustre “Never Give Up” last year.
Nonetheless, it represents a key part of KT’s media strategy, with the company saying it would invest around $380 million to produce over 30 new drama series and 300 entertainment programmes by 2025. In fact, the studio intends to release 22 drama series by the end of 2022.
And KT is not alone in its considerable content creation ambitions.
SK Telecom established a South Korean video streaming service, Content Wavve Corp., back in 2019, working alongside three of the country’s national broadcasters. Since then, then Wavve has pledged to invest around $760 million in content creation by 2025.
LG Uplus, meanwhile, has recently invested an undisclosed sum in children’s animation studio SAMG Entertainment, while also bolstering its own Content Platform Business Group, which is set to focus on 5G-based virtual reality (VR) and augmented reality (AR) content.
Of course, this is not to mention the work that all three operators are doing with regards to the metaverse, with each making strategic investments in this area in 2022. SK Telecom in particular seems to have something of a lead in this area, already making international partnerships to help offer its metaverse platform, Ifland, to customers abroad.
The South Korean telcos appear to be unanimous in their decision to be directly involved in content creation, rejecting the conventional wisdom of operators in Western markets that have instead struck partnerships with content players like Netflix and bundled these services alongside connectivity.
Now, with Netflix no longer looking like the unassailable behemoth it once was, betting big on content could be a big win for the South Korean telecoms operators. Their international rivals are sure to be watching the situation closely.