The Growing Dependency on Netflix: Challenges Faced by Domestic OTT Platforms

The Growing Dependency on Netflix: Challenges Faced by Domestic OTT Platforms

In recent years, there has been a significant increase in the dependence on Netflix in the Korean market. This has raised concerns about the sustainability and competitiveness of domestic OTT platforms. It is undeniable that Netflix's investment of over 3 trillion won in the Korean market is a welcome development. However, this intensified competition has resulted in higher-than-expected losses for local companies. To address this challenge, Itae Hyun, the CEO of a domestic OTT platform, suggests adopting a cost-effective strategy as a countermeasure.

While short-term performance improvements are important, some companies are looking beyond the domestic market and planning to expand their reach on a global scale. Wave, for instance, acquired the OTT platform Coco in December last year, which had a strong presence in the North American market. Additionally, Wave is considering entering the Middle East and Asian markets through the FAST (free ad-supported television) and AVOD (advertising-supported video on demand) models. This long-term approach aims to establish a foothold in these regions and compete with Netflix on a global stage.

However, there is a concern that the competitiveness of Korean content may be overshadowed by Netflix's dominance. Professor Sung Min warns that if Korean platforms, like Tving and Wave, focus solely on entertainment content, they risk losing their established brand identity. To mitigate this risk, it is crucial for these platforms to diversify their content and establish cooperative models with other industry stakeholders. This will not only help to reduce risks but also improve efficiency in the long run.

In light of these challenges, here are three actionable pieces of advice for domestic OTT platforms:

1. Focus on Differentiation: To stand out in a highly competitive market, it is important for domestic OTT platforms to differentiate themselves from Netflix. This can be achieved by offering unique content that caters to local tastes and preferences. By understanding the needs of the Korean audience and tailoring their content accordingly, these platforms can carve out their own niche and attract a loyal user base.

2. Embrace Collaboration: Instead of viewing Netflix as a direct competitor, domestic OTT platforms should explore opportunities for collaboration. By partnering with Netflix or other international platforms, they can leverage each other's strengths and create mutually beneficial content sharing agreements. This not only expands the reach of Korean content but also fosters a collaborative ecosystem that benefits all parties involved.

3. Invest in Original Content: Investing in original content is crucial for domestic OTT platforms to establish their own brand identity and attract viewers. By creating high-quality, locally produced content, these platforms can showcase the diversity and richness of Korean culture. Original content also offers a competitive advantage over international platforms, as it cannot be replicated elsewhere. Therefore, it is essential for domestic OTT platforms to allocate resources towards producing original content that resonates with the Korean audience.

In conclusion, the growing dependency on Netflix in the Korean market poses significant challenges for domestic OTT platforms. However, by adopting a cost-effective strategy, expanding globally, diversifying content, and establishing collaborative models, these platforms can overcome these challenges and compete effectively with Netflix. It is crucial for domestic OTT platforms to differentiate themselves, embrace collaboration, and invest in original content to succeed in an increasingly competitive landscape. By doing so, they can strengthen their position in the market and provide compelling alternatives to Korean viewers.