cable industry

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cable industry

  1. 1. Cable Television Industry in Korea: Today and Future April 8, 2014 Yoo S. Yang, Ph.D. (梁裕錫 敎授) Chung-Ang University (中央大學校) Seoul, Korea
  2. 2. History  1995 Cable TV Service launched: 48 SOs with 24 PPs and Terrestrial broadcast channels(KBS, MBC, SBS)  1999-2000 Deregulation of the Cable Industry • Vertical and horizontal integration allowed (MPPs, MSOs, MSPs) • Licensed PPs (news, home-shopping) and Unlicensed PPs (registration only) • SO Ownership 33% allowed to conglomerates, foreigners, press  2003 10 million subscribers  2005 Digital Cable TV service launched  2007 VoIP service  2008 15 million Subscribers (80% of household)  2008- 2010 Deregulation of the Media Industry • Convergence of Telecommunication and Broadcasting • 2008 IPTV launched • 2011 Four new general programming channels (GPCs) launched  2013 14.8 million subscribers (6.2 mil. Digital/ 8.6 mil. Analog)
  3. 3. Cable Industry in Korea  Five vertically and horizontally integrated cable media groups (MSPs: Multiple System Operators and Program Providers) • 92 system operators(SOs) in 77 franchise areas • 264 program providers(PPs) now in service Multiple System Operators Multiple Program Providers channels 3
  4. 4. Cable TV’s important role in Korea Critical Access to Terrestrial Broadcast Programs # of Employees Cable TV hires 17,500 employees in Korea - SOs : 4,846 - PPs : 12,654 employees Broadcast television networks employ 13,691 workers 7.9% 69.1% ※ Source: Television Viewing Behavior Study (KCC 2012) Cable Satellite Terrestrial broadcast IPTV no TV 4
  5. 5. Cable Industry: Revenues 36% 48% 4% 12% PPs Annual Revenue in 2012 Program Channels Home shooping channels Total Revenu e US $ 5.3 bil. 1,054 1,132 1,253 1,487 1,691 1,816 1,937 2,122 2,3201,581 2,057 2,350 2,761 3,053 3,300 3,960 4,717 5,548 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Annual Revenues by Broadcast Networks in Korea [unit : billion KW,%] television broadcast networks Cable television networks Program Providers Satellite television networks* IPTV Year 2013 SOs: US$ 3.2 bil. PPs: US$ 5.9 bil. • Home shopping channels account for almost 50% of the total revenue among program providers. 2004 2005 2006 2007 2008 2009 2010 2011 2012
  6. 6. Cable Network Subscribers (2008-2013) Five MSOs, running 77 SOs, account for 80% of the cable subscribers in Korea. 1.9 6.2 mil 15.20 14.86 mil 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 2008 2009 2010 2011 2012 2013 Millionsubscribers A. Cable networks D. Cable networks Cable networks Total 13.3 8.6 mil
  7. 7. Despite the decrease of subscribers, SOs and PPs’ revenue UP!!! 15.2 mil 14.8 mil. Cable TV Subscribers 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2008 2009 2010 2011 2012 2013 US$ 3.2 billion US$ 5.9 billion Unit: Bil. Won, 10,000 households US$ 2.1 billion Cable SOs’ Revenue PPs’ revenue US$ 2.8 billion
  8. 8. TV Ads market Year 2012
  9. 9. Digital Services by the Cable TV  interactive services  Smart Broadband Services  UHD Channels on Cable  OTT services
  10. 10. Digital Cable Network Services in Korea VOD(movie/TV drama) TV shopping Cloud-based consol games Interactive learning TV garaoke TV stock trading 10
  11. 11. Smart Broadband Services App Store Personalized VOD service Web-browsing UPPER BODY(App) Back 11
  12. 12. UHD Channels on Cable 12
  13. 13. OTT services by Cable Operators 13
  14. 14. Government Regulations in Korea Two Regulators now on the Cable industry • Communications policies • Pay TV network policies (Cable, IPTV, Satellite, Program Providers) • Licensing and Re-licensing of terrestrial broadcast networks and general program channels • Ex-post regulation of broadcast business (illegal behaviors) Korea Communications Commission Ministry of Science, ICT and Future Planning 15
  15. 15. Regulations on Pay TV Network Business in Korea Cable Network Satellite Network IPTV Cross- ownership Maximum 33% of cross-ownership No cross-ownership regulation Market Shares • Limit 1/3 of 77 franchise areas • Limit 1/3 of total cable subscribers • Now same as IPTV (2014 revised) No limit Limit 1/3 of total Pay TV network subscribers Max. Subscribers* 5 million  8 million No limit 8 million * Assuming 15 million Cable subscribers, and 24 million households of Total Cable and IPTV subscribers Broadcasting Act Internet Multimedia Broadcast Services Act 16
  16. 16. Pay TV subscribers by Network 0 5 10 15 20 25 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 A. Cable networks D. Cable networks Cable networks Total IPTV Satellite networks Relay Cable networks total
  17. 17. Challenges and Opportunities • Rapid penetration of IPTV services • Digital Content fee charged by KBS, MBC, SBS and Newly licensed media channels • The rise of OTT(over the top) service • KCC’s intention to relax restricitions on terrestrial TV advertising • Switching to Digital Cable (14.8 million households as captive market) • New digital services (MVNO, VOD, Home Security) • A pending Special Bill to support Digitalization of the Cable Industry (2014) • Deregulation on the cable industry • KCC’s agreed to the License Fee Hike for KBS along with the plan to halt advertising on K BS
  18. 18. Policy and Regulations
  19. 19. Government View II: Media as Creative Satellite sponsorship Subscribers Private Capital Inflows Market Competition Deregulation Transparency IPTV SOs PPs Cable TV SOs PPs Digital Media service infrastructureTerrestrial Network TV TV advertisers Better regulations for the creative industries. Pay TV
  20. 20. Government Policy Direction  New Initiative to Better Regulate the Business by the Government (March 2014) • Deregulate if not necessary. • Improve the regulation if needed.  KCC and MSIP on the Cable Industry • Shift from the terrestrial network centric approach to develop the content industry and the TV advertising industry • Competition – in the media buying market by allowing private media representatives – 4 New General Program Channels(GPSs), whose programs SOs must carry, to promote both content creation business and competition with the broadcast networks. • Global standards in regulating the cable industry • Relax ownership restrictions on cable business • Open the domestic market to foreign competition • Relax or eliminate detailed restrictions on advertising, programming, etc. • “the same regulation on the same services” Principle • Fair Competition among non-terrestrial TV services (Cable TV, IPTV, Satellite TV)
  21. 21. Desired Direction of Regulations for the Cable Industry  For Fair Competition and Diversity of Broadcasting (consumer benefit),  “Same Service, Same Regulation” is desired when integrating the two separate acts next time (the Broadcasting Act and the Internet Media Broadcast Services Act)  From price competition to service-based competition is more desirable in the Pay TV market  bloody price competition lowers down the ARPU of the Pay TV industry  Focus more on substantial investment for quality improvement, rather than marketing expenditures 현황 27
  22. 22. Thank You !
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