On July 13, 2022, Son Heung-min of Tottenham Hotspur answers questions from reporters before the first match of the Coupang Playoff Series between Team K League and Tottenham Hotspur at the Seoul World Cup Stadium.[사진 연합뉴스]
[허태윤 칼럼니스트] It may be incomprehensible to the generation of the 50s and 60s, whose daily lives consisted of watching free sports broadcasts on public broadcasters or IPTV (Internet Protocol Television) broadcasts, but the age of enjoying the games of big sports stars free has expired. .
Pitching Ryu Hyun-jin, who returned to Korea after accumulating the most wins among Koreans in the Major League, pitching Son Heung-min, who is playing for the national team in the World Cup, MLB Seoul’s tour of around legendary baseball player Ohtani, the world’s most valuable player, Gyeonggi State, and OTT (online video service, Over The Top) The time has come where you can’t watch it without subscribing to).
This means you have to be a member of Coupang’s e-commerce company ‘Wow Service’ to watch national football matches, and you have to be a member of the local OTT ‘TVing’ to watch professional baseball. We live in a world where OTT has become a major player in the media content market, surpassing IPTV, cable, and public broadcasting, not only in dramas, entertainment, and entertainment programs, but also in the sports content streaming market real time.
Coupang hits the jackpot by investing in sports
As ‘Tving’ goes on air for the first time since securing exclusive wire and wireless broadcast rights for domestic professional baseball starting this year, a lot of ridiculous happenings are taking place. Due to the mistake of introducing players according to their uniform numbers rather than batting order, ‘Batter No. 22’ in baseball broadcasts, and when a runner was SAFE on third base, an absurd caption was posted saying ‘Third base SAVE!’ thus following one after the other.
Although clumsy scenes like this have appeared one after another, TVING’s bold investment (KRW 135 billion over three years from 2024 to 2026, an average of KRW 45 billion per year) is clearly having an impact. Based on the big data-based ‘Mobile Index’, on March 9, the first day of the pilot game broadcast, the number of daily users (DAU) of the TVING application (app) recorded 1,846,914, an increase of 13.2% from the previous Day.
This is the second highest figure in the domestic OTT market, after Netflix (2,671,150). Given that professional baseball is the sport with the most fans among domestic sports, TVING is expected to be able to secure more subscribers starting in April when the season begins in earnest.
Coupang sparked the competition for investment in OTT sports content. Since its establishment, Coupang Play has been broadcasting the German Bundesliga, Spanish Primera Liga, French Ligue 1, and the Danish League. Recently, it has been broadcasting live the 58th Super Bowl LVIII, the best sporting event in the United States, making it a lot of fun. I saw.
Recently, it exclusively broadcast every game of Qatar Asia Cup soccer and US Baseball’s ‘MLB World Tour Seoul’, beating OTT into second place Tving.
A national ritual is held before the special game between the Korean baseball team and the LA Dodgers held at the Gocheok Sky Dome in Seoul on March 18.[사진 정시종 기자]
San Diego player Wade jumps and catches a batted ball during a special game between the San Diego Padres and LG Twins held at Gocheok Sky Dome in Seoul on March 18.[사진 정시종 기자]
Through these efforts, Coupang Play surpassed 8 million monthly active users (MAU) for the first time among domestic OTTs in January (WiseApp data). This is the second highest record after Netflix, the number one in Korea, with 12.37 million, and Tving, Wave, This figure surpasses Disney.
Three reasons why competition for sports broadcasting rights will widen further
OTT sports broadcasting is a global trend. Netflix invested $5 billion to secure exclusive broadcast rights to World Wrestling Entertainment’s (WWE) hit RAW for 10 years starting in 2025. In the US, Apple TV Plus has exclusive broadcast rights to Major League Soccer in the US until 2032, and Amazon Prime has exclusive broadcast rights to NFL (Thursday Night Football), the American football league.
The reason why OTTs are trying to secure the broadcasting rights of sports content is because the cost of producing original content is rising dramatically. As Netflix appeared in the domestic market, the production costs of original content rose to 1 billion won per episode, it won up to more than 3 billion. As a result, the total production cost of one series reached 10 to 50 billion won. The total production cost of season 2 of the Netflix original content ‘Squid Game’, which was a global hit, is said to have earned over 100 billion. However, while Netflix is likely to recoup production costs by streaming to subscribers around the world, such an investment is bound to be onerous from the perspective of a native OTT company.
On the other hand, sporting events have a solid fan base, so they can ensure stable viewership rates throughout the season, and depending on the game, even more success at the box office can be expected.
The second relates to the introduction of an OTT ‘advertising rate system’. The biggest reason for OTT subscriber churn (termination of contract) is the steadily rising subscription fee. The card that OTT has created to solve this problem is the advertising rate system.
Netflix has already introduced an advertising rate plan. The advertising rate system that TVING introduced last month is a system that allows you to view content for a lower subscription fee than the basic rate when you see an ad. TVING’s 5,500 won monthly plan is a system where ads appear on content you watch and you are linked to the advertiser’s page when you click the ‘More ad info’ button in the upper right corner. It is a very attractive system for advertisers, where open ads lead to purchases.
In baseball, exposure time can naturally be achieved every time the offense and defense change, and in football, every time there is a halftime change. From the point of view of the introduction of the OTT ‘ad rate system’, in fact, almost all sports have content optimized for advertising exposure.
The third is the ‘feed in’ effect which keeps subscribers within the platform ecosystem. Coupang provides all Coupang Play content for free if you sign up for the WoW service, which costs 4,900 won per month. Users who are passionate about sports have no choice but to be satisfied with Coupang’s service, which is cheaper than OTT and allows them to enjoy WoW services as well.
The same goes for other OTT platforms. Exclusive sports broadcasting rights are usually long-term contracts lasting 3 to 10 years. From an OTT perspective, it is possible to secure a stable sports fandom during this period.
Faster data transfer speeds are changing the way video content is viewed to focus on streaming. At the center of that change are video OTT platforms, and content is moving around them. However, in the past, the success or failure of drama was a factor in determining competitive advantage in the OTT market, but the high cost investment risk that cannot guarantee returns creates a new level of competition in securing sports content. This is because sports are unscripted dramas with a fixed market called fandom.
ⓒThe Economist (Unauthorized reproduction and redistribution of ‘The Economist’s economic news for tomorrow’ is prohibited.
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