Summary
- Market Saturation: The South Korean OTT market faces saturation, with a decline in card spending growth since 1Q22.
- Netflix's Strong Position: Despite higher membership prices, Netflix(NFLX:US) maintains a dominant market share due to consumer loyalty and popular original content.
- Consumer Data Insights: Aicel Technologies’ data highlights Netflix's steady retention rates compared to competitors like Tving and Wavve.
- Content Investment: Continued investment in high-quality original content is crucial for maintaining and growing market share.
Shifts in Korean OTT
The South Korean OTT (Over-the-Top) market is experiencing significant shifts, with market saturation and evolving consumer behaviors influencing platform performance. This article examines the latest trends using card transaction data and insights from Aicel Technologies, focusing on Netflix's market dominance and strategies for competing platforms like Tving and Wavve.
Market Saturation and Card Spending Trends
Decline in Card Spending Growth
Since the first quarter of 2022, the South Korean OTT market has seen a decline in card spending growth. This trend is attributed to increased outdoor activities and a return to normal daily routines, reducing the time available for content consumption.
Netflix's Market Dominance
Popularity of Original Content
Netflix maintains a strong position in the South Korean OTT market, largely due to the popularity of its original content. Despite higher membership prices, Netflix’s extensive library and consumer loyalty help retain its user base even with potential price increases.
Consumer Loyalty and Retention Rates
Aicel Technologies’ monthly retention data shows that Netflix has high retention rates compared to its competitors. The availability of various membership options, including ad-supported plans, contributes to consistent user retention.
Challenges for Tving and Wavve
Transaction Decline and Content Volatility
Both Tving and Wavve are currently facing declines in transaction counts. Tving has been notably affected by hits like "환승연애 (EXchange)," highlighting the need for increased investment in original content to reduce volatility.
Pricing Strategies and Consumer Resistance
Wavve, known for its affordability, may face less consumer resistance to price increases compared to Tving. However, both platforms need to enhance their content offerings to compete effectively with Netflix.
Conclusion
The South Korean OTT market is characterized by saturation and intense competition. Netflix's dominance, driven by popular original content and strong consumer loyalty, sets a high bar for competitors. Platforms like Tving and Wavve must invest in high-quality content and refine their pricing strategies to capture and retain market share. Aicel Technologies' card transaction data provides valuable insights into these trends, helping stakeholders navigate the dynamic OTT landscape.
