LGU+ signed an exclusive contract to supply video on demand (VoD) contents with the U.S.’ largest cable TV company ‘HBO (Home Box Office). This is the first time a Korean pay broadcasting company entered into a VoD content supply contract with the No. 1 cable broadcasting company in the U.S.
With this as a momentum, competition between common carriers for killer content development targeting VoD market is forecast to intensify. As content developers landed in the Korean peninsula following global media platform companies like YouTube and Netflix, infinite competition with native companies in Korea has become unavoidable.
LGU+ announced that it had entered an exclusive content supply contract with HBO of the U.S. and would supply as many as 600 HBO VoD contents from the 13th.
“HBO joined hands with LGU+ as it entered Korea’s digital publication market,” said a LGU+ insider. “LGU+ will provide HBO contents exclusively over the next six months.”
HBO, which is recording the largest cable TV audience share in the U.S., is a subsidiary of a general media supply Time Warner. Over the years, it had only supplied contents in the form of real-time pay channel rather than VoD to broadcasting service providers in each country. Tbroad, a multiple system operator (MSO), provided real-time HBO channel until last year.
However, as clear signs of ‘code cutting (cable TV subscriber secession)’ phenomenon began to be observed as of late, HBO changed its internal policy to concurrently provide VoD service, according to sources. In fact, HBO signed a content supply contract with a Chinese portal Tencent in December last year and examined the feasibility of its entry to streaming type VoD service market.
“HBO is securing a wide range of regular viewers in Korea,” said an IPTV industry insider. He expressed anticipation, “For the next six month, which is the period of the exclusive contract, it will influence LGU+’s VoD sales increase and IPTV subscriber expansion considerably.”
Having secured HBO as a key content supply channel, LGU+ secured a foundation for increasing its share in the domestic VoD market, of which the scale grew to be over KRW 600 billion last year.
According to ‘Korean film industry report 2014’ recently published by Korean Film Council, the scale of IPTV and digital cable TV movie VoD sales last year was KRW 225.4 billion. It had increased rapidly by an annual average of 47.9% since 2010 in which a scale of KRW 49.1 was recorded. This is the reason IPTV service providers including LGU+ are dedicating efforts to winning content supply contracts from global content makers and to expanding the numbers of their VoD contents.
Together with the uncut version of ‘Game of Thrones,’ which has never before been released in Korea, LGU+ plans to provide a number of HBO’s key contents, such as ‘News Room’ and ‘Band of Brothers,’ These will be available as pay contents through a mobile IPTV service U+HDTV, an IPTV service tvG and an Internet video service Uflix Movie.