Territory Report: South Korea

More digital pain than pleasure in high-tech country

South Korea has the technological potential to put on one of the world’s most dramatic demonstrations of what digital platforms can do for the film industry. Whether it does so is another matter.

The country is wired to the max. Domestic broadband Internet is superfast and ubiquitous, mobile TV devices are everywhere, and many people now lead virtual lives behind their avatars.

Until the end of 2008, broadband companies were not permitted to offer real-time TV, only time-shift or “near-IPTV” services, for fear of providing too much competition to cable operators.

But such legislation has allowed the development of sophisticated pirate movie services that take advantage of the broadband networks’ formidable bandwidth. These have all but knocked out the homevideo market and caused the Korean movie industry to become highly dependent on theatrical box office, with ancillaries now accounting for an estimated mere 20% of revenues.

Three phone and infrastructure companies — KT, LG Dacom and SK Broadband — are planning to invest $2.75 billion in IPTV over the next five years. While KT and SK have become movie and TV content investors, which might presuppose a willingness to combat piracy, there has been little talk about starting low-cost, legal download services.

It seems that only when they have won millions of TV customers away from the well-entrenched cablers will the broadband companies feel ready to bite the hand of the illegal movie services that have driven much of today’s demand for the Internet.

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