Mobile Korea

Today I have read an interesting article about the current situation on the Korean mobile TV market. It is motivated by the recent event, that TU Media has been able to acquire the simultaneous re-transmisson rights from MBC. This represents a big step for TU Media but it comes two and a half years too late.

As TU Media started operation mid 2005 it tried to acquire simultaneous re-transmission rights from broadcasters. This means that S-DMB viewers would be able to watch popular dramas and shows from fixed TV at the same time as on fixed TV. These contents are the most popular contents on both, fixed and mobile TV. However, at that time broadcasters were reluctant to share these contents because they wanted to use it for their own T-DMB service. Due to that S-DMB had to focus on other contents like sports and news. But the lack of “killer” contents from fixed TV hindered S-DMB development (as shown in the graphic above). Until today it had been able to acquire approximately 1.26 million subscribers. But according to TU Media they need approximately 2.5 million subscribers to be profitable. As a result, as reported two weeks ago, SK Telecom is thinking about limiting its involvement in TU Media.

But also T-DMB is struggling to build a profitable business. Despite more than seven million T-DMB devices in Korea the advertising revenues are marginal. Which partially is the result of very restrictive legislation on advertising but also broadcasters have failed to develop an attractive mobile advertising value proposition to make this channel more attractive for advertisers.

Experts are blaming policy for allowing two different mobile TV standards and businesses. Their competition was one of the main obstacles that mobile TV could not develop its full potential. So is mobile TV doomed in Korea? I do not think so, because consumers have embraced this new medium and it is very likely that broadcasters will take mobile TV more serious and endeavor to make mobile TV advertising more attractive for broadcasters. Until 2012 more than 20 million T-DMB devices are expected, so mobile TV has a future in Korea. In these days I am finalizing the mobile TV report I have been working on recently, so if you are interested in a more thourough analysis of the Korean mobile TV market contact me. I am eager to share it with everybody who might be interested.

There are rumors in Korean press that SK Telecom is hesitant to inject more money in its S-DMB business and TU Media, because reaching the break-even is unlikely. Although subscribers have reached almost 1.3 million in September 2007 TU Media has generated only losses. Together with initial investments of about 250 million USD overall this venture could have cost SK Telecom more than 500 million USD since beginning of operation.

There are several factors for missing commercial success of S-DMB, some of them are:

1. Targeting the mass market SK Telecom has underestimated the importance of acquiring popular contents from terrestrial TV. Upon the launch of S-DMB it had been too naïve and expected to get rights for retransmitting contents from the broadcasters. However with T-DMB in the pipeline they had been reluctant to share these contents.

2. Launching the satellite (it had been launched in cooperation with a Japanese company MBCo) and building the infrastructure almost by itself required significant funding, estimated to be about 250 million USD.

3. When entering the market it relied too much on existing skills and thus pursued a subscription based model, making a success on the mass market very unlikely.

4. Also Korean government is not free from blame. It issued licenses for mobile TV to two different parties with a diametrically different approach. Subscription based S-DMB and free T-DMB. Due to this both sides could not exploit the full market potential of mobile TV in Korea.

5. Being direct competitors in the mobile market KTF and LG have been reluctant to promote S-DMB, because it is a service of a direct competitor.

Although TU Media has not been a commercial success it can provide very valuable lessons to interested players in the mobile TV market, especially in the Western world where mobile TV is about to be launched.

1. Content is king – it has to be tailored to your targeted audience else your business is doomed. If targeting the mass market popular formats from TV is crucial.

2. Initial investments have to be balanced carefully and should not burden the future development too much.

3. Especially as an MNOs may not underestimate the importance of the right content.

These are just some of my thoughts. I am currently working on a report about the lessons learnt from two years of mobile TV market in Korea in which these things will be elaborated in more detail. Once it is finished I am willing to share it with everybody who is interested. So please do not hesitate to contact me.

T-DMB (Terrestrial Digital Multimedia Broadcasting) Phone meets the golden age. In second quarter, the sales of T-DMB Phone increased about 3.4% comparing to first quarter.

That is interesting results because total number of 3G service phone user keep increasing and KTF, one of MNO in Korea, focus their capability on 3G services such as Video call.
However, most of T-DMB phone is concentrated on 2G service!

KTF tries to advertise the diverse function of 3G service.
By contrast, SKT and LGT, MNO in Korea focusing their ability on 2G service, promote their 2G service with excellent design and T-DMB service. Prada Phone is a good example.


Some experts said there will be keen competition between 3G and 2G service soon. It is very hard to estimate how situation will develop because this competition has never happened before.

If you concentrate your attention on how Korean TMT market is changed, you can get some insights about how your home country will be changed.