The era of watching Son Heung-min, Ryu Hyun-jin, and Ohtani matches for free is over (Heo Tae-yoon’s brand story) – The Economist VRESP

On July 13, 2022, Son Heung-min of Tottenham Hotspur is answering reporters’ questions ahead of the first game of the Coupang Play Series between Team K League and Tottenham Hotspur at Seoul World Cup Stadium. (Photo Yonhap News)

(Columnist Heo Tae-yoon) It may not be understandable to the 50s and 60s generation, who used to watch sports broadcasts for free on public broadcasters or IPTV (Internet Protocol Television) broadcasts, but the era of enjoying the games of big sports stars for free has come to an end. .

The pitching of Ryu Hyun-jin, who returned to Korea after accumulating the highest number of wins among Koreans in the Major League, the play of Son Heung-min, who plays for the national team in the World Cup, the MLB Seoul tour of legendary baseball player Ohtani, the world’s most valuable player, Gyeonggi Province, and OTT (online video service, Over The Top) The era has come where you can’t watch it without subscribing to ).

This means that you have to be a member of e-commerce company Coupang’s ‘Wow Service’ to watch national soccer games, 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 the main player in the media content market, surpassing IPTV, cable, and public broadcasting, not only in dramas, entertainment, and entertainment programs, but also in the real-time streaming sports content market.

Coupang hits the jackpot by investing in sports

As ‘Tving’ begins broadcasting for the first time since securing exclusive wired and wireless broadcasting rights for domestic professional baseball starting this year, many laughable incidents are occurring. Due to the mistake of introducing players by their uniform numbers rather than batting order, ‘Batter No. 22’ appeared in baseball broadcasts, and when a runner was SAFE at third base, an absurd caption was posted saying ‘Third base SAVE!’ Cases such as this followed one after another.

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 effect. 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, a 13.2% increase from the previous day.

This is the second-highest figure in the domestic OTT market, following Netflix (2,671,150). Considering that professional baseball is the sport with the largest fandom among domestic sports, TVING is expected to be able to secure more subscribers starting in April when the season begins in earnest.

It is Coupang that ignited the competition for investment in OTT sports content. Since its inception, Coupang Play has been broadcasting the German Bundesliga, Spanish Primera Liga, French Ligue 1, and Danish League. Recently, it has been broadcasting live the 58th Super Bowl LVIII, the best sports event in the United States, making it a lot of fun. I saw.

Recently, it exclusively broadcast all matches of the Qatar Asian Cup soccer and the U.S. Major League Baseball ‘MLB World Tour Seoul’, beating out OTT second place Tving.

A national ceremony is being held ahead of the special match between the Korean baseball team and the LA Dodgers held at Gocheok Sky Dome in Seoul on March 18. (Photo by Reporter Si-jong Jeong)
San Diego player Wade jumps and catches a batted ball during a special match between the San Diego Padres and LG Twins held at Gocheok Sky Dome in Seoul on March 18. (Photo by Reporter Jeong Si-jong)

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 spread further

OTT sports broadcasting is a global trend. Netflix invested $5 billion to secure exclusive broadcasting rights to World Wrestling Entertainment (WWE)’s popular program, RAW, for 10 years starting in 2025. In the United States, Apple TV Plus has exclusive broadcasting rights to Major League Soccer in the United States until 2032, and Amazon Prime has exclusive broadcasting rights to NFL (Thursday Night Football), the American football league.

The reason why OTTs are trying to secure sports content broadcasting rights is because the cost of producing original content is soaring. As Netflix appeared in the domestic market, original content production costs rose to 1 billion won per episode, up to more than 3 billion won. As a result, the total production cost of one series has reached 10 to 50 billion won. The total production cost of season 2 of Netflix’s original content ‘Squid Game’, which was a global success, is said to be over 100 billion won. However, although Netflix is ​​likely to recover production costs by streaming to subscribers around the world, such investment is bound to be burdensome from the perspective of a native OTT company.

On the other hand, sports events have a solid fan base, so they can secure stable viewership ratings throughout the season, and depending on the game, even greater box office success can be expected.

The second is related to the introduction of OTT’s ‘advertising rate system’. The biggest reason for OTT subscriber churn (contract termination) is the steadily rising subscription fee. The card that OTT has come up with 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 at a lower subscription fee than the basic rate when you see an advertisement. TVING’s 5,500 won monthly plan is a system where advertisements appear on content you watch and you are connected to the advertiser’s page when you click the ‘More advertising information’ button in the upper right corner. It is a very attractive system for advertisers, where exposed advertisements lead to purchases.

In baseball, ad exposure time can be naturally secured every time the offense and defense change, and in soccer, every time there is a halftime change. From the perspective of introducing an OTT ‘advertising rate system’, in fact, almost all sports are content optimized for advertising exposure.

The third is the ‘rock-in’ effect that 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. Consumers 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 the OTT perspective, it is possible to secure sports fandom stably during this period.

Faster data transmission speeds are changing the way video content is viewed to focus on streaming. At the center of that change is the video OTT platform, and content moves around them. However, in the past, the success or failure of a drama was a factor in determining competitive advantage in the OTT market, but the high-cost investment risk that cannot guarantee a return is creating a new level of competition in securing sports content. This is because sports are unscripted dramas with a fixed market called fandom.

ⓒThe Economist (https://economist.co.kr) ‘The Economist, Economic News for Tomorrow’ Unauthorized reproduction and redistribution prohibited


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