LG U+, a South Korean mobile network operator, has launched a content production studio called Studio X+U. In February, the studio began serializing the web novel “Night has Come” on its mobile platform, Kakao Page. The novel is based on a drama with the same title that was released in December 2023. LG U+ had previously sold the drama to global OTT companies like Rakuten Viki and Amazon Prime Video in Japan. An official from LG U+ said, “We plan to anchor our content production, distribution, and IP business in the global market and use it as a mid- to long-term growth engine.”
Korea’s three major telecom companies are shifting their focus towards content production. In the past, they used to create their own content to lure subscribers to services like IPTV (Internet TV). However, now they are looking to increase their business capabilities with the aim of generating revenue from the content itself. The idea is that self-produced content can be reproduced in various forms such as web novels, webtoons, music, and characters. It can also be sold to domestic and foreign OTTs for profit. A telecom industry insider has mentioned that “These companies are trying to find a new breakthrough in the stagnant telecommunications market by becoming content producers themselves rather than just delivering external video content to their subscribers.”
KT was one of the first to jump into the content production race. KT’s content subsidiary KT Studio Genie generated $166 million (221.4 billion won) in revenue last year alone. The company’s revenue has increased more than 18 times in two years, from $8.85 million (11.8 billion won) in its first year in 2021. The previous year’s “Extraordinary Attorney Woo” was hugely popular, and last year, the company produced 14 entertainment and drama programs, including “A House with a Yard,” which led to a surge in sales. “Last year’s drama ‘Moon in the Day’ was sold to many global OTT platforms, and overseas sales increased significantly,” said a KT official.
LG U+ has been focusing on producing its own content since last year. Since hiring Chief Content Officer (CCO) Lee Duk-jae from CJ ENM, it has produced more than 10 entertainment and drama programs, including “Our Game: LG Twins,” “High Cookie,” and “Man in Europe.” In particular, it is focusing on producing short content of around 30 minutes to target young people, which is different from the existing program format.
SK Telecom’s content business is mainly conducted by its subsidiary SK Broadband, which is in charge of IPTV services. SK Broadband is having economic profit with the “Pororo the Little Penguin,” which it has been investing in since 2002. Not only is it exclusively releasing parts of the Pororo series on IPTV in the form of VOD, but it is also earning a good return on its investment. “It’s hard to disclose the specific amount, but the return on investment has reached 500% by the fourth quarter of last year,” said an SK Broadband official. SK Telecom has also built a VFX content production space in Seongnam, Gyeonggi-do, which it rents out to other companies.
It is important to note that the reason why the three telecom companies are expanding their content business is because their existing telecom networks and platforms are highly competitive. All three companies offer paid broadcasting services such as IPTV and cable TV, and also have their own channels (such as ENA and Channel S). They have a well-established distribution network for producing and selling content, which means they have less of an investment burden than other production companies.
Additionally, they can increase the number of users on their own platforms through content. “The drama ‘Haikuki’ was initially watched by many viewers on Netflix, but as time went on, more and more people watched it on U+mobile TV, which previews the next episode,” said a representative from LG U+.
