South Korean OTT platforms TVING and Wavve reported losses of $10.3 million (142 billion won) and $57 million (79.1 billion won), respectively, last year. Their revenue was also significantly lower than that of Netflix, with TVING totaling just $236 million (326.4 billion won) and Wavve $179 million (248 billion won). WATCHA, another local service, generated only $31 million (43 billion won) in revenue.
While Coupang Play and Disney+ have yet to disclose their separate financial results for Korea, industry observers believe that Netflix is the only major OTT operating at a profit in Korea.
Until last year, Netflix appeared to dominate as the local OTT market neared saturation. However, TVING and Coupang Play, ranked second and third in the country, have recently started to attract more users by offering sports broadcasts.
In terms of financial performance, Netflix saw a 6% increase in revenue in Korea year-on-year, but its operating profit declined by 15%. Higher costs, including those for content, marketing, and administrative expenses, led to this decrease.
Specifically, Netflix Korea allocated $500 million (696 billion won) of its total revenue to cover the cost of goods sold, with $480 million (664 billion won) transferred to the United States headquarters as payment for subscription memberships. This transfer accounted for 81% of its total revenue last year, underscoring a business model where significant revenue is repatriated to the U.S. headquarters through membership sales.
According to the Korean audit report, Netflix paid approximately $2.6 million (3.6 billion won) last year in corporate taxes in Korea, representing about 0.4% of its total revenue, a figure criticized for its low magnitude. Critics argue that Netflix has inflated the cost of goods sold to reduce its taxable profit in Korea. In comparison, in 2022, Netflix’s corporate tax payment in Korea was slightly lower, at $2.4 million (3.3 billion won).
