The merger between South Korea's online video services Tving and Wave has been stalled for three years, with opinions divided on its necessity. Some argue that the merger is essential for enhancing content competitiveness and investment capacity, while others believe the changed market conditions warrant a reevaluation of its benefits.
According to industry sources, stakeholders have yet to reach a consensus on the merger. The two companies signed a memorandum of understanding (MOU) for the merger in December 2023, but they have not finalized the deal nearly three years later.
Despite the stalled merger, business collaboration has been steadily expanding. Last June, they introduced a 'Double Subscription' plan allowing users to access both services under a single fee, and since March, they have been supplying major original content every Monday.
Opinions on the necessity and benefits of the merger remain divided. Some believe that merging would reduce operational costs and enhance content investment capacity. An industry insider stated, "Currently, users expect diverse content from each platform. By merging, we can alleviate the burden of content investment while focusing limited resources on producing new content, thereby improving investment efficiency."
Conversely, others argue that the market environment has changed since the merger discussions began, suggesting that the potential benefits should be reassessed. They point out that combining the services may not necessarily lead to increased subscriber revenue, especially given the high costs of content production and operations.
Park Yoon-young, CEO of KT and a major shareholder in the merger, noted in July that "the content market is evolving, and there are many factors to consider, including industry, company, and profits."
Some believe that existing collaborations, such as the integrated subscription and content sharing, are sufficient. They argue that with the ability to provide some content together without a merger, it is worth considering whether the costs associated with restructuring ownership and integrating services would yield significant additional benefits.
The slowdown in the growth of the content market also impacts the merger discussions. Last month, global OTT service Netflix announced it would lay off about 1,000 employees, or 6% of its workforce, due to declining revenue and subscriber growth. This marks the largest restructuring Netflix has undertaken since 2022.
Another challenge is the unclear direction for overseas operations post-merger. Like Netflix, Tving and Wave would need to establish a standalone platform abroad and secure subscribers. However, most domestic broadcasters, including SBS and JTBC, are collaborating with global OTTs like Netflix and Disney, making direct international expansion for a merged OTT platform virtually impossible.
An industry insider remarked, "In the content industry, profitability comes from content distribution. Tving and Wave also need to gain operational experience through direct overseas expansion." They added, "However, the current structure makes it difficult to pursue direct international expansion, complicating efforts to garner strong support for the Tving-Wave merger."
* This article has been translated by AI.
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