In the ever-evolving landscape of South Korea's over-the-top (OTT) industry, the prolonged merger discussions between TVING and Wavve have raised significant concerns among stakeholders. As of March 21, 2025, these discussions have been dragging on for more than 16 months without clear resolution, leaving both companies reeling under mounting financial pressures.
Originally, the merger was expected to solidify a position strong enough to rival Netflix, which dominates the market with over 12.37 million subscribers. The agreement to bring together the two platforms was inked in December 2023 and was hailed as the first step towards creating a 'native super OTT'. However, the promise of a combined force has remained unfulfilled due to ongoing internal disagreements, particularly involving KT Corporation, the second-largest shareholder of TVING, which holds a 13.54% stake.
KT's indecision over supporting the merger is pivotal, as it has effectively taken on a "casting vote" role in negotiations. While CJ ENM, a major stakeholder in TVING, strives to strengthen content production and operational capabilities, KT has expressed a cautious stance. The company is meticulously evaluating whether the merger presents real economic benefits beyond mere equity integration.
According to industry insiders, KT's hesitation stems in part from concerns that a successful merger could lead to further erosion of its IPTV subscriber base, which is already under pressure due to fierce competition from global giants like Netflix. An anonymous source in the OTT industry noted, “If a giant OTT emerges from this merger, KT's IPTV subscribers may flee in droves, further destabilizing an already struggling pay-TV ecosystem.”
The rising dominance of Netflix has severely complicated the situation. In recent months, Netflix has introduced a competitive ad-supported subscription tier priced at just 5,500 won, along with strategic partnerships with Naver and regional broadcasters like SBS. This aggressive pricing strategy has led to a reported 1.5 times increase in new subscriber numbers during the last quarter of 2024, setting a challenging benchmark for local services.
Moreover, Netflix's exclusive deals, such as securing rights to classic Korean dramas through partnerships with local networks, have bolstered its content library, drawing more viewers away from domestic providers. As observed by a Naver executive, this collaboration has not only improved their subscription metrics but also enhanced user engagement across their platforms, further complicating the stakes for TVING and Wavve.
Adding to the complexities, the Korean OTT landscape is becoming even more competitive with the entry of Apple TV into the market, enhancing the capabilities of local services. Until now, Apple TV primarily catered to iPhone users, but a recent shift included launching an Android app, marking its serious commitment to capturing the South Korean audience.
With mounting operational losses — TVING reported losses of 76.2 billion won in 2021, escalating to projected losses of 710 billion won in 2024, while Wavve's figures revealed losses hitting 803 billion won in 2023 — the urgency for both companies to merge intensifies. Combined, their subscriber base could potentially surpass 8.52 million, elevating them to the second position in the market and creating a formidable competitor against Netflix.
Industry experts like Professor Shim Youngseop from Kyunghee Cyber University suggest that the delayed merger can be attributed to conflicting interests among key stakeholders. "The content provision strategies of CJ ENM and KT are misaligned. Each entity pursues its agenda, making negotiations difficult due to diverging priorities over content IPs and revenue sharing," he explains.
Adding to the mix of challenges is the resignation of Park Geun-hee, the head of Wavve Americas, which has put a further strain on the firms' global expansion plans. Park, who has been at the forefront of developing global strategies for K-content, is reported to have resigned amidst the ongoing merger stalemate, raising alarms over their potential international outreach.
The interruption in collaboration also reflects a broader trend that threatens the competitive stance of Korean OTT platforms. According to the 2024 Broadcasting Media Usage Behavior Survey published by the Korea Communications Commission, YouTube and Netflix are far ahead in market share, capturing 72.7% and 36.0% respectively, whereas TVING and Wavve are struggling with only 14.8% and 6.9% market shares.
The dynamics at play are further complicated by recent developments in content strategy from conventional broadcasters. For instance, SBS recently entered a six-year exclusive content deal with Netflix, while MBC has begun focusing its offerings on Coupang Play. These actions diminish the competitive advantage of local OTT players by depleting the exclusivity of their content libraries.
As discussions on the merger continue to stagnate, industry observers stress the importance of engaging government regulators to facilitate a resolution. Public sector interventions may be warranted to foster a healthier environment for domestic content creators to thrive amid international competition. Comments from market insiders indicate that a coordinated response from the authorities may help streamline negotiations and possibly facilitate an agreement.
Overall, the merging of TVING and Wavve is not merely a corporate adjustment; it is a critical strategic maneuver necessary for the survival of domestic OTT platforms. The ongoing dissolution of discussions could significantly undermine the competitive edge of South Korean OTT services. With global players asserting their dominance, the urgency for a successful merger cannot be understated as both companies seek to bolster their content capabilities and broaden their subscriber base. Only time will reveal whether these negotiations will yield a favorable outcome, but the stakes are increasingly high for all parties involved.
