Do you still remember Korea’s IT839 Strategy? The Ministry of Information and Communications (MIC), the former communications regulator in Korea, had suggested the government driven IT policy introducing and promoting 8 services, building 3 infrastructures, and developing 9 ICT new growth engines. It has successfully transformed Korean IT industry so competitive today until their dissolution with the new government. After that, there seemed no more significant government push for Korean IT.

[IT839 by MIC]

However, the new government comes up with new scheme called 3-3-7. The Ministry of Knowledge Economy (MKE)’s new strategy aims to support Korean IT sector to penetrate global market. Providing customized marketing support, they selected 13 items and divided them into three categories: 3 strategic items (DMB, WiBro, E-Government), 3 flagship items (Semiconductor, Display, Wireless) and 7 potential items (RFID/USN, Robot, Network, Software, E-Health, LED, Security).

According to this marketing strategy, MKE will play the significant role to help relevant Korean players in those areas to pioneer global market by hosting IT road show, enhancing government relationships and inviting foreign venture capitals etc.

Its first attempt seems to be already in action. Since the president MB Lee’s comment “Mountainous country like Peru definitely needs WiBro” during the last visit to Peru in November 2008, two governments have maintained highly business oriented relationships each other.

[Korean Delegation led by MKE]

As a result, a new delegation led by MKE composed of 100 people from both public and private sector will be sent on 9th March. They will host ICT road shows at the three hub cities  in Central and Southern America such as Bogota (Columbia), Lima (Peru), Sang Paulo (Brazil). Korea’s leading players in DMB, IPTV and WiBro including Samsung Electronics and Posdata will participate in the event. Mr. Lee Han Chul from KOTRA (Korea’s trade-investment promotion agency) mentioned “This event will open the door for exporting our advanced IT such as WiBro” Mr. Choi Won Joon from Posdata commented “Opportunities for WiBro can be found in big countries without established fixed line IT infrastructure like Brazil.”

What Korean ICT companies are good at is developing new innovative services. On the other hand, what they are not good at so far is marketing & sales in overseas market. At least in IT industry, which is directly related to national IT standard and other significant issues, the government surely has a role to support exporting, for example, a political support to help their private sectors to contact foreign public organizations. It is expected that this new government marketing support scheme re-vitalizes the globalization of Korean ICT sector.

Korean Mobile TV operators are facing the biggest challenge never expected to happen at that time they decided to enter the terrestrial Mobile TV business, also known as T-DMB(Digital Multimedia Broadcasting) in South Korea, in which they eyed “Cash Cow”.

T-DMB service was started with a revenue model that relies solely on advertising, which was expected by the Korean government to keep T-DMB afloat. It, however, turned out to be wrong, and now T-DMB operators call on the government to allow them to create new revenue streams such as activation fees.

T-DMB operators have long suffered from sluggish advertising revenue regardless of a skyrocketing growth in the number of T-DMB viewers, which account for about a one-third of the nation’s total population almost getting closer to the number of cable TV subscribers. As we can see the table above, T-DMB’s ads revenue is only about 1.2% of cable TV’s revenue, which is too low, even considering average overall viewing rates of about one-tenth of cable TV’s. But, it doesn’t seem that the ads revenue will be increased by that reason because DMB advertisers are more concerned with the advertising exposure rate, rather than the viewing rate or time.

Advertisers understand that DMB users watch TV programs while on the move, and if ads come up, they usually avoid watching them. But, 2007 consumer behavior research report by KOBACO, Korea Broadcast Advertising Corporation, indicate that T-DMB viewers who watch the ads in which they are interested accounts for 33.7% of total responders, which is higher than 17.4% of terrestrial TV viewers.

This is a positive sign to DMB operators and certainly helpful for them to promote their advertisng effectiveness to the advertisers. However, Korean Mobile TV operators doesn’t have enough capital left to maintain their business so they may discontinue DMB service on subways, which costs them more than half of their current profits. It will be so hard for DMB operators to decide whether to stop service on subways since it may create vicious cycle in that most DMB users watch TV programs on the subway. So, it is seen that DMB operators need to find a wise way to overcome revenue shortfall.

KT, South Korea’s largest fixed-line and WiBro operator, has created new business opporunities combining WiBro with other services in ways to expand its WiBro market and increase users. Last year KT kicked off a trial run of its WiBro-based Mobile IPTV, which was successful. Now it is expected among Korean WiBro operators, KT and SKT, that their WiBro business will gain momentum with the launch of Mobile IPTV service after the roll-out of 4G networks capable of providing 100Mbps data transfer rates that mobile IPTV requires.

Mobile IPTV is widely regarded as an IP-based multimedia service platform that embodies a combination of ubiquity, IP, and personal. Through Mobile IPTV users will be able to make a phone call over the internet, watch TV programs or UCC videos on the web, and enjoy various interactive services in an all-in-one device having relatively high efficiency when compared to DMB.  

Source: Samsung Electronics

According to KT insider it is assumed that the numer of subscribers to mobile IPTV can amount to the number of mobile phone users, which is four times bigger than possible fixed IPTV subscribers. So, it is certain that mobile IPTV will be an attractive service platform for IPTV service providers to use.

Source: Samsung Electronics