Naver to challenge YouTube dominance in South Korea

 

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Founded in 1999, Naver Corp has grown rapidly over the past 16 years. Today, the internet company has a market cap of more than $19 billion.

The internet company┬álaid out its future global strategy at Connect 2015 in Seoul last Tuesday — its second annual conference organised to discuss its vision and strategy for the mobile industry.

In tech savvy South Korea, YouTube currently reigns supreme, but Naver Corporation, the sprawling conglomerate behind the country’s largest search portal and chat app Line in Japan, vowed to challenge YouTube’s video streaming dominance in 2016.

Naver executives took the stage at the Naver Connect 2015 conference last Tuesday to deliver a message best summed up by two keywords: “live” and “mobile”. They said their strategy will make it possible to challenge video content giants Netflix, Facebook and YouTube owner Google — at least in South Korea.

“The keywords ‘live’ and ‘mobile’ encapsulate our corporate strategy for next year,” said Naver CEO Kim Sang-hun in a keynote speech. “We will focus our attention on providing for our partners mobile-based, live-streaming content, which we believe will be the key to survival in the fast-changing global IT environment against competitors such as Google, Facebook, and even Twitter.”

Kim emphasised keeping an “organic connection” between services and content consumers in order to detect what they want and give them it when they want it.

“In order to protect the domestic movie market, we must shake things up, and provide differentiated technology and content,” said Jang Joon-ki, director of video strategy, adding that Naver will have a two pronged video strategy — one in differentiated services, and another in content.

“Since YouTube entered the domestic market, it started a ‘warring states period’ in the domestic South Korean market. Naver TV Cast can compete fiercely with Facebook and YouTube in video content and in services,” Jang said.

Naver TV produced 290,000 video clips of content a month in the first 10 months of this year — more than double the 140,000 video clips a month the company created during the 12 months of 2014.

This was the result of Naver TV Cast having inked a deal with Smart Media Rep (SMR) for a revenue share of 90 percent for the broadcasters and 10 percent for Naver TV Cast. SMR originally looked for a similar deal with YouTube, but Google insisted on a 45 percent slice of advertising revenue.

SMR consists of seven big media outlets in South Korea — MBC, SBS, CJ E&M, JTBC, TV Chosun, Channel A, and MBN — and launched in the second half of 2014.

SMR, an ad agency for streaming services, provides smart Over-the-Top (OTT) service providers with video advertising proceeds generated from mobile, PC, and smart TV viewership. The seven TV companies of Smart Media Reps make up more than half of all terrestrial and cable TV viewership in South Korea. OTT refers to a telecommunications operator delivering services across IP networks, usually the internet.

In addition to video streaming content, Naver has Line Corp, founded in Tokyo in 2000. Over the past 15 years, it has amassed over 200 million monthly active users in Asia, including Japan, Taiwan, Thailand, Indonesia and, recently, Pakistan.

Naver said it will also gear up other mobile-based services, such as Naver Webtoon, group chat app Naver Band, and V app, a social video streaming service initially focused on marketing Korean pop music in East Asia to ratchet up market share, which has proved a late-blooming success. Naver reported that more than 50 percent of V app viewers come from outside South Korea.

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