People can easily watch the OTT program anywhere they want.
/Photography by Eom Hye-rin
Have you watched the drama “Squid Game,” which is gaining popularity all over the world? Squid Game, which was first released to the public by Netflix in September, drew attention from people around the world and rode a wave of box office success. What was the secret of Squid Game that sensationally captivated people’s attention? Due to the prolonged epidemic of COVID-19, entertainment industries such as movies and dramas have suffered unprecedented confusion and changes. The pandemic also influenced theather district which made it suffer a lot of losses, so the alternative chosen by many directors and actors was Over The Top (OTT) services. As such, the way people access media such as OTT platforms, and Social Network Service (SNS) has changed a lot, and various online industries have undergone many changes because of COVID-19. In addition, the e-commerce market, where online channels are widely used, is also growing, and a new type of commerce method has emerged. Now, it seems familiar to see and purchase products online using electronic devices. Let’s look at direction in which these industries have undergone changes, what needs to be improved in order for this industry to develop further, and in what direction it needs to move forward.
The method of content distribution has entered a new phase
When many people heard the phrase “channel of content distribution,” they might think of people huddling in the living room watching TV. Previously, most of the existing content distribution channels were conducted in real-time. Therefore, it was common to watch or listen to the broadcast at a time set by the broadcaster rather than watching or listening to it at any time. However, as the new content distribution platforms such as OTT and SNS emerged and grew, the word “Home Theater” has become an old saying. The newly emerged content distribution platform can be seen through the growth of various contents of OTT and SNS. In particular, during the pandemic, the number of subscribers and sales of new content distribution platforms increased noticeably compared to the past.
The popularity of OTT services is rapidly increasing day by day
OTT refers to a TV service that can be viewed through the Internet. It provides contents through a general-purpose Internet network rather than radio waves or cables. The development and distribution of high-speed Internet lies behind the emergence of OTT services. This is because video services can be enjoyed without any inconvenience as long as Internet speed is guaranteed. Therefore, most OTT services began to come out in the mid to late 2000s. Due to the prolonged situation of COVID-19, the growth rate is accelerating. Producing and releasing a movie became difficult, and although it was released, only a few people visited the theater to watch it. However, OTT services are characterized by less time and space restrictions on production because the broadcasting hour is not set. On the other hand, when producing actual movies or dramas, broadcasting time limits exist. As said, the OTT service does not have the same limits, so directors can show whatever they want to show through dramas and movies. The development of smartphones is another reason for the increase in demand for OTT platforms. Now, the smartphone is considered as more essential media than TV. According to a survey released by the Korea Communications Commission earlier this year, 67.2% of smartphones were recognized as essential media in everyday life as of 2020, which is a significant difference from TV (29.5%). As the usage rate of smartphones increases, interest in OTT services, that can easily show programs, has also increased. Typical OTT platforms include Netflix, Wavve, TVing, and Watcha. Among them, Netflix is the most popular OTT platform headquartered in the United States (U.S.), with 210 million members from more than 190 countries around the world. Under the name of Netflix Original, it also produces its own dramas, movies, and entertainment shows. In addition, the news of the Disney Plus service launching in Korea attracted many people’s attention on November 12th. Disney Plus is a subscription online streaming OTT service launched by Disney in 2019. It is a service that Disney operates on its own to compete directly with Netflix, and consumers’ interest was high even before its launch because of its wide range of users with high loyalty to independent content. It will provide more than 7,500 TV series, more than 500 movies, and original works that can only be seen on Disney Plus for all age groups. With the development of OTT, there was a work that became very popular. Squid Game is a representative self-produced drama content exclusive in OTT. By showing Korea’s unique games, it evoked nostalgia to Koreans, gave freshness to foreigners, and received a lot of love. Not only Squid Game, but more self-produced contents such as Sweet Home, My Name, and Back Spirit are also emerging.
The number of SNS users increases
SNS refers to a web-based service that allows individuals to publicly or semi-publicly build their personal information within a particular system, and present a list of other users they are associated with, and a list of other people in the system. Although definitions vary depending on which perspective they follow, elements commonly pointed out in the definitions are online spaces called websites, the formation and maintenance of interpersonal relationships, the structure of networks, waves of networks, and information exchange. Representative SNS include Facebook, Instagram, and Kakao Talk, and people communicate through them. Instagram showed a 13.4% increase in usage time compared to 2020. Thus, it can be assumed that many people being restricted from outdoor activities due to COVID-19 had a significant impact on making them spend a lot of time on SNS. It has characteristics such as a role as a marketing tool, being able to communicate with others non-face-to-face, and have an influence on others. Park, an SNS user, said, “I am currently using SNS such as Instagram and Kakao Talk. The reason why I am using them is to communicate with others and share my daily life. Since, most people are using SNS, even in some cases, I cannot form a bond of sympathy with those who do not use it.”
OTT and SNS need improvements
As OTT develops, some things need to be improved. There is a controversy over reverse discrimination between domestic OTT platforms and overseas OTT platforms. Domestic OTT promotion policies promised by the government, including tax deductions, have stopped without taking the first step. Meanwhile, overseas OTT is controversial because it generates huge sales in Korea but does not pay any network usage fees. As individual OTT provides increasingly differentiated content, consumers cannot watch all the content they want on a single platform anymore, and multiple OTT subscriptions are increasing the economic and psychological burden on consumers. In January 2021, the Fair Trade Commission reviewed OTT’s terms and conditions. It corrected provisions that stipulate non-refundable requirements, penalizes unfair disadvantages to customers, restrict subscription withdrawal rights, and arbitrary rate changes without prior notice or consent.
According to Jung Won-sik, a professor of Division of Culture Content at Chonnam National University, the outlook for OTT is very bright, and the paradigm of the media environment is shifting around it. However, OTT can lead to flooding of provocative content beyond social standards, fake news, and macroscopically hindering cultural imperialism or content diversity. Therefore, due to openness and the nature of OTT based on global networks, controversy, and trial, and error are expected over the next considerable period of time.
In the case of SNS, exposure and abuse of personal information are problems. If users interact with people on SNS, their personal data can be unintentionally exposed to unwanted people. In addition, Facebook has a function of notifying the place where the user posted, which is likely to expose the user’s location. There are also cases where companies use personal information commercially to find what consumers want, which is considered the biggest drawback of SNS. It is also the most powerful cause of the spread of unclear information. Therefore, these aspects need to be improved, and it is necessary to think about ways to refine it.
Food is being sold through live commerce, and viewers are communicating with sellers by chatting.
/Extracted from BAEMIN Shopping Live
People’s Consumption Culture Has Also Changed
With the advent of COVID-19, many changes have occurred in the media contents distribution industry such as OTT services and SNS. Besides, online platforms are emerging and developing in various fields, and the e-commerce platforms, where online channels are used the most, are also growing due to multiple factors. So, let’s take a look at how it is developing in this regard.
What is an e-commerce platform?
E-commerce, an abbreviation for electronic commerce, refers to all types of transactions (online shopping, online retail, and so on) of buying and selling goods or services through an online network using electronic devices such as smartphones and computers. The platform based on this is called the e-commerce platform. In the late 1990s, the word “electronic commerce” was first introduced in Korea and the growth of e-commerce has accelerated with the rapid development of the Internet. Recently, with the proliferation of smartphones, the PC-based e-commerce market has been rapidly moving to mobile shopping.
The spread of COVID-19 has changed our lives to non-face-to-face activities as social distancing is required, and it has become an opportunity for people in their 50s and 60s who enjoyed offline shopping more to experience online shopping. As a result, “untact” related service industries have been in the spotlight and the provision of various non-face-to-face services has accelerated, resulting in a significant increase in sales in the online shopping industry. According to SSG.COM, one of Korea’s leading online shopping malls, since January 2020, when the spread of COVID-19 began in earnest, the closing rate of orders for SSG delivery has soared to the national average of 99.8%, up about 20% from the existing national average of 80%.
Online shopping malls and live commerce are developing
Representative examples of e-commerce platforms include online shopping malls and live commerce, which has recently gained new interest. Because of the prolonged COVID-19, there is a risk that there may be contact with many people if a consumer directly goes to the shopping mall, so many people have come to use online shopping malls, which is a relatively convenient and safe way to purchase products as they do not have to be in contact with people. Coupang, one of Korea’s leading online shopping malls, also grew rapidly as the non-face-to-face culture spread. Coupang’s sales in the first quarter of 2019 amounted to 1.5602 trillion won, which was more than three trillion different from Emart’s sales (4.5854 trillion won). However, it has narrowed the gap significantly in just two years by expanding the sales volume based on its high market share in the online shopping market, which has become the trend in the aftermath of COVID-19. Compared to the first quarter of 2019, Coupang’s sales growth rate was 232%, more than eight times the growth rate of Emart (27%) during the same period. As such, the number of people shopping through online shopping malls or SNS open markets is increasing.
In addition, “live commerce,” in which customers communicate and shop in the form of real-time streaming broadcasts, is emerging. Live commerce is a compound word of live streaming (meaning real-time) and e-commerce, and it refers to a new commerce method in which real-time Internet streaming broadcasting and e-commerce platforms are combined. The live commerce platform is characterized by a combination of online and offline shopping by providing an environment where customers can safely enjoy the convenience of online shopping while communicating with broadcasters in real-time as if purchasing goods directly from offline stores.
NAVER Shopping launched the live commerce “Shopping Live” service in March 2020, and it has been receiving positive responses. The cumulative number of shopping live contents was 60,000 cases, and the cumulative number of views and purchases was 300 million and 3 million, respectively (as of June 2021). In addition, by opening a dedicated studio for small and medium-sized business owners, space and equipment are supported, and customized online education is being conducted. Using live commerce, small and medium-sized business owners are also growing together. BAEMIN, famous for its domestic delivery application, also officially launched “BAEMIN Shopping Live,” in March. BAEMIN Shopping Live topped 40,000 viewers on average a month after its first broadcast and increased to 60,000 viewers three months after its launch.
Live commerce delivers sensations and emotions that could not be conveyed with simple photos or texts. It is positioned as a popular platform by distributing content while answering customers’ questions in real-time. Accordingly, many e-commerce companies are expanding the use of video rather than text or images to differentiate contents and are attempting various commercial videos or streaming such as live commerce.
Park Ye-jin, a live-commerce user, said, “It is difficult to go shopping outside due to the COVID-19, so I have been using online shopping a lot. At first, I was very anxious about buying things online because I could not check the product myself and had to wait for delivery. However, I was relieved to see and purchase the products in real time through live commerce. I watch live commerce videos frequently because I can see the shape or color of products realistically without visiting the store, and I plan to purchase various products such as clothes and food by using live commerce.”
The e-commerce platforms will continue to grow
The biggest reason consumers use the e-commerce platform is that it is easy to use because they are relatively free from time and space constraints. In addition, consumers can purchase items anytime and anywhere if they have electronic devices such as smartphones. Aside from this, from the perspective of companies, they have the advantage of being able to use netizens around the world as buyers. Also, operating costs such as distribution costs and building rent can be greatly reduced, and inventory management is efficient compared to other offline platforms.
For these various reasons, the size of the global e-commerce market is expected to grow continuously in the future. According to the “E-commerce Outlook Report” released by media investment company Group M in December 2020, the global e-commerce sales in the retail sector in 2020 are estimated to be close to four trillion dollars (about 4,414 trillion won). This is an increase of about 19% compared to the sales of 2019 (3.167 trillion dollars). Group M estimates that by 2024, the e-commerce market will reach 6.82 trillion dollars, accounting for 25% of total retail sales. If the global e-commerce market continues to grow at a double-digit rate every year since this year, the retail e-commerce market is expected to reach a total of 10 trillion dollars by 2027.
There are some problems that need to be improved on e-commerce platforms
Due to the nature of online shopping where customers cannot see or touch a product, they decide whether to purchase by predicting the actual product through reviews. However, abusing this point, problems such as posting reviews with good product reviews at the top or mobilizing manpower to fabricate reviews are occurring. Even professional agencies that fabricate reviews post false reviews by mobilizing part-timers, so review manipulation is a form of collaboration between professional agencies, part-timers, and sellers who requested review fabrication. However, since it is not easy to distinguish whether the actual buyer left a review or the part-timer received an empty box and wrote a false review, it is difficult to find evidence for review fabrication through an agency.
Another problem is the lack of regulations related to live commerce. Live commerce is similar to home shopping in that it introduces and sells products in real-time through video, but it is not subject to the same regulations as home shopping because it is not transmitted through radio waves. Live commerce is classified as a communication medium such as YouTube, not “broadcasting,” so it is not subject to deliberation or regulation because it is possible to do business only by reporting under the Electronic Commerce Act. In other words, there is no way to prevent exaggerated or false advertisements of products. Moreover, if a consumer has a problem after purchasing a product, the platform’s responsibility is close to zero. Even if consumer damage occurs due to false or exaggerated expressions, the platform only needs to take minimal measures to resolve disputes since it is not a selling party. It is a form in which consumers have to talk directly with the seller, and this is why it can be seen that the protection of live commerce users is not sufficient.
There were many inconveniences while living non-face-to-face because of the COVID-19, but behind it, we were able to experience the growth of the new online platform industries. As such, the development of online content distribution platforms and e-commerce platforms is expected to allow related industries to grow together. The content distribution platforms will be able to develop the entertainment and content production industries, and the e-commerce platforms will be able to develop the payment system or delivery industries. However, it is most important to improve the problems brought about by these industries’ growth and to reduce the damage to consumers by establishing related regulations.
Eom Hye-rin, Choi Yu-ri firstname.lastname@example.org, email@example.com
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