Online Streaming

IT Infrastructure

 

Source: pixabay

One of the distinguishing features of Korean culture is the ‘Bbalee Bbalee’ culture, which translates to ‘fast and faster’ culture. Korea is believed to have the fastest and easiest accessible internet systems in the world.

Korea is known to have a robust IT Infrastructure facilitated by the population density in large cities. Close to 50% of the population lives in the Seoul Metropolitan area which makes free, high-speed Wi-Fi easier to deliver than in other countries.

Most cafés and restaurants have free Wi-Fi and all mobile phone companies provide free Wi-Fi in subways. While the internet is essential to everyone, the dominant mode of access is shifting from computers to mobile devices.  As a result, the penetration rate for computers per household is actually decreasing.

Source: Korea Communications Commission 

Korea boasted the fastest internet speed over 13 quarters until 2017. In 2019, Korea's internet speed ranked 30^th. As the 3^rd generation and 4^th generation communication networks were established in Korea before most countries, as time passed, other countries installed more advanced technology-based communication networks providing faster internet and edged ahead of Korea. However, Korea was the first to commercialize high-quality 5th generation communication network so it is likely to recover first-rank status again soon.

 Telecom Generation Characteristics

 

Source: Compiled by IRC Consulting

Online Content

As the speed of internet increased, it created an ecosystem for the growth of online streaming. As there are no location and time restrictions to online streaming creates more demand for its content. The Z generation, which is comfortable with digital environment with the growing content to choose from also contributes to the demand.        

As much as the demand for online streaming content is growing, the supply is also increasing. Not only is it becoming simple to create and distribute contents, it is also easier to penetrate the market as the number of streaming platforms increases. Moreover, as all platforms are internet based, there is no longer any distinction between domestic and international content. 

 

Streaming Music

After MP3 players were introduced and replaced most of portable music devices, the music industry discovered new emerging problems. Initial issues were the decrease in CD sales and poor returns on massive investments in music albums. One solution to this problem was to create a ‘Digital Single Album’ which contains a single digitalized mp3 file song. However, digital single albums did not solve the core issue which was free uploads that violated copyright. The music industry had to make major changes to overcome these new developments. These problems encouraged the music industry to take advantage of streaming, which turned out to be a great success. Compared to videos, live media sound data files are smaller and much easier to stream. Live streaming solved most of the issues that were plaguing the music industry but also changed the consumers. After moving on to streaming, consumers did not have to wait in line or stay over-night in front of a store to be the first to listen to a new album. Moreover, the Golden Disk Award (Korean Music Award) changed its evaluation ratings from ‘album sales’ to ‘music streamed.’

There are currently three main music stream services Melon, Bugs Music and Genie Music. Melon is the number one music service provider and has services connected with other favorite contents like Kakaotalk and they offer a discount for SKT telecom mobile services. Bugs Music, the oldest of the three has the most albums.

Streaming Video 

Over the Top (OTT) video streaming was first introduced to the public in 1999 by ‘Hananet’ and ‘DreamX,’ but due to the slow streaming speed and poor quality, it did not take off. As transmission speeds began to grow, it was possible to provide video streaming with speed and quality. In 2016, a survey by a mobile app ‘CashSide’ revealed that out of 1,173 viewers about 75% watched two or more videos every day and within the 75%, 34.4% watched 2~3 videos, 21.8% watched 4~5 and 18.4% watched over 10. Youtube has the largest streaming market in Korea but other Korean platforms are growing and challenging Youtube to become number one.

The freedom to choose content and time that suits the viewer is one of the most significant advantages of the streaming media. Also, the consumption pattern and media trends for streaming consumers are changing and they now enjoy ‘Snack Culture’, contents which are short and natural like a snack. As internet streaming grows, television viewing is decreasing. Some elementary school students do not know famous movie stars or past presidents but remember all the favorite live streamers.

Source: Compiled by IRC Consulting

l  Web/Portal Based Streaming

 

1.    Afreeca TV: Afreeca TV is the domestic leader in live broadcast streaming. As a broadcasting system, it requires an open chat room where the viewers have instant interaction with the Streamer (also known as Broadcasting Jockey in Korea). Similar to Twitch, Afreeca TV has a donation system to ‘shoot stars’ to the streamer you would like to support which, along with advertising is a revenue source.

 

2.    Naver (TV cast): Naver is the number one Korean portal website that gives it a strong brand image, interaction and connections. Naver started developing the streaming platform in 2015 with highlights from sports events such as baseball, soccer and other sports. Naver expanded into three types of platforms. The first is ‘TV cast’ which focuses on sports highlights, e-sports and comedy. The second is ‘Playleague’, a subcategory of TV cast but based on user content. The third is ‘V app’ which is a platform for celebrity live broadcasting. V app is a mobile-based platform essential for fans of K-pop or K-culture.

 

3.    Kakao TV: Kakao is one of the most popular mobile messenger apps in Korea, similar to ‘Whatsapp’ in the U.S. Daum TV was the name of the initial platform but after the merger of Kakao and Daum it was changed to Kakao TV because of the brand power. Kakao TV focuses on videos and live internet broadcasting allied with new major broadcasting companies. The most significant advantage is that consumers can simply and directly share media through their messenger platform.   

       

l  OTT/VOD Based Streaming

 

1.    Whatcha: Whatcha is similar to Netflix but is a startup company that provides service at a lower monthly cost. Like Netflix, Whatcha creates a recommendation algorithm for users based on viewing patterns.

 

2.    Tving & Pooq: Tving and Pooq are both known for their content businesses. Tving provides contents from CJ E&M, which is running the largest K-culture businesses such as tvN & Mnet dramas, music videos, movies, comedy and other types of shows. Pooq is a joint investment by all the terrestrial broadcasting companies.

 

3.    Mobile Carrier Streaming: One of the best ways for users to consume more mobile packet (data) is large video media, which accounts for a significant portion of data. Therefore, to encourage data usage, all three major mobile carriers (SKT, KT, LGU+) have been developing new and exciting platforms. With the penetration of smartphones, the mobile carrier streaming industry is proliferating.

A.     LGU+ started in May of 2015 with a business platform and held the higher ground compared to the other two companies with the most contents.

B.    SKT started after LGU+ with live TV, VOD, video clips, sports and movie contents with a platform named Oksusu.

C.    KT started most recently in 2016 with ‘Dovido.’ Dovido is a compound word of do+video+do, which can shoot, edit, upload and make videos on one platform.

 

l  Social media

Until recently, the most popular social media was Facebook but this has changed. A ‘Report on Social Media and Search Portals in 2018’ by Open Survey stated that compared to the previous year the users of Youtube as a social media had significantly increased becoming the most used followed by Instagram, Facebook and Naver post/blog.

 

Opportunities and Risks

 

The online streaming industry has also shown potential for growth in other industries. As online streaming of music has increased the demand of complimentary products such as AI speakers, content media streaming can generate interest in domestic products and Korea itself.

There are great risks as well as major distributors such as Netflix and Spotify can dominate the market while suppressing and controlling contents. There is also conflict with existing media. In the past, movie theaters and TV shows enjoyed a time buffer before it was released online. However, Netflix is releasing movies at the same time as theaters which might destroy the existing markets. Lastly, regulations regarding Korean media are strict compared to other global leaders. This will open the door for overseas media development while the domestic contents will have to contend with regulations and standards which are not a problem elsewhere.          

Korea has high internet speed, wide adaptation of smartphones and many early adopters. Developments are ongoing even as we speak. In the subways, everyone has their face buried in their smartphones watching something. Live streaming is becoming a part of everyone’s life.

With Covid19 spreading, social distancing turning mainstream, usage of online streaming increased. Untact (a term created to emphasize absence of contact) activities are growing and online streaming contribute a major part into it. Instead of meeting someone or going out for a drink, people tend to stay home and watch movies, dramas, or other streamers contents. The growth of online streaming was already significant but with Covid19 working as a catalyst, the sky is the limit.

  

contact@ircconsultingkorea.com  

IRC CONSULTING 

Suite 1705, Officia Building, 92, Saemunan-ro, Jongno-gu, Seoul, Republic of Korea 03186 

서울시 종로구 새문안로 92 광화문 오피시아빌딩, 1705호 Tel: +82-2-737-3222,  http://www.ircconsultingkorea.com

EDUCATION: THE SOURCE OF KOREA’S BEST RESOURCE, SKILLED HUMAN RESOURCES

Korea is a country with few natural resources.  The "Miracle on the Han", the model of transformation of an impoverished nation to a global industrial powerhouse, is the product of skilled human resources.  Let's take a quick look on how Korea developed this all-important resource.

 

Korean Education

 

Enthusiasm for educations is embedded in the Korean DNA. Education has been the key to social advancement for centuries.  Successful scholars earned access to coveted royal appointments bringing success and resources to the scholar and his family.  While learning was involved, the key value was social access.

 

In the modern era, education remains an important key to success.  Free, universal education through middle school is a right enshrined in the constitution.  In 2018, the vast majority of the population (88%) graduated from high-school and 49% graduated at an university, technical college or some other form of post-secondary professional training.

 

Given that education is the key to success, it has always been highly competitive.  Students are assigned to schools based on their residence.  Parents often move (or falsify their residential address) to districts that offer the best education. The ‘Eight Gangnam School District’ is the most popular as it is believed to be the ticket to better education. (The district is a wealthy district and the reputation for good education is further driving up housing prices in the district).

 

The importance of education has stimulated an entire industry of 'after-school' study (sometimes referred to as 'cram schools'). Lines of cars can be seen standing outside of popular academies as parents wait for their children ready to rush them to their next scheduled study session. In 2019, the market size of private education for elementary, middle and high school students was calculated to be around KRW 21 trillion (US$ 1.8 billion) with 74.8% of all students attending at least one after-school class. This polarizes opportunities for wealthy families.  In response, to promote equal education, the government is working to provide more affordable public education.

 

 

Education changes

 

The education system has changed in many different ways since its modern education was first established in the years following the second world war. However, the fundamentals of the education system have not changed much. Students focus on memorizing materials rather than trying to understand or apply it. This rote learning was highly applicable during the early period of rapid industrialization that required disciplined, repetitive action. However, it is less useful for more advanced skills.

 

Starting from 2011, the government focused on developing a 'smart education' system, to prevent private education dominating the market and to provide equal opportunities for education. Extensive afterschool programs were established and online courses on EBS online (Korea Educational Broadcasting System, a public broadcasting organization) were created. This had little impact on reducing the private education sector but it allowed more students to have access to education. Despite this effort, the basics of the education system did not change and the government continues to grapple with implementing fundamental improvements.

 

Impact of Covid19 on Education

 

Covid19 has affected all aspects of Korean society including education. The initial response was to suspend all classes until Covid19 was under control. However, it is still not fully under control but education cannot be suspended forever. After schools re-opened, within 2 days, 800 school were closed again. The Ministry of Education announced that online education cannot be 100% effective, but it is still essential. School that remain open are providing both online and offline classes to reduce the risk of Covid19, while Schools that are closed school are providing only online courses.     

 

As this new system was applied suddenly, society was unprepared so applying and adapting education online caused various issues. The greatest problem was technical issues caused by a sudden change in the system. While teachers and professors were not comfortable with online technology, they were forced to provide online classes without proper understanding of the technology or teaching methods. The students were also not used to the system which caused participation problems and other issues. One technical problem is that it is difficult to track what the students are doing, especially for exams. There was one incident where 80% of the students shared answers during a medical school university exam. Now most schools seem to have the capability to provide online courses but they are still getting used to it.   

 

 

New Normal Education

  

 

Challenges are emerging from the new Covid19 era education paradigm. Online education for elementary students is less effective compared to middle school or high school students. In schools, students learn not only the subjects taught by the teacher but also learn interaction with other students and adapting to new and different environments. Teachers also have difficulty in bonding with the students, unable to provide them the personal care that they need. Middle school and high schoolers obtain better results with the online education compared to elementary students as they are able to concentrate more.

 

As hard as it is for students it is also equally difficult for teachers.  They must create new programs and new ways to convey course materials. Considering the vast amount of educational content already available on-line from EBS, Youtube and other platforms, it will challenging to present course materials that are sufficiently unique and differentiated. However, if teachers integrate available content into their own courses, there are opportunities to provide even better education than in the classroom format.

 

In the future, as students become familiar with online teaching, it will be difficult for them to give up the upside of the online class experience they have adjusted to and will demand to use some of these methods even after offline classes resume.

 

Even though this was an abrupt change in the education industry, we hope that we can develop systems and processes that will deliver better education in the future.

contact@ircconsultingkorea.com  

IRC CONSULTING 

Suite 1705, Officia Building, 92, Saemunan-ro, Jongno-gu, Seoul, Republic of Korea 03186 

서울시 종로구 새문안로 92 광화문 오피시아빌딩, 1705호 Tel: +82-2-737-3222,  http://www.ircconsultingkorea.com

So Many and Too Many Restaurants

Korea Food Service Market Size 

Units: 1,000 companies,1,000 people, KRW billionSource: 2019 Food and Service Statistics

An interesting fact about Korea is the number of restaurants. In 2017, the number of restaurants and bars in Korea reached over 692,000 which is close to the number of restaurants in the U.S. Moreover, this was twice or more the number in Italy, France, or Taiwan. This fact becomes more fascinating when we consider the ratio to the population.

The ratio of restaurants and foodservice companies per population in Korea is overwhelming compared to other countries.

However, we cannot be optimistic about being the number one country with a restaurant per population. As much as the number of restaurants increases, the competition grows and chance for companies to create revenue decreases. The average yearly revenue per restaurant in 2017 was USD 100,000 compared to USD 800,000 in the US and USD 500,000 in China. We can understand from the data that the foodservice and restaurant business in Korea is a red ocean, where the market is saturated and too many competitors are fighting over a limited market.

Food Service Characteristics

Food Service Industry Outlet Size

Number of Employees	Volume ratio	Revenue ratio
Less than 5	86.40%	50.70%
Between 5 and 9	11.20%	27.30%
More than 10	2.40%	22%

The majority of restaurants are small stores with less than five employees and low revenue. On the other hand, 2.4% of the companies which have more than ten employees account for over 20% of the market. The foodservice market is polarized similar to most other industries. The polarization is not only related to the size of the company but also related to regional characteristics.

 Food Service Industry Regional Distribution

  

Seoul and Gyeonggi-do, which are together considered the metropolitan area, contains 50% of the population and accounts for about 40% of the foodservice industry.

Food Service Industry Categories

Korean food is still the most popular cuisine accounting for 60% of restaurants by number and 56% value.

Units: ea, KRW billionSource: KREI Foodservice Trends and Characteristics

Food Service Industry Trends

The growth rate shows a very different situation. Korean food restaurants are decreasing. Most restaurants showed revenue growth with ‘other national food’ restaurants showing the most, with 39.2%, followed by chicken-based (17.2%) and Chinese food (16.9%).

Delivering focused outlets also showed a sharp growth of 15.4% per annum as customer trends changed toward simple, easy and quick. The increase in single households and double-income households has led to less interest or time to spend on cooking driving the take-out and delivery sector. (For more information on delivery food visit this link)

  

COVID-19 Impact on the Food Service Industry

The spread of COVID-19 in Korea has led to a dramatic decline in the restaurant business.  Although restaurants were never under lockdown in Korea, many people opted to stay away due to social distancing. Now when people eat out and risk exposure to COVID-19, they want to be rewarded with something better.  Therefore, less popular restaurants or value-oriented restaurants will feel more commercial pressure.  This will lead to a decline in the number of small restaurants and increased business for large restaurants and franchises.

Restaurants with delivery and take out services have a better offer to overcome this situation. In response to social distancing, more people will opt for delivery or takeout rather than eat at a restaurant.    

Even though consumer tastes are changing, Korean restaurants still account for the majority of restaurants. A typical Korean meal includes rice, soup, a few side dishes, and the main dish. Generally, more side dishes suggest a fancier meal. When people are dining together, side dishes are shared and diners take the food directly from the dish with their own chopsticks. In light of stopping the spread of Covid-19, this is not ideal. We anticipate that in response to Covid-19 consumers will be less inclined to select Korean food compared to other options.      

Another significant trend influencing the foodservice industry is dining alone.  Prior to 2010, eating alone was not common. Since then, with the increase in ‘single’ and ‘double income’ households, eating alone has started to gain acceptance. With the awareness of Covid-19, single-serving menus and eating alone are also gaining more acceptance while restaurants focusing on single diners are showing growth.

Overall, we can see many opportunities emerging in the foodservice market but equally there are many uncertainties as the full impact of Covid-19 remains unknown.

    

contact@ircconsultingkorea.com  

IRC CONSULTING 

Suite 1705, Officia Building, 92, Saemunan-ro, Jongno-gu, Seoul, Republic of Korea 03186 

서울시 종로구 새문안로 92 광화문 오피시아빌딩, 1705호 Tel: +82-2-737-3222,  http://www.ircconsultingkorea.com