KT’s Olleh has launched the world’s first ultra-high definition pay TV service
South Korea’s largest IPTV provider KT Corporation (formerly known as Korea Telecom) has launched the world’s first ultra-high definition (UHD) pay TV service, called “Olleh GiGA UHD TV”. In conjuncture with this new service, KT announced the “GiGA” internet service, offering its fastest broadband speeds to date, to support the UHD TV delivery. The UHD pay TV service is priced at KRW 12,320 per month with four possible monthly STB rental contracts: no fixed plan, one, two and three year contracts are respectively KRW 9,000, KRW 7,000, KRW 5,000, KRW 4,000. KT plans to provide an exclusive UHD channel through satellite service affiliate KT Skylife, and secure over 500 UHD programmes by the end of 2014. KT intends to invest KRW 10.2b in order to launch three further UHD channels by 2015.
Whilst KT’s service is the first to launch, it’s not the only South Korean pay TV operator with UHD ambitions; SK broadband has announced that it will launch a UHD service called B tv UHD, and LG has also stated that the next STB for its Uplus IPTV service will be UHD-capable.
The move towards UHD pay TV services can be seen as an attempt by providers to gain market share.
South Korea is a saturated pay TV market, with almost 96% of TV-owning households expected to be subscribing to pay TV service by the end of 2014. Future pay TV growth for any South Korean operator largely depends on its ability to win subscribers from its competitors, whilst retaining its existing customers. Service-based differentiation is an important part of this strategy because it removes the necessity to compete solely on price and better facilitates revenue growth.
UHD TV set household penetration in South Korea is currently low at 1.1%, but will increase to 17% by 2018, with LG and Samsung driving strong demand in their domestic market. Early adopters looking to access UHD content on their TVs will be an important opportunity to win market share. IPTV operators are well positioned here: UHD content will be relatively scarce in the format’s early years, making what content is available better suited to IPTV’s native on-demand video delivery than the linear broadcast channels that cable, satellite and terrestrial operators rely on. IPTV operators can also manage the bandwidth used to deliver the video, providing them with a significant quality-of-experience advantage over third-party over-the-top (OTT) players.
Pay TV providers cannot win and retain subscribers by simply offering a UHD TV service. Operators will need to differentiate through a superior user experience. Beyond the UHD element, KT’s new STB focuses on improving user experience by being faster and more responsive to channel changes and remote control inputs as well as offering voice control. It also offers a picture in picture (PIP) system with four screens allowing subscribers to watch four HD channels simultaneously whilst the UHD content ecosystem is in its infancy. Given the current lack of UHD content, user experience could be an important differentiator for winning early UHD market share.