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Market Insight

South Korean operators challenge Google Play and Apple App Store

June 15, 2015


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The three largest mobile operators in South Korea, SK Telecom, KT and LG Uplus have launched One Store, a unified app store, for their smartphone users. One Store is a combined version of Olleh Market (KT), T Store (SK Telecom), and U+ Store (LG Uplus). This partnership will strengthen the presence of South Korean operators in the local app content sector which is currently dominated by Google and Apple stores.

One Store is available for users through an upgrade to existing operator app stores already on users’ smartphones. The three operators hope that the unified app store will help in cost saving and that funds will be used to invest in Korean developers’ IT projects. SK Telecom announced that the most recent T Store software development kit (SDK) will be fully compatible with One Store SDK. 

Our analysis:

To access South Korean mobile operator stores, developers have had to register their applications separately on three different platforms, Olleh Market, T Store and U+ Store which have slightly different policies and procedures for app developers. The introduction of One Store will ease the registration process while the unified data management will provide integrated information from the three operators in terms of customers, downloads and sales. Mobile subscribers will be able to access unified customer app reviews and preserve their application purchase history even if they switch to another mobile operator.

The three mobile operators have been investing heavily to differentiate their content ecosystems. In 2010, the Korea Communications Commission (KCC) started the unified store initiative as it was considering ways to avoid the mobile operators from spending too much in marketing competition. The first approach is to prevent the operators from spending more than 20 percent of their revenue on promotional expenses. The other one is to allow the operators to work together on an integrated platform to enable subscribers’ access to a greater pool of applications.

Partnering will help, but there is limited ability to compete with Apple and Google

South Korean mobile operators have retained a stronger role in the mobile content market on Android than most of their international competitors. Following Apple’s launch of its App Store in 2008, there was a flurry of activity from mobile operators looking to compete with app stores of their own. In most cases operators have either scaled back or abandoned these plans altogether while in some cases retaining a role in the Android app market by providing billing support for Google Play. The operators may have had a stronger position, but this consolidation is a sign that it remains a struggle to compete with the global scale of OTT stores from Google and Apple (which remains the only app store provider for iOS devices). The unified approach will help mitigate the lack of scale that individual stores suffered from, and the streamlined processes will be welcomed by developers – but the real challenge is persuading users and international content developers to use an alternative store to the dominant Google Play.

Operator partnerships have a poor track record

KT, SK Telecom and LG Uplus had all previously signed up to the Wholesale Applications Community (WAC). First announced in 2010, WAC was an alliance between 24 global carriers to create an open applications marketplace. Despite the public support of many operators, WAC never really got going and was closed by 2012 – as operators struggled to work together and compete with global players. 

Geography
South Korea
Organization
KT LG Uplus SK Telecom
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