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Living the dream of Mobile TV - and demoing it!

(viewed 2514 times)
Today I met with Sean Lee & Kang-Min Ahn who are respectively (on
photo aswell), CEO & CFO of DirectMedia, based in Seoul. We discussed
their business of mobile content distribution and their accelerating
transition to become the biggest mobile content producer in South
Korea.

DirectMedia are a joint venture combining KTF (Korea Telecom Freetel).
Samsung & Yedang (the latter of which is 3rd largest music publisher
in Korea). Their mandate was to explore the opportunities in mobile
from a content perspective, whether that could be achieved via a
platform, application or a service. In 2002 they successfully
commercialised their first mobile TV broadcast and subsequently became
the exclusive mobile content 'operator' for KTF. By 2006 they were the
3G content provider. Since then they have experimented with WiMax,
with mixed results, and now they are branching out into web
distribution with the recent acquisition of the content provider for
the hugely popular Daum portal. So, one could fairly say that they are
in the pretty unusual position of being a mobile content buying up
traditional web/online properties. They just turned over $15M and now
they see themselves as an' Entertainment Content Company' and ready to
take on broadcasters and video producers.

So naturally I had to ask Sean and Kang, how did they start and what
factors led to their success? What insights can we learn from them and
how has their service evolved over the past few years?

Firstly, it is worth noting that 60% of all music downloads are
conducted via mobile in South Korea whereas mobile downloads are only
responsible for 15% of music downloads in the rest of the world.

Secondly, they were able to benefit from the Korean Telco's 'open
umbrella' approach where they create big opportunities for startups in
the mobile space by acting primarily as investors who also offer the
enormous power of their payment systems. In particular, distribution
channels was where all investments were focused at the turn of the
millennium, so DirectMedia was well positioned to take a large chunk
of the money.

Thirdly, and this is where things get spicy, Korea is an interesting
case in terms of how content is released and distributed. Traditional
channels, like TV & cinema, are very important here but there is a
faster turnaround where that content gets distributed onto other
formats like DVD, VOD and now mobile. Whereas Hollywood and western
content companies tend to release content serially into these other
product lines, in South Korea, content releases are almost parallel.
Essentially they are still staggered but within much shorter
timeframes. So whereas in the UK, you might postpone a cinema visit in
favour of typically waiting 3-6 months for the DVD release and a year
for VOD/cable release, in South Korea audiences are able to expect it
much sooner than that.

These factors allowed DirectMedia to capitalise on a hugely under
estimated source of revenue; simultaneous and prior releases of
derivative content. By working directly with the content rights
owners, their distribution power initiated their transition into
producing both online and offline derivative content offerings.

In general, the type of content produced is on a case-by-case basis
depending on the show format, be it blockbuster, TV drama, Talk show
or Sports. Typically you might be able to download the movie
soundtrack via your mobile, get a ringtone or ringback tone. (My
understanding of Ringback tones are when music gets played when you
call someone instead of the normal dialing/beeping sound which has
happened a few times whilst calling people over here - Blondie eat
your heart out - means you end up dancing whilst 'hang-ing on-the
tel-ephone').

By way of an unusual and innovative example, a blockbuster movie is
released and DirectMedia will produce a printed comic & mobile comic
version (either hand drawn or movie screenshots with speech bubbles).
Storylines within the mobile comic format tend to mimic blockbusters,
whereas TV dramas, such as the hugely successful 'Coffee Prince' can
experiment with parallel storylines.

This led me to ask Sean and Kang if this meant that strategies of the
content producers were changing to include provisions for parallel and
derivative content. Their reply was 'interesting you say that!' as
this is one of the key factors for their evolution into a content
production company rather than a pure distribution company. With their
massive distribution power, now DirectMedia is in a position to sign
deals with hugely popular writers and recently signed an exclusive
deal with Park Ing Kwang (need to clarify this name).

Given this is mobile content channel company buying up traditional
Korean web channels in order to distribute their own produced content
online, might you give an insight into the directions Google is
taking. And actually Direct Media like the comparison. Google monetise
via text and display ads that is relatively agnostic, whether it's
search queries or contextual ad matching on content sites. In the same
way, content is the business driver for DirectMedia and what they do
is provide ubiquitous access to it along with unique, rich and
unbelievably fast consumer experiences.

So how do they make money out of this content? Currently through user
subscriptions and pay per use. Advertising is the next model they are
looking to crack. The internet has almost killed off these models in
the UK, has it survived here because they own the digital rights? No,
actually they produce mostly DRM free content and they don't see DRM
free products as a threat.

They believe there is a misperception at work in the realm of content
purchase behaviour. Most consumers would rather be honest, which
corroborates iTunes' story of success, and as long as the price is
right, consumers will buy it. Besides, Sean sees users as not
specifically buying content. He says that users are really buying
functionality. Ringtones, Ringbacktones, music for your blog, videos
on your mobile are all seen as simply applications; Content is Apps.

And this is where perhaps the UK Telco's hand mobile startups are
missing opportunities. Their focus is generally on how to generate
revenue directly from the user, rather than exploring the range of
experiences users want for themselves. Perhaps the west should drop
the content is king mantra, be looking at creating apps and
functionality with content in mind. DirectMedia generate revenue in
three ways. Revenue share on content (b2c), operator fees for
supplying the platform (b2b) and shared data charges on sporadic
special events, such as a Korea Vs Japan Baseball game. Incidentally the only time
their servers have gone down.

So in a world of openness and agnostic distribution the consumer power
of the fanboy still holds true. If people love content and it works
how they want it and when they want it, people will buy it.

Posted by jc1000000

5th Nov 2008, 15:42   comments (4)

Business of Love & War in Korea

(viewed 1184 times)
Following mondays meeting with korean bloggers Chang & Danny, I spent
the rest of the day at with Dai-Kyu Kim, a Korean entrepreneur, who
has been involved with startups for over 10 years with one claim to
fame as securing for the Asia licensing for API based personal finance
tool Quicken.

Although Dai-Kyu is involved in an interesting startup as we speak, we
didn't actually discuss business but instead the online industry and
culture in general in Korea, how businesses and politics work in Korea
and also he shared some insights into the divide between North and
South.

Some insights Dai-Kyu and others I have met with over here, shared
with me is that Korea does not see itself inherently as a divided
country. The enforced divide between north and south is within living
memory of at least one third of the population and, like Dai-Kyu many
families, have been almost permanently divided between brothers,
sisters, fathers, mothers, sons and daughters. It is really sad to be
honest. Only once a year, are some families allowed to re-unite and
even then it is only for an hour. Mothers are 'hanging on' just to see
their children for the last time. And even when they have not been in
touch for many, many years, they still always recognize their
children. From the beginning, idealism drove brothers apart to pursue
their visions and then the wall came down. Dai-Kyu told me how North
Korea stands in stark contrast to the South. People don't have mobile
phones, travel is restricted and just to make a phone call you have to
go to the post office. Financial wealth is too difficult to hide there
so North Korean families with supporters in the South, Japan and
Canada send laptops instead. And those that manage to find an escape
route are lucky only in one sense. The journey to escape can take
years. Firstly one needs to be able to get to border, which is
difficult as travel is completely restricted. Then somehow bribe the
border guard without getting caught. Make it past that and escapees
have to swim across the dividing river, naked, and in the winter most
people freeze to death before they make it to their families and
contacts through the other side. Some people travel through Thailand
without any money that is worth anything and then even when they get
to South Korea, the rural lives they knew are met with sprawling
metropolis' that after 50 years speak a modern, anglicized Korean and
an almost impenetrable techno culture. That said, some of the younger
people who make the journey have adapted and even found fame in the
South.

South Korean businesses are under an unusual tax system that makes it
extremely difficult to stay on the right side of the law. The
'official tax' is so astronomical that there is very little incentive
to be honest. On top of that, there is a poor and sporadic system of
enforcing it, almost to the extent that the government would just
rather you avoided it. This ultimately acts as system of control, so
they will always have something over you should they ever need it.
Even the big 4 accountancy firms offer choices to businesses, which is
to pay the official tax, or the unofficial official tax, which is a
lower bracket, but shows that you are at least attempting to act in
good faith with the government.

This same indirect control exists in the law of marriage. Seoul, like
Tokyo is littered with 'love hotels', which are not as seedy as they
might sound. In a culture of extremely traditional and ancient values,
these hotels provide a place for young couples to escape the family
nest and be with their prospective partners. Young Korean couples are
on the whole forbidden by both sets of parents to see each other, so
they tend to elope on a sporadic basis to the love hotels. The thing
is that for the average westerner who is allowed to see his girlfriend
or boyfriend whenever they like, this kind of defiance for a young
Korean couple is almost unimaginable. What the parents say the younger
must do. To the book. And among threats of punishment for the young's
defiance I've heard of parents threatening to divorce each other if
their child does not obey. South Korea is also one of the few places
that it is categorically illegal to cheat. If you are caught, and the
dalliance is proven against you, you can go to jail. Broadly speaking,
the cultural impact of this law is incidental and next to zero. Some
suspected spouses get tracking devices unknowingly downloaded to their
phones and in worst cases there is a sort of low level detective
activity to catch cheating partners. However, on the whole, no one
ever actually goes to prison for it. Best case, they found someone too
and worst case, you'll go down if you are a despised government figure
with rival political ambitions.

So the truth is, you'd never notice any of this unless someone told
you. On the whole the Korean attitude is equal for love and business ?
if it doesn't directly involve you, then how others lives their lives
is none of your business. People here just get along, adapt and, as is
the case of the love hotels, even make thriving businesses out of it.

Posted by jc1000000

5th Nov 2008, 15:36   comments (3)

Korean bloggerati: Chang Kim & Danny Kim

On Monday I met with Korean bloggers Chang Kim & Danny Kim from
web20asia.com & technokimchi.com respectively. Unfortuanately in my
enthusiasm i forgot to take a photo of them together so you will have
to make do with these headshots from their blogs. If there is anything
you want to me go into further detail on please leave a comment. We
filmed a video so will save most of this post till that is edited.but
here are some of things we discussed.

'Citizen Journalism' in South Korea, in particular relation to massive
response of civil disobedience caused by bloggers at the candlelight
vigil earlier this year and the unusual transformation of Ohmynews
into a privately funded company into one in which the readers became
the stakeholders.

Cultural network as social network and what factors Korean culture
made social networks take off. Culturally speaking, the Korean social
networks, in the non-online sense (i.e. god forbid, 'actual' friends
and family rather than your spam mates on MySpace) have always been
geared towards setting friends and family up in their lives in
general, whether that is in love and marriage or jobs and career
advancement. Chang said that successful Korean online social networks
such as Cyworld have to some extent been misrepresented in the west
and rather than these being places where the glitterati of the
'digital generation' hang out, it's more of a place for pre-teens
where 10 year old girls go because they think that's what older girls
do and so seek to emulate them.

Other topics included the nature of the web/mobile market in South Korea. Openness within
Telco's and the threat of Google Android & the iPhone. This is a hot
hot hot topic right now. Fire up the questions!

Posted by jc1000000

5th Nov 2008, 15:34   comments (0)

Grubs up

Saturday was a chance to hang out with friends and experience some
typical korean culture. Drinking Sodyou (a perilous Sake like drink
pronounced 'Soh-juh') and eating...erm... 'pupas'. Chrysalis' was
another translation. Basically somewhere in that soup is a caterpillar
i think. Well lots actually.


Look! Electric price tags...

The chinese characters that make the english phonetic sound 'Ho'
actually mean man+woman... so hip hop clearly keep chinese
philosophers under their beds. (Like neitzche kept buddhist writers
under his bed)

Beer space. I can't believe theINQ never thought of that. Damn, maybe
that's what we should have called this blog!

Posted by jc1000000

4th Nov 2008, 19:55   comments (4)

Perils of translation

(viewed 1011 times)
I 'do' connect - why wont you let me??

Oh....!

Posted by jc1000000

4th Nov 2008, 19:41   comments (0)

Jai Jaisimha from AOL

Interviewed Jai who is the VP of Mobile & Desktop for AOL

AOL is taking a radical new direction towards openness releasing loads
of APIs for the messenger and mobile products. The most unexpected
thing is that they are embracing developers rights to make money out
of the new products they create and also offer monetisation support to
them.

When i edit the video i will publish it here.

We then went off to check out Seoul City Hall & Gyeok San Beung.
Really was like old meets new - hmmm a metaphor for AOL supporting
open source & releasing APIs?

I particularly love the picture of people dressed in traditional
attire taking a photo of each other! :)

Posted by jc1000000

4th Nov 2008, 19:30   comments (0)

Live squid & octopus on the menu

The squids are pretty cute. They have huge eyes and intelligent,
almost smiling faces and the way they more about is elegant. Totally
put me off trying one. The octopus were the size of a fist! I can't
see how anyone could fit it in their mouth.

Posted by jc1000000

30th Oct 2008, 23:27   comments (3)

Koreacomm Dinner

It was really sweet the way the guy welcomed us here - struck me as
having that particular cultural sensibility westerners would associate
with the far east - a lot of deference even though they have clearly
gone to great lengths to make an incredible occasion. He said, "I am
very pleased to welcome you to Seoul. Normally the autumn here is of
many beautiful colours but not his year. I regret that you are not
able to enjoy the autumn leaves. Maybe also the Korean food is not to
your liking but we hope you will enjoy the cultural spectacle
tonight."

And then these rock chicks came on playing classical music to big
beats. They were wicked!

Posted by jc1000000

30th Oct 2008, 18:44   comments (0)