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Living the dream of Mobile TV - and demoing it!

Living the dream of Mobile TV - and demoing it!
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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  

Advert

Jose says:

That looks cool ! What's the price like for the final user ?

5th Nov 2008, 19:00

Anonymous says:

Wow that's amazing! So smooth.

6th Nov 2008, 01:44

jc1000000 says:

Jose - they have different payment models - in some cases the user doesn't even pay or the cost is bundled inot the mobile service plan.

10th Nov 2008, 10:49

Miss25(2n5ohc0-dot--at-gmail-dot-com) says:

From the mid-1990s to the early 2000s, few liberal talk hosts had national exposure. ,

23rd Oct 2009, 01:30

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