Seoul – A survey conducted by Consumer Insight indicates that the potential merger of Korean streaming giants Tving and Wavve could attract a significant number of new subscribers, but any increase in subscription fees post-merger could severely jeopardize this growth and even lead to mass cancellations from existing users.
The survey, which polled 500 OTT users aged 20-59 across South Korea, found that 24% of those not currently subscribed to either platform expressed interest in joining the merged service. This potential boost in subscribers is primarily driven by expectations of cost savings through a single subscription (47%), enhanced content diversity (41%), and improved viewing convenience (38%). This positive sentiment is even stronger among existing subscribers of both services, with over 60% expressing approval of the merger.
However, the survey also highlighted the crucial role of pricing. When potential new subscribers were asked about their likelihood to subscribe if prices were to rise, a majority shifted from “likely” to “neutral” (52%) or “unlikely” (19%). This sensitivity to price increases is even more pronounced among existing subscribers. If fees go up, only 17% of current Tving users and 27% of Wavve users would maintain their subscriptions, while 43% and 33%, respectively, indicated they would likely cancel.
This price sensitivity is likely due to Tving's existing higher price point compared to Wavve, coupled with the prevalence of discounts for Tving subscribers through services like Naver Plus.
“While the merger aims for economies of scale, increasing prices will dramatically impact both new subscriptions and customer retention,” Consumer Insight cautioned. They emphasized the need for a “reasonable pricing policy” that aligns with consumers' cost-consciousness to maximize the potential benefits of the merger.
The Tving-Wavve merger is widely seen as a strategic move to challenge Netflix’s dominant position in the Korean OTT market. Combined, the platforms would have a user base comparable to Netflix in South Korea, based on monthly active users (MAU) data. For both Tving and Wavve, which have faced ongoing losses, the merger offers the potential to boost revenue, improve profitability, and explore international expansion.
A significant hurdle to the merger was recently cleared when SK Square and CJ ENM addressed Wavve’s substantial convertible bond debt. While most shareholders have signaled their approval, KT's final decision as Tving's second-largest shareholder is still pending, adding a layer of uncertainty to the finalization of this potentially game-changing merger in the Korean OTT landscape.
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