Netflix, SK Telecom end Korea net neutrality row | Major Businesses | Business | News | Rapid TV News
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Bringing to a mutually beneficial conclusion a row that threatened to spill over into global streaming and broadband markets, Netflix, SK Telecom and SK Broadband have signed a strategic partnership to enhance customer convenience.
Netflix Korea 19Sep2023
At the heart of the dispute was the telco’s contention of unfairness in the way that the explosion in the number of Netflix users in Korea has meant massive cost increases for the telcos in making its infrastructure capable of supporting acceptable user experiences despite the commensurate added strain on the network. It has been a similar story with other streaming services in the country.

Netflix had rebuffed efforts to gain financial contributions leading to three years of ligation that has just been settled. The deal between the parties will see SKT and SKB plan to provide “an environment where customers can enjoy Netflix with a convenient viewing experience” and payment method on smartphones and IPTV (Btv) platforms and to prepare various products, including bundle plans.

In addition, the telco is launching a Netflix bundle product that combines SKT's rate plan and SKB's IPTV product, it is also planning to introduce a new Netflix combination product in SKT's subscription product Universe. Additionally, it plans to release products related to Netflix's recently launched advertising plan so that more customers can experience Netflix.
SKT and SKB will sequentially launch new products for customers starting from the first half of 2024.

The two sides now say that that going forward they will use the new partnership as an opportunity to end all previous disputes and work together as future-oriented partners. This they say reflects the common intention of both companies to prioritize customers above all else.

“As Netflix’s top priority is to provide the best entertainment experience throughout the journey from when a special story is created to reaching the screens of members around the world,” commented Tony Zameczkowki, VP of business development, Asia Pacific, Netflix. “I look forward to the journey we will take together for our common customers in the future.”
Choi Hwan-seok, manager of management strategy at SK Telecom, added: “This strategic partnership with Netflix started from the philosophy of SK Telecom and SK Broadband, which prioritises customer value, and provides a better media service environment to customers by incorporating the technology accumulated by SK Telecom.”

Assessing what the deal could mean for global markets and the global streaming and comms industries, analyst Strand Consult said the outcome to the row was  significant in a number of ways. Principally, it said the new partnership symbolises the recognition of the need for broadband providers to recover costs and to find sustainable business models., working for Netflix and SK as both entities have financial relationships with the end user and the parties are in position to share the revenue accordingly.

“Notably the end user still bears the cost, but Netflix’s revenue is ostensibly reduced. Such an arrangement works for streaming but not necessarily for the large search and social network platforms as they do not have financial relationships with end users,” Strand remarked.

“However, it does signal that broadband providers could do more to partner with video streamers, and this could be helpful for competitors to Netflix. It is also important to address video streaming as it is a key driver of network traffic…The outcome may come as a relief to many who had grown fatigued of drawn out litigation over three years and the associated political spill over. It does leave questions for how emerging nations are to recover costs as infrastructure is limited and end users have low income. Notably the global movement for broadband cost recovery is hardly ending; it is just beginning.”