John Lee is the Regional Vice President and General Manager, NDS Korea, responsible for business development and operational management. He has been with NDS for five years and has over 10 years’ experience in the Korean pay-TV market. Prior to joining NDS, Lee worked with a Korean satellite broadcaster and in the set-top box division of a major Korean electronics manufacturer. He took time to discuss the Korean pay-TV market with World Vision.

World Vision: Who are NDS’ main customers in Korea?

John Lee: Currently, NDS’ clients include SkyLife, T-Broad, CJ Hellovision (formerly CJ CableNet), BSI, GSGB, and KT (formerly Korea Telecom). SkyLife is the only satellite broadcaster in Korea.

How would you describe the Korean pay-TV market? What features do the different platforms offer?

The Korean pay-TV market is both dynamic and extremely competitive. This is probably one of the main reasons the market has developed so rapidly. Pay-TV is relatively new in Korea. Until a few years ago only to free-to-air broadcasting was available. The market is now quite advanced. Our customers offer a variety of services to engage their customers. For example, SkyLife offers DVR and Sky Touch interactive applications. CJ Hellovision has interactive applications including home shopping and banking. Tbroad also offers a variety of interactive applications.

The competition between satellite and cable began when SkyLife was launched in 2001.

Korean Pay-TV Market in Brief

Source: Asia Pacific PayTV & Broadband Market 2008, Media Partners Asia

From the start, SkyLife aggressively promoted the advantages of pay-TV. In response, cable MSOs started upgrading their services from analogue to digital. It took a year or two before the cable MSOs realised that they could actually compete with SkyLife.

When SkyLife introduced DVRs, interactive applications and data services, the cable companies followed suit.

However, the recent news that IPTV will be launched in Korea has the cable MSOs somewhat frustrated. Currently their biggest fear is that IPTV could prove to be the real threat to them.

Content continues to improve as more operators offer premium content. At the same time, the broadcasting technology is moving from analogue to digital and from Standard Definition (SD) to High Definition (HD).

The bottom line is that the Korean pay-TV market is healthy and thus able to meet the increasing demands and expectations from subscribers.

What effect is the introduction of IPTV actually having on your market?

IPTV is actually the driving force behind the competitive atmosphere in Korea. The IPTV service was originally offered by telcos as an addition to their telephony service. Now, even cable MSOs are trying to jump onto the bandwagon in order to compete with the telcos.

At the end of the day, it is the subscribers who benefit from both the telcos and cable companies offering triple play services.

How big do you expect IPTV to become in Korea and perhaps most important, how soon?

According to the Asia Pacific Pay TV & Broadband Markets 2008 report published by Media Partners Asia (MPA), there are currently almost 18 million TV households in Korea of which about 14 million are cable subscribers and another 2.16 million are satellite subscribers.

Though IPTV has the potential to be one of the major TV services in Korea, there are still a lot of challenges to be dealt with.

The real competition is just beginning. The government has begun granting licences which will enable IPTV service providers to move beyond the trial stage and begin offering live channel service.

Since NDS began working with SkyLife in 2001 how has this partnership developed?

NDS originally provided SkyLife with MediaHighway® middleware, EPG and VideoGuard® conditional access for their launch in 2001. They were on a very tight schedule and NDS helped them meet their deadline by introducing a complete end-to-end solution.

This partnership was a success as it helped SkyLife become a premium brand in the Korean pay-TV market. Soon afterward, NDS also provided DVRs which helped them lower their churn rate as well as differentiate their service from the competition.

Most recently, we were able to help them introduce a very low cost STB for their HD service which allows them to offer viewers a premium service at a very competitive price.

What other new applications is NDS helping its Korean partners to offer their subscribers?

For our cable customers, CJ Hellovision and BSI, NDS provides VideoGuard conditional access and EPG. Tbroad and GSGB also use VideoGuard.

Since our success with SkyLife we have also begun working with cable operators. Our track record for on-time delivery of systems that include advanced services like video-on-demand and pay-per-view is a crucial asset.

NDS has helped its cable customers launch their services in a stable environment ahead of their competitors. We have also helped the development of the mandatory cable card required in STBs in Korea. This has helped lower the price of STBs.

You mentioned local requirements for Korean STBs. How does NDS Korea support STB integration for the worldwide market?

Every year, about 8-10 million STBs manufactured in Korea are exported to NDS accounts worldwide. We have a healthy relationship with Korean STB manufacturers including Humax, Samsung, LG, Kaon, DMT and Homecast.

We are pleased to be able to help the Korean CE industry reach wider global markets and encourage the export of Korean technology around the world.

I understand the Government of Korea has mandated the switchover to digital broadcasting by 2012. How are Korean broadcasters preparing for the change?

The first step was for Korean broadcasters to move from analogue to digital headends. Now they aggressively support the switch to digital STBs.

In addition, cable MSOs are finding ways to lower the price of their STBs to get ready for the change to digital. Korean broadcasters are also acquiring HD content as a way to encourage subscribers to switch from analogue to digital.

How will NDS support existing customers and what new solutions is NDS planning to launch in Korea?

NDS sees competition as an important factor and driver in the Korean pay-TV market. Every operator competes with every other operator. Our mission is to support our customers by delivering the solutions they require, and on time.

NDS also proposes various solutions and services to increase customers’ ARPU since Korean pay-TV ARPU is relatively low. The support structure is a central part of the operations of NDS Korea: Our customers feel that NDS meets their needs because of our strong local presence.