Demand for Digital Content Booming in Korea

Thanks to mobile phone technology advancements and the widespread adoption of broadband access, the South Korean market for digital content is up 38.5 percent.

SEOUL, South Korea—Advancements in mobile phone technology and the widespread adoption of broadband access are fueling a boom in digital content here, according to industry experts. In spite of the global downturn in IT spending, the South Korean market for digital content last year exceeded $3 billion, up 38.5 percent from 2001.

The impressive numbers were reported last week by Koreas Ministry of Information and Communication as part of a survey of more than 2,000 local digital content businesses. The survey predicts that the Korean market for digital content will hit $8.3 billion by 2006.

In 2002, there were 32.6 million cell phone subscribers in Korea, according to the survey, representing nearly 100 percent of the adult Korean population. Typical mobile phones sold in Korea these days feature 40 polyphonic ring tones, a 65,000-color TFT-LCD display that offers crisp images, a built-in digital camera and even camcorder functionality. By the end of last month, about 10.5 million subscribers owned color phones, a number thats expected to increase by 50 percent by the end of this year.

Koreans now use their mobile phones not only for voice communication but also for data communication. Teenagers and young adults in particular like to use their cell phones for entertainment. At any time of day, young people can be seen playing games and taking pictures using their color cell phones in Koreas subways and streets. All of this is evidence that the Korean market for multimedia services is growing sharply, according to the survey. In the online music market, mobile phone ring tones make up about 77 percent of total sales. The mobile gaming industry is also expected to grow fast as a result of the growth in wireless telecommunication service, in particular SK Telecoms upcoming rollout of IMT-2000, Koreas standard for next-generation wireless service.

Amid the recent rapid growth in the color mobile phone market, mobile handset manufacturers such as Samsung Electronics and LG Electronics are aggressively marketing cutting-edge handsets. Parts makers such as Samsung SDI are also helping to build the market for the high-end mobile phones with cameras, developing 65,000-color OLED screens that allow for vivid, high-definition images. Today, many phones offer STN-LCD and TFT-LCD screens with 65,000 or 260,000 colors on the main display inside the handset, supplemented by a smaller external monochrome STN LCD or 256-color OLED display.

Mobile phones are not only fueling the market for digital content, they are also driving the online payments market, experts say. Koreans are more frequently using their cell phones to buy products or services or to transfer money without the need for credit cards or online banking accounts, using built-in payment applications. The most popular type of mobile phone financial transactions are direct money transfers (25.5 percent), followed by payments for digital content (21.7 percent).

Meanwhile, as the broadband Internet infrastructure matures, the online video industry is experiencing rapid growth. The digital satellite broadcasting and video-on-demand movie industries, major drivers of the Korean digital content sector, recorded 147.9 percent growth year over year, according to Ministry figures.

Korea also leads the world in high-speed Internet penetration, with about 10 million households signed up for cable modem or VDSL services. VDSL, which offers speeds of up to 20M bps, is available for about $20 per month. Recently a 50M-bps VDSL service, which lets consumers download a 90-minute movie in just 20 seconds, was rolled out. 100M-bps VDSL service is slated to be launched by the end of this year.