Kim Et Al 2015

Telematics and Informatics xxx (2015) xxx–xxx
Contents lists available at ScienceDirect
Telematics and Informatics

journal homepage: www.elsevier.com/locate/tele
Competitive dynamics in the Korean video platform market:

Traditional pay TV platforms vs. OTT platforms
Junghwan Kim a, Seongcheol Kim b,⇑, Changi Nam c
a
Internet Research Team, NAVER, Republic of Korea
b
School of Media and Communication, Korea University, Republic of Korea
c
Department of Business and Technology Management, KAIST, Republic of Korea
a r t i c l e i n f o a b s t r a c t
Article history: Netflix is commonly referred as an over-the-top (OTT) media, and it takes a role of a video
Received 15 January 2015 platform changing the market. The purpose of this research is to explain the competition in
Received in revised form 28 April 2015 Korean video platform market, in particular competition between traditional pay TV and
Accepted 25 June 2015
OTT. In this study, the theory of the niche is adopted to explain the competitive dynamics
Available online xxxx
in video platform market in Korea. This theory is a unique framework to conceptualize and
empirically measure the impact of new media on the old one. It explains and predicts the
Keywords:
existence, displacement, and extirpation of players in the ecosystem. To make up for the
Over-the-top (OTT)
Theory of niche
previous researches, multiple resources such as gratification and time spent using media
Video platform market are measured in this study. The result indicates that the case of the Korean market was
Competition significantly different from the case of America, in that competition between traditional
Traditional pay TV pay TV and OTT was not severe.
Ó 2015 Elsevier Ltd. All rights reserved.
1. Introduction
Netflix, the internationally acclaimed online video platform, was nominated in six categories at the 71st Golden Globe
Awards in 2013, and won the Best Performance by an Actress in a Television Drama award for House of Cards. Famous for
providing video-on-demand (VOD) streaming services globally, Netflix had recently commenced producing House of Cards
as its first original content title, garnering enough attention to receive the award. Netflix uses the Internet to broadcast video
content and is commonly referred to as over-the-top (OTT) media; meanwhile, HBO, a representative premium cable and
satellite TV provider in the U.S., launched its own OTT service ‘‘HBO Go’’ in 2010. While both providers had forecast the
changes in media usage patterns and recognized the value of Internet based services, Netflix managed to sell the same
number of paid subscriptions as HBO by October 2013. Moreover, consumers who were subscribers of pay TV platforms
including cable and satellite began switching to OTT, choosing it as their main video platform; meanwhile, some subscribers
downgraded their pay TV service from a premium to regular package (Banerjee et al., 2014). The former change is referred to
as ‘‘cord-cutting,’’ while the latter is ‘‘cord-shaving.’’ Such changes also occurred in the Korean video platform market,
whereby the growth of global and local OTT services such as ‘‘YouTube,’’ ‘‘GomTV,’’ and ‘‘PandoraTV’’ stimulated traditional
TV platform providers to launch Netflix-like OTT services such as ‘‘tving’’ and ‘‘pooq.’’
According to the U.S. Federal Communications Commission (FCC), an OTT is defined as an online video distributor that
delivers video programming content to consumers over the Internet (FCC, 2013). In the U.S., the total number of OTT
⇑ Corresponding author.
E-mail address: hiddentrees@korea.ac.kr (S. Kim).
http://dx.doi.org/10.1016/j.tele.2015.06.014
0736-5853/Ó 2015 Elsevier Ltd. All rights reserved.
Please cite this article in press as: Kim, J., et al. Competitive dynamics in the Korean video platform market: Traditional pay TV platforms
vs. OTT platforms. Telemat. Informat. (2015), http://dx.doi.org/10.1016/j.tele.2015.06.014
2 J. Kim et al. / Telematics and Informatics xxx (2015) xxx–xxx
subscribers was 53 million in April 2013, 39.4 million of whom were paid subscribers. The number of OTT subscribers in the
U.S. is expected to surpass 81.2 million by 2017, when the penetration rate will reach almost 50% (IDC, 2013). Among the
OTT service players, Netflix is the representative player. The Netflix was established in 1997 as an online DVD rental service
and grew to become the world’s biggest subscription based, digital content delivery service. The company’s content library
reportedly comprises more than ten thousand movies, and its service is compatible with more than 30 device types (FCC,
2013). Netflix earned total revenue of US$1.5 billion by the end of 2014 from more than 36.3 million paid, streaming sub-
scribers in the U.S., and recently extended its service areas to include South America and Europe.1 Hulu, another famous U.S.
service that was started by a terrestrial TV consortium consisting of FOX, NBC, and ABC, launched its OTT service in 2008. Hulu’s
force is derived from its content power and business models; that is, a brand loyalty regarding TV content already exists among
the consumer bases of FOX, NBC, and ABC. Hulu succeeded in creating a well-organized business model that consists of both
free-of-charge and ad-supported options, while a subscription fee distinguishes Hulu Plus from Hulu. Only users in Japan
and the U.S. can currently access Hulu videos.2 In South Korea, pooq and tving are popular OTT services. MBC and SBS, the major
terrestrial TV providers in South Korea, launched pooq in 2012. This service obtained as many as 2.4 million subscribers in just
17 months.3 Like Hulu, content power is pooq’s key asset, but pooq obtains its content only from terrestrial TV; consequently,
pooq has had difficulty ensuring content diversity compared with its strongest competitor, tving, which also sources content
from cable TV. CJ HelloVision, a multiple system program operator (MSP) that is one of the major cable TV providers in
South Korea, launched the tving OTT service in 2010. Although tving is more expensive than other OTT services, it successfully
attained 6 million subscribers4; furthermore, tving has the ‘‘first-mover advantage.’’
‘‘Mobile’’ and ‘‘Internet’’ are keywords of the new media ecosystem. The emergence of the Internet has had numerous
effects on traditional media, whereby consumers’ media usage patterns have consequently evolved (Bondad-Brown et al.,
2012). The diffusion of mobile devices such as smartphones and tablet PCs is another important factor, whereby consumers
can use the technologies to enjoy unlimited content anywhere and at anytime. The changes in the video platform market
posed the following major question for not only the practical field, but also the academic area: ‘‘Do online video platforms
have a displacement effect on traditional TV platforms?’’ This has also been a foremost question for many researchers
including Cha (2013), Cha and Chan-Olmsted (2012), and Precourt (2013); however, a research has not yet attempted to
directly measure the competition between the OTT and traditional TV platforms.
In this study, the theory of the niche is adapted to explain the competitive dynamics in the video platform market. This
theory is a unique framework for the conceptualization and measurement of the economic impact of new media on the older
versions (Dimmick et al., 1992). Niche theory also explains and predicts the existence, displacement, and extirpation of
players in the ecosystem (Dimmick et al., 2000), along with the indices of niche breadth, niche overlap, and competitive
superiority. The purpose of this research is to explain the competition in the video platform market and to draw implications
for not only OTT service providers, but also for traditional pay TV platform providers. The fulfillment of this purpose will
contribute to both practical and academic fields, with the latter contribution derived from the literatures analysis on niche
theory that is presented in this paper.
2. Theoretical background and research questions
2.1. Media competition: displacement or reinforcement effect
The emergence of new media has not only affected consumers’ media usage patterns, but it has also changed the research
field – especially regarding its relationship with older media. Previous studies on the relationship between new and old
media can be divided into two major streams. The first stream is a longstanding media displacement effect that was intro-
duced by Lazasfeld (1940), after he performed pioneering research on the displacement effect of radio on the print media.
Since then, many researchers have tried to examine displacement effects with the advent of new technologies such as TV,
cable TV, VCR, Internet, the smartphone, and those that are used in computer mediated communication. The displacement
effect is based on the limited amount of time that a consumer has to spend on media consumption (Dutta-Bergman, 2004).
Previous research on the displacement effect assumed a ‘‘zero-sum game’’ regarding the competition for the time that con-
sumers can spend on a medium. New media can succeed only by diverting resources from the older media (Dimmick, 1997),
and displacement occurs when the emergence of new media reduces a consumer’s time allocation toward existing, older
media (Dutta-Bergman, 2004; Kim et al., 2013; McCombs and Nolan, 1992); this effect can be explained by the principle
of relative constancy (McCombs & Nolan, 1992). The following researchers are among many who have adapted their perspec-
tives to incorporate the principle of relative constancy: Lin (1999) argued for the concept of media substitution in relation to
TV exposure and online-service access; Okazaki and Hirose (2009) examined media displacement effects between traditional
media, PC, and mobile Internet, using several specific scenarios such as ‘‘dining out’’ and ‘‘travel planning’’ to measure the
effects in Japan; Stempel et al. (2000) found that the consumption of Internet news content led to a decrease in the amount
of time that people used traditional media to access the news; Choi (2013) concluded that the consumption of traditional
1
<http://ir.netflix.com>.
2
<http://www.hulu.com/about/news>.
3
<http://www.dt.co.kr/contents.html?article_no=2014020602010831759002>.
4
<http://www.metroseoul.co.kr/news/newsview?newscd=2014040300283>.
J. Kim et al. / Telematics and Informatics xxx (2015) xxx–xxx 3
television programming decreased as people began using digital multimedia broadcasting (DMB) and smartphone
applications to watch real time broadcasting, as well as user created content (UCC) and VOD content; and Kim et al.
(2013) examined smartphone usage to see whether the use of radio and newspaper apps resulted in a decreased usage that
of traditional forms, and whether accessing the Internet and game contents on a smartphone resulted in a decreased use of
PCs for the same purposes.
Similar to the displacement effect, but presenting a slightly different perspective, is ‘‘functional alternative.’’ The
researchers who argue in favor of functional alternative explain that the level of gratification, which depends on the type
of services that the medium provides, results in different media usage patterns (Cha, 2013; Dutta-Bergman, 2004; Lin,
1999, 2001; Nam and Barnett, 2010; Okazaki and Hirose, 2009). Accordingly, two media with similar content usually satisfy
a consumer’s motivation in the same way, resulting in a displacement effect. Cha (2013) examined the predictors of TV and
online video platform use. She found that the more that consumers perceive online video platforms as different from TV in
terms of the way that they satisfy their needs, the more likely they will be to use online video platforms. Recently, some
researchers also have been interested in OTT market. Banerjee et al. (2013) utilized longitudinal survey panel data to reveal
the transition among the OTT segments such as ‘‘cord loyalists’’, ‘‘non-pay TV’’, and ‘‘cord couplers’’ especially, they found
age, annual income, and race/ethnicity determine how households choose OTT segmentations. Gimpel (2015) interviewed
22 executives at key positions in the video value chain to prove big questions. The questions related to the competition
between pay TV and OTT are not only belonging to America but also Europe (Baccarne et al., 2013), Latin America
(Ganuza and Viecens, 2014). Lin (2001) also addressed the displacement effect between the Internet and traditional media.
Fidler (1997), however, argued against the existence of a perfect substitution between new and old media. Instead, he
proposed that the media coevolve and coexist through transformation and the principle of ‘‘delayed adoption.’’ Fidler also
believed that the substitution concept that was utilized in previous studies is vague, whereby the separation of functional
displacement and users’ choices is unclear (Yim, 2010). If Fidler is accurate, how can multi-platform usage be explained?
We cannot merely conclude that new media substitutes old media, as people do not consume just one medium. Although
people consume many different types of media, the previous studies only focused on individual media types; therefore,
an approach from an ecological perspective is needed. Furthermore, with respect to the inconsistent results from previous
studies on the displacement effect, the niche theory that is explained in the next sub-section is more useful than the prin-
ciple of relative constancy for explaining the competitive dynamics of media industries.
2.2. The theory of the niche
2.2.1. The concept of niche theory

The theory of the niche originates from ecology and explains how an organism competes and coexists in a dynamic
environment, whereby the competitive dynamics between or among other populations in an ecological environment are
examined (Yi and Sung, 2007). The organizations in the ecology must compete with others to survive because resources
are limited. From an organizational-ecology point of view, the influence of the environment is more essential than that of
internal organizational operations (Yi and Sung, 2007); consequently, it is necessary to understand how populations adapt
to their environments (Hannan and Freeman, 1989).
The original meaning of the term ‘‘niche’’ is ‘‘a suitable environment for organisms to live in,’’ but the term can also be
defined as the resource usage patterns of populations (Yi and Sung, 2007). From this understanding, niche theory has been
adapted to explore the competition between new and older media for limited resources such as consumer satisfaction, time,
space, and advertising dollars (Dimmick et al., 2004; Dimmick and Rothenbuhler, 1984). In the original study that applied the
theory of the niche, the authors argued that a medium depends on resources and must compete to obtain a niche, just like
organisms in nature (Dimmick et al., 2010). When competition occurs, the older media face the danger of exclusion,
replacement, or displacement (Dimmick et al., 2004); therefore, the media must differentiate themselves across the resource
categories that facilitate their survival to compete and coexist within the resource space (Dimmick et al., 2011).
Researchers have adopted the theory of the niche to compare not only new media and older media (e.g. online/mobile
news vs. traditional news), but also interpersonal media and services (e.g. cell phone vs. landline vs. instant messaging
vs. email vs. text messaging), as well as the competition patterns between two media. Niche theory can be analyzed by
applying the following three types of measures: niche breadth, niche overlap, and competitive superiority (Dimmick,
2003). Niche breadth involves measuring the area of a niche. If a medium provides a broad niche range in a specific dimen-
sion, then the medium is a generalist regarding resource utilization; otherwise, it is a specialist (Li, 2001). Specialists gratify a
relatively limited set of motivations, whereas generalists satisfy a broader range. For example, radio has a specific and nar-
row niche breadth in local advertising, whereas national broadcast TV has a general and broad value in advertising (Dimmick
and Rothenbuhler, 1984). Niche overlap occurs when there is a similarity between two media in terms of their resource uti-
lization patterns (Dimmick, 2003). While a high niche overlap means that the media serve the same (or similar) needs using
similar resources, a lower niche overlap indicates that different needs are being served with the use of different resources.
The overlap value is an index of the substitutability or complementarity of two media; therefore, a high value indicates
strong competition, whereas a low value represents the opposite. Competitive superiority measures consumers’ perceptions
of satisfaction toward one medium over another. A significantly higher superiority score represents a medium that is supe-
rior to another medium in the provision of gratification.
Using the previously mentioned information, we concluded that the theory of the niche is a useful framework that
enables a researcher to examine the competitive dynamics of media industries in great detail; for example, competition
occurs between the Internet and newspapers ‘‘when they provide information to customers.’’ Niche theory is also considered
a meaningful tool for examining competition in media industries because it is one of the most important approaches for
understanding strategic management5 in media industries (Mierzjewska and Hollifield, 2006).
2.2.2. Research questions

We used the literature analysis to identify some of the limitations of previous research studies. First, it is difficult to find a
clear definition that distinguishes the difference between platform and media content. Choosing a specific platform and con-
suming specific media content can be different, but many researchers have used both behaviors interchangeably in previous
studies. Second, there is a dearth of Internet-related research; only five papers examined the relationship between the
Internet as a new medium and traditional media. Lastly, all of the studies adopted only one resource dimension such as grat-
ification, time/space, or advertising income, so supplementation is required to better understand market competition.
The main purpose of this paper is to explore the competitive dynamics between OTT platforms and traditional pay TV
platforms in Korea. Before analyzing the competition in the video platform market, though, it is important to confirm the
motivations that underlie the selection of specific video platforms. Also, we added ‘‘time spent on media,’’ another important
resource, to compensate for the corresponding limitation of previous research studies. Based on the literature review, the
following research questions were developed:
RQ1: What are the niche breadths of OTT platforms and traditional pay TV platforms?
RQ2: Based on the consumers’ perceptions of gratification, what is the extent of the niche overlap between the OTT plat-
forms and traditional pay TV platforms?
RQ3: Which patterns of competitive superiority are presented between the OTT platforms and traditional pay TV platforms?
RQ4: How do the niche values (niche breadth and niche overlap) of ‘‘time spent using media’’ resources differ from those of
gratification resources?
3. Research methods
3.1. Expanded resources
To compensate for the limitations of previous research studies, multiple resources such as ‘‘gratification’’ and ‘‘time spent
using media’’ were measured in this study. Among the resources, ‘‘gratification opportunities’’ play a central role in media
use (Ha and Fang, 2012) and is usually defined as a consumer’s belief that the media will give them more chances to obtain
satisfaction (Dimmick et al., 2004). The survey items were drawn from previous studies on media usage and gratification
such as Rubin (1979); moreover, considering the attributes of OTT services, survey items that measured variables like ‘‘social
interaction’’ and ‘‘entertainment’’ were also included. Also, as mentioned earlier, motivations to use specific media content
and motivations to select specific media platforms were not properly separated in previous studies, with most of the survey
items related to the former. Therefore, based on previous studies including Seol et al. (2012) and Lim (2007), factors related
to media platforms such as content, financial benefit, ease of use, and convenience were also included in the survey.
Moreover, and also to compensate for the limitations of earlier studies, multiple (twin) resources were utilized to mea-
sure competition in the video platform market. To do this, panel data that was recently released by Korea Information
Society Development Institute (KISDI) was analyzed to examine market competition; in this data, the media usage patterns
(media diary) of 10,319 users from 2010 to 2012 were recorded. By using multiple resources, we may be able to draw out
more meaningful concrete findings from this paper. The survey items are provided in Table A.1 of the Appendix.
3.2. Formula for calculating each value (for gratification)
3.2.1. Niche breadth

Niche breadth usually measures the range of consumers’ gratification. We used the formula by Dimmick (1993) to calcu-
late this value, whereby the average value of the respondents’ gratification is standardized from 0 to 1.
PK
PN k¼1
GOn Kl
n¼1 Kðu1Þ
B¼
N
u and l indicate upper and lower bounds of a scale. In this research, u is 7 otherwise l is 1. GO means gratification obtained
rating on a scale from the survey. N shows the number of respondents using a medium, otherwise n means first respondent.
K indicates the scale number on a gratification dimension, and k is the first gratification scale.
5
Structure-conduct-performance (SCP) framework and resource-based view (RBV) are other theoretical backgrounds for studying strategic management.
3.2.2. Niche overlap

Niche overlap represents the degree of competition between two media. A high degree of niche overlap indicates a high
degree of similarity between the perceptions of gratification obtained from media ‘‘i’’ and ‘‘j’’ (Li, 2001). The niche overlap
value was calculated using the formula by Dimmick (1993).
qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi2
PN PK ðGOi GOj Þ
n¼1 k¼1 K
Oi;j ¼
N
i and j indicate medium i (old media) and medium j (new media). GO is gratification obtained rating on a scale for i and j. N
means the number of respondents who used both i and j. n shows the first respondent.
3.2.3. Competitive superiority

The differences between two media in a dimension can be tested for significance using a t-test (Dimmick, 2003). The com-
petitive superiority of one medium over the other was calculated using formulas by Dimmick (1993).
PN PK
n¼1 k¼1 ðm¼i>j Þ
Si>j ¼
N
PN PK
n¼1 k¼1 ðm¼j>i Þ
Sj>i ¼
N
i and j also mean medium i and j. mi>j shows the value of a respondent’s rating for those scale items on which i is rated
greater than j (the sum of the actual values), however mi<j means value of a respondent’s rating for those scale items on
which j is rated greater than i. K indicates the number of scales in a dimension, k is the first gratification scale, N shows
the number of respondents who used both i and j. Lastly, n is the first respondent.
3.3. Formula for calculating each value (for time spent with media)

For time spent with media, the niche breadth means the range of the time durations of consumers’ media usage. It was
calculated using the formula by Dimmick and his colleague’s study (2011). The average value of the respondents’ time spent
with media was standardized from 0 to 1.
1
B ¼ Pc 2
c i¼1 pi
pi indicates the proportion of a given media type (e.g. cable TV, IPTV, satellite TV, and OTT) in a particular time period. c is the
number of media type categories.

Niche overlap measures the extent of the similarity between two media in terms of resource consumption. The formula
by Dimmick and his colleagues (2011) was used to calculate the niche overlap value:
X 2
Di;j ¼ ðpi k pj kÞ
Di,j shows the distance between media i and j. pi calculates the proportion of media i’s resource use in a particular time per-
iod, k is media type category.
Although a formula for the calculation of competitive superiority exists, as mentioned by Dimmick and his team (2011),
this measurement which utilizes categorical data has the following limitation: In an interpretation of media competition
regarding categorical resource usage, the formula can only compare two media. Competitive superiority values of time spent
with media were therefore excluded from this study.
3.4. Data collection
From Apr. 28 to Apr 29, 2014, prior test was conducted with a systematic random sample of 100 participants online. A
principle components factor analysis of the gratification items using the varimax rotation method was implemented to ana-
lyze the pre-test. The final survey, which measures niche values of each service was conducted from May 9 to May 14, 2014.
Data were collected through an online survey agency in Korea. All of the items were anchored on a 7-point Likert scale rang-
ing from ‘‘1 = strongly disagree’’ to ‘‘7 = strongly agree.’’ To evaluate the competitive dynamics in a video platform, the follow-
ing video platforms were compared: traditional pay TV platforms such as cable TV, internet protocol TV (IPTV), and satellite
TV (sTV) versus OTT platforms such as pooq, tving, Naver TV (NTV), and YouTube. These seven services were chosen because
they also provide streaming or VOD services, whereby consumers can demand UCC in addition to the professional TV content
that is provided. Moreover, pooq, tving, Naver TV, and YouTube were ranked as the most consumed OTT platforms in the
annual report of Korea Communications Commission (KCC).
4. Research results
4.1. Sample characteristics and gratification dimensions
For the online survey, we attempted to obtain data from various demographic groups. The final sample used in this study
comprised 516 respondents, of whom 259 (50.2%) were males and 257 (49.8%) were females; similar proportions from each
age group participated in the survey. We used the SPSS 19.0 package to analyze the responses to the 29 questions on grat-
ification opportunities. The varimax rotation method was used to conduct factor analyses of the principal components. This
study has two kinds of macro gratification inputs, ‘‘what to offer’’ and ‘‘how to offer,’’ from a video platform provider’s point
of view. ‘‘What to offer’’ refers to a specific service of a video platform and is related to the motivation for using specific con-
tent. Four gratification factors such as passing time (PT), entertainment (ET), information (IF), and social interaction (SI) are
associated with the ‘‘what to offer’’ category. ‘‘How to offer’’ indicates the subsidiary role of a video platform. Financial ben-
efit (FB), convenience (CV), and ease of use (EU) are related to the ‘‘how to offer’’ category. Thus, seven micro-gratifications
that come from two of the macro roles of video platform providers were measured in the main survey.
4.2. Niche values for gratifications

We found that YouTube provided the highest level of expectation in terms of information gratification, whereas Naver TV
provided the least; except for financial benefit gratification, YouTube provided the highest level of expectation in all dimen-
sions. This data indicates that YouTube had a wider range of gratification than other services. Similar patterns in the rankings
of the passing time and entertainment factors were found for the information dimension, meaning that the core dimensions
(‘‘what to offer’’) of traditional pay TV platforms and OTT platforms were similar, because niche breadth represents the range
of gratification provided by each platform. IPTV ranked first in financial benefit dimension, while the OTT platform Naver TV
was at the bottom. Cable TV and sTV also had higher values compared to other OTT platforms. Compared to traditional pay
TV platforms, OTT platforms had higher ranges only for the convenience dimension (see Table 1).

As shown in Table 2, for the information dimension, the highest degree of niche overlap is shown in the relationship
between pooq and tving (0.755), whereas Naver TV and YouTube (1.231) have the lowest degree of niche overlap for the
information dimension. In the passing time dimension, the highest similarity is between tving and Naver TV (0.686), whereas
Naver TV and YouTube (0.97) have the lowest similarity. The lowest overlap value of 0.779 is for pooq and tving, indicating
that they have the highest degree of overlap between their niches in the entertainment dimension, in which Naver TV and
YouTube are the two platforms with the lowest similarity (1.158). In the social interaction gratification dimension, tving and
Naver TV (0.702) have a low degree of similarity, whereas sTV and YouTube (1.085) are relatively complementary. Table 2
also indicates that the niche of pooq and tving have a high degree of similarity in the gratification dimensions of financial
benefit (0.718), ease of use (0.675), and convenience (0.795). There is also a moderately low degree of overlap between
the niches for traditional pay TV and YouTube in these dimensions.
To summarize, the degree of niche overlap between traditional pay TV and OTT is not very high. From the 21-group com-
parison, the overlapping between these two media is moderate; however, the overlaps with traditional pay TV media are
mainly those of pooq and tving. At this point of the study, YouTube and traditional pay TV seem to have complementary
aspects.
4.2.3. Competitive superiority

In the comparison of competitive superiority, a large number of comparison groups and the number of dimensions that
was analyzed resulted in extensive results; consequently, we will only elaborate on representative trends.
Table 1
Niche breadth for each video platform.
IF PT ET SI FB EU CV
Cable 0.608 0.667 0.631 0.445 0.570 0.604 0.544
IPTV 0.616 0.681 0.654 0.461 0.608 0.594 0.610
sTV 0.602 0.650 0.621 0.437 0.533 0.559 0.551
pooq 0.572 0.654 0.623 0.454 0.494 0.568 0.621
tving 0.572 0.649 0.619 0.456 0.511 0.572 0.626
NTV 0.565 0.630 0.603 0.461 0.480 0.562 0.595
YouTube 0.690 0.710 0.718 0.540 0.501 0.672 0.673
Note: 0 = minimum possible breadth, 1 = maximum possible breadth. The number in parentheses is the niche-breadth ranking within the same dimension
(gratification).
Table 2
Niche overlap values for each video platform.
IF PT ET SI FB EU CV
CA–IPTV 0.807 0.753 0.809 0.749 0.927 0.809 1.117
CA–sTV 0.801 0.811 0.876 0.794 0.966 0.902 1.046
CA–pooq 0.892 0.893 0.955 0.827 1.086 0.904 1.272
CA–tving 0.910 0.798 0.923 0.853 0.987 0.920 1.241
CA–NTV 0.962 0.870 0.932 0.868 1.133 0.942 1.201
CA–YT 1.114 0.878 1.029 1.074 1.411 1.002 1.424
IPTV–sTV 0.762 0.706 0.850 0.766 0.996 0.821 1.065
IPTV–pooq 0.896 0.797 0.887 0.809 1.246 0.867 1.105
IPTV–tving 0.925 0.750 0.884 0.851 1.180 0.890 1.104
IPTV–NTV 0.973 0.852 0.970 0.857 1.345 0.931 1.166
IPTV–YT 1.110 0.866 0.986 1.017 1.722 1.114 1.291
sTV–pooq 0.859 0.795 0.888 0.790 0.982 0.819 1.175
sTV–tving 0.899 0.816 0.936 0.827 0.984 0.832 1.157
sTV–NTV 0.988 0.861 0.965 0.863 1.028 0.887 1.173
sTV–YT 1.134 0.937 1.094 1.085 1.420 1.163 1.387
pooq–tving 0.755 0.715 0.779 0.731 0.718 0.675 0.795
pooq–NTV 0.866 0.840 0.939 0.777 0.977 0.773 0.964
pooq–YT 1.201 0.944 1.097 1.069 1.259 1.100 1.138
tving–NTV 0.814 0.686 0.824 0.702 0.751 0.739 0.882
tving–YT 1.172 0.885 1.120 1.084 1.291 1.072 1.110
NTV–YT 1.231 0.970 1.158 1.025 1.128 1.098 1.088
Note: 0 = maximum overlap, 6 = minimum overlap. (Because the value of niche overlap has an inverse relationship with the degree of niche overlap, with a
lower value of niche overlap indicating a higher overlap between two services.)
For competitive superiority, YouTube is in a high position with the power of its UCC content and financial benefit dimen-
sion is the only exception. But when YouTube was excluded, traditional pay TV has competitive superiority over the remain-
ing OTT platforms. For the convenience dimension, OTT has competitive superiority. In the case of IPTV, however, the results
are less consistent. IPTV has a stronger competitive superiority than Naver TV, which was probably due to the recent launch
of IPTV mobile services. Generally, traditional pay TV possesses competitive superiority over OTT in the information and
financial benefit dimensions. More specifically, IPTV is competitively superior in the passing time and entertainment dimen-
sions, cable TV is competitively superior in terms of financial benefit and ease of use, and OTT is more competitively superior
in terms of social interaction (see Table 3).
4.3. Niche values for time spent with media
To overcome the limitations of previous research, this study regarded time spent with media as a resource for video plat-
form providers, and the niche breadth of each year was computed. As shown in Table 4, cable TV had the highest amount of
time spent with media in 2010, whereas OTT had the least. Interestingly, the overall result of this study was the same as
those from 2010 to 2012, whereby the niche breadth value of each platform increased insignificantly except for OTT.
Table 5 indicates the niche overlap values for each video platform from 2010 to 2012. The highest overlap value of 0.601 is
between cable TV and sTV, indicating that the competition between traditional pay TV was relatively fierce. The overlap
measure between OTT and sTV is 0.720, which is the lowest. The niche overlap between OTT and traditional pay TV is lower
than the values among traditional pay TV. The two video platforms with the highest degree of similarity between their
niches, however, are OTT and cable TV, with an overlap score of 0.586 in 2011. The overlap measure between IPTV and
OTT is 0.799, which is the lowest in 2011. Although the niche overlap ranking in 2012 is the same as the ranking in 2010,
the values are observably smaller.
5. Conclusion and implications
This paper attempted to examine the competition in the Korean video platform market. To develop the research ques-
tions, a literature analysis using 41 previous works on niche theory was performed. To make up for the gaps in the literature,
multiple resources such as ‘‘gratification’’ and ‘‘time spent’’ on media were studied in this paper.
The results show that, in overall terms, YouTube provided the highest level of gratification, while Naver TV has the nar-
rowest niche breadth; this means that YouTube was a generalist platform that may satisfy the needs of consumers in almost
all dimensions, while Naver TV was a specialist platform. The niche breadth values of traditional pay TV are bigger than those
of OTT media except for YouTube, and a fair proportion of participants reported that they accessed YouTube rather than the
traditional TV platforms. Interestingly, the niche breadth of traditional pay TV is higher than that of OTT platforms for finan-
cial benefits, and this was possibly due to the economic benefits that bundled services could provide to customers. Generally,
the niche breadth values of the social interaction dimension are relatively low compared to those of other dimensions, which
might be explained by the reason that other media, like mobile messengers Kakao Talk or Line, can satisfy a consumer’s need
for social interaction. By studying the niche breadth values for OTT platforms, we found that pooq and tving had higher niche
8
Table 3
Superiority measurements of the seven video platforms.
Group Information Pass time Entertainment Social interaction Financial benefit Ease of use Convenience
S-score t-Value S-score t-Value S-score t-Value S-score t-Value S-score t-Value S-score t-Value S-score t-Value
CA>IP 3.769 1.712 2.496 2.619** 3.333 4.878** 3.318 3.521** 2.027 6.672** 4.269 1.652 4.880 10.040**
IP>CA 4.353 3.205 5.058 4.548 3.550 3.676 10.052
CA>SA 4.120 1.072 3.403 2.936** 4.702 2.193* 4.537 1.809 3.579 6.666** 5.554 6.904** 7.095 0.087
SA>CA 3.758 2.597 3.924 3.862 2.014 3.019 7.140
** ** **
CA>PQ 5.262 5.451 3.502 1.750 4.952 1.559 4.264 0.756 4.331 11.531 5.645 6.576 5.562 9.470**
PQ>CA 3.335 2.994 4.368 4.550 1.680 3.203 11.045
CA>TV 5.434 5.590** 3.281 2.607** 4.924 2.121* 4.093 1.504 4.004 9.203** 5.215 4.805** 5.242 10.451**
TV>CA 3.424 2.564 4.141 4.663 1.855 3.421 11.056
CA>NA 5.783 5.983** 3.977 5.386** 5.475 4.922 4.171 2.231* 4.496 13.192** 5.736 7.149** 6.165 6.221**
NA>CA 3.587 2.463 3.682 5.047 1.463 3.141 9.583
J. Kim et al. / Telematics and Informatics xxx (2015) xxx–xxx

CA>YT 2.810 12.927** 2.188 7.010** 2.384 14.637** 2.318 15.213** 4.262 7.428** 2.857 10.552** 4.184 18.175**
YT>CA 7.777 4.213 7.810 8.502 2.527 7.029 14.331
IP>SA 4.231 3.081** 3.390 5.641** 5.339 5.792** 4.998 5.065** 4.264 12.680** 5.072 5.957** 10.297 10.968**
SA>IP 3.203 1.921 3.273 3.176 1.384 2.950 4.682
IP>PQ 5.572 7.283** 3.550 4.158** 5.333 4.995** 4.643 1.616 5.103 16.480** 4.922 4.078** 7.874 0.261
PQ>IP 3.064 2.386 3.543 4.043 1.397 3.432 8.021
IP>TV 5.676 6.859** 3.612 5.538** 5.618 5.772** 4.913 1.624 4.969 14.882** 4.915 3.223** 7.657 0.951
TV>IP 3.223 2.099 3.498 4.285 1.585 3.700 8.202
** ** ** ** **
IP>NA 5.990 7.683 4.300 8.635 6.488 8.866 4.814 1.105 5.428 17.878 5.409 5.258 9.256 3.863**
NA>IP 3.196 1.876 3.194 4.388 1.370 3.444 7.048
IP>YT 3.304 11.438** 2.502 5.046** 2.998 11.446** 2.845 12.396** 5.238 10.952** 3.176 10.785** 6.453 8.780**
YT>IP 7.762 3.979 7.258 7.921 2.647 7.568 11.516
SA>PQ 5.045 4.955** 2.781 0.874 4.285 0.429 3.676 3.000** 3.370 6.145** 3.791 0.900 5.244 9.623**
PQ>SA 3.298 3.021 4.442 4.769 2.014 4.114 10.758
SA>TV 5.091 5.095** 3.002 0.359 4.574 0.084 3.649 3.152** 3.141 3.134** 3.612 2.231* 4.899 10.947**
TV>SA 3.312 2.903 4.543 4.800 2.411 4.421 10.994
SA>NA 5.537 5.579** 3.545 3.170** 5.287 3.358** 3.727 3.965** 3.674 7.298** 4.217 0.418 6.564 5.445**
NA>SA 3.523 2.657 4.045 5.207 1.986 4.372 9.610
SA>YT 2.760 13.867** 1.952 9.966** 2.264 16.172** 2.151 17.012** 3.729 2.693** 2.236 15.757** 4.368 17.665**
YT>SA 8.058 4.787 8.320 9.050 3.099 8.390 14.227
PQ>TV 3.564 0.090 2.810 1.300 4.105 0.803 4.033 0.295 1.893 2.265* 3.360 0.772 6.182 0.030
TV>PQ 3.535 2.467 3.826 4.140 2.362 3.618 6.198
** ** **
PQ>NA 4.267 1.304 3.651 4.298 5.112 3.763 4.105 1.139 2.705 2.752 3.969 0.889 8.824 5.256**
NA>PQ 3.820 2.438 3.746 4.525 2.110 3.659 5.895
PQ>YT 2.132 18.437** 2.167 8.514** 2.484 15.773** 2.628 14.914** 3.052 1.124 2.293 15.890** 5.820 9.098**
YT>PQ 8.857 4.645 8.432 8.618 3.312 8.318 11.072
TV>NA 4.072 1.451 3.098 3.236** 4.672 3.403** 3.802 1.061 2.775 5.041** 4.012 2.353* 8.357 6.132**
NA>TV 3.587 2.202 3.514 4.186 1.690 3.213 5.126
TV>YT 2.184 18.112** 1.756 9.990** 2.366 16.107** 2.847 13.503** 3.246 0.426 2.287 15.136** 6.087 8.389**
YT>TV 8.826 4.605 8.461 8.409 3.147 8.167 11.031
NA>YT 2.138 18.632** 1.649 12.622** 2.074 19.397** 2.645 13.656** 2.264 4.027** 1.990 17.466** 4.234 13.558**
YT>NA 8.884 5.240 9.105 8.281 3.128 8.564 11.764
*
p < .05.
**
p < .01.
Table 4
Niche breadth for each media from 2010 to 2012.
2010 2011 2012

Cable TV 0.269 0.270 0.273
IPTV 0.240 0.191 0.246
Satellite TV 0.267 0.194 0.268
OTT 0.183 0.152 0.173
Note: 0 = minimum possible breadth, 1 = maximum possible breadth.
Table 5
Niche overlap values for each media from 2010 to 2012.
2010 2011 2012

Cable–IPTV 0.606 0.594 0.589
Cable–sTV 0.601 0.636 0.584
Cable–OTT 0.618 0.586 0.600
IPTV–sTV 0.636 0.772 0.620
IPTV–OTT 0.715 0.799 0.707
sTV–OTT 0.720 0.765 0.714
Note: 0 = maximum overlap, 6 = minimum overlap. (Because the value of niche

overlap has an inverse relationship with the degree of niche overlap, with a
lower value of niche overlap indicating a higher overlap between two services.)
breaths compared to Naver TV because they provide key video content. The niche breadth for cable TV has been growing and
it has the widest niche breadth compared with the other services in this study; however, the niche breadth for OTT platforms
is the narrowest over the three years. Regarding the niche overlap, the overlap between traditional pay TV and OTT is not
very high; instead, the niche overlap among the traditional pay TV services is relatively high. The niche overlap between
YouTube and traditional pay TV is mostly low, indicating a complementary relationship. The overlap between pooq, tving,
and Naver TV is generally high, whereas the overlap between pooq, tving, and YouTube is not high. Alternatively, the
high-mobile-usage group show a high degree of overlap with YouTube in terms of convenience, while pooq and tving show
a high degree of niche overlap in most of the dimensions, which is most probably due to the similar contents and services
that they provided. For competitive superiority, YouTube is in a high position due to its powerful UCC content, with financial
benefit dimension the only exception. However, when YouTube was excluded, traditional pay TV services have competitive
superiority over the remaining OTT. For the convenience dimension, OTT possess competitive superiority.
In summation, through a simultaneous niche analysis of the two important resources of gratification and time spent on
media, we produced a somewhat contradictory result for OTT. This result can be used as a reference that signifies the lim-
itations of previous research studies that only examined one resource – usually gratification. Accordingly, future research
studies will need to simultaneously consider the various dimensions of resources.
The Korean market was significantly different from the American market in this study, whereby the competition between
traditional pay TV and OTT was not severe. This mildness can be explained by the fact that a service with strong brand power
like Netflix does not exist in Korea; the subsidiary and complementary role that online based, video content consumption has
played so far might also be relevant here. However, the report goes that Netflix will extend their service area to Korea in
2016. If we can enjoy the service, it would be an interesting research that deals with same framework in this study. The fierce
competition between YouTube which has a lot of UCC and Netflix which has a lot of global PGC (Professional Generated
Contents) may be drawn. Furthermore, because OTT do not appear to exert any kind of substitution effect, an attempt to reg-
ulate OTT with the Broadcasting Act may be the outcome of a premature assessment. Hasty regulation, especially for Internet
services, may hinder consumer or social welfare, and could also raise the issue of market distortion.
This paper is not without limitations. First, as the analysis focused entirely on the concept of displacement, any form of
complementary relationship between the two media could not be covered in this study. The research instead focused on the
comparison of two types of resources and revealed the limitations of niche theory through empirical evidence. Future studies
should therefore also focus on the complementary relationship between different media forms. Lastly, the potential effect of
YouTube’s strong brand power on the relationships between the variables was considered during the analysis; therefore, the
results for when it was included and when it was excluded from the OTT services group are provided. The difference in the
outcomes of the two cases also allows us to consider the competitive advantage of the online video portal in the near future.
Acknowledgements
This work was supported by the ICT R&D program of MSIP/IITP [2013-005-002-003, Research on Spectrum and Future
Policy] and the National Research Foundation (NRF) of Korea grant funded by the Korean government
(NRF-2013S1A3A2043357).
Appendix A
Table A.1
Items for survey ‘‘Watching/using this service (platform) will. . .’’
Factors Items Researchers

Information (IF) – be helpful in learning about things that happen in society (IF1) Papacharissi and Rubin (2000),
– be helpful in getting information on various topics for my life (IF2) Rubin (1979) and Sun et al. (2006)
– be helpful in getting useful information for me (IF3)
Passing time/relaxation (PT) – be good when I have nothing better to do (PT1)
– be good to just pass the time (PT2)
– be good to relax (PT3)
– be good because it is a pleasant rest (PT4)
Entertainment (ET) – be good because it provides me entertainment (ET1) Kaye (1998) and Lee (2011)
– be exciting (ET2)
– be enjoyable (ET3)
Social interaction (SI) – allow me to feel that I belong to a group with similar interest to mine (SI1)
– allow me to join a discussion (SI2)
– get along well with other people (SI3)
– be helpful in getting more points of view (SI4)
– be good in making humane relationships (SI5)
Financial benefit (FB) – be cheaper than other services (FB1) Seol et al. (2012) and Lim (2007)
– allow me to get a discount through bundling (FB2)
– be good because of reasonable price (FB3)
Ease of use (EU) – be good because it is easy to handle (EU1)
– be good because the procedure of using is simple (EU2)
– be good because it is easy to learn how to operate it (EU3)
Convenience (CV) – be good because I can watch the program whenever I want (CV1)
– be good because I can watch the program at anyplace that I want (CV2)
– be good because I can watch the program under any circumstances (CV3)
– be good because programs are fairly up to date (CV4)
– be good because it is easy to find the previous program (CV5)
– be easy for me connect with other mobile devices (CV6)
– be good because I can watch program seamlessly (CV7)
– be easy for me to save my favorite program (CV8)
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Telematics and Informatics xxx (2015) xxx–xxx

Contents lists available at ScienceDirect

Telematics and Informatics

Competitive dynamics in the Korean video platform market:

2. Theoretical background and research questions

2.1. Media competition: displacement or reinforcement effect

2.2. The theory of the niche

2.2.1. The concept of niche theory

2.2.2. Research questions

3.1. Expanded resources

3.2. Formula for calculating each value (for gratiﬁcation)

3.2.1. Niche breadth

3.2.2. Niche overlap

3.2.3. Competitive superiority

3.3.1. Niche breadth

3.3.2. Niche overlap

3.4. Data collection

4.1. Sample characteristics and gratiﬁcation dimensions

4.2. Niche values for gratiﬁcations

4.2.1. Niche breadth

4.2.2. Niche overlap

4.2.3. Competitive superiority

4.3. Niche values for time spent with media

5. Conclusion and implications

J. Kim et al. / Telematics and Informatics xxx (2015) xxx–xxx

2010 2011 2012

Note: 0 = minimum possible breadth, 1 = maximum possible breadth.

2010 2011 2012

Note: 0 = maximum overlap, 6 = minimum overlap. (Because the value of niche

Factors Items Researchers

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