On June 22, 2020, the Korean government announced its “Digital Media Ecosystem Development Plans” (the “Development Plans”).  The Development Plans are intended to strengthen the global competitiveness of Korea’s domestic industry in the rapidly changing digital media ecosystem centered around the Internet.  Below is a summary of the Development Plans relating to OTT services. 
 

• Self-rating system for online video content

  • Currently, OTT service providers must obtain ratings from the Korea Media Rating Board (the “KMRB”) for paid video content in accordance with the Promotion of the Motion Pictures and Video Products Act.

  • In an effort to minimize regulations, the government plans to introduce a self-rating system allowing OTT service providers to self-rate their content without going through the KMRB.

  • The government announced it will propose corresponding amendments to the Motion Pictures and Video Products Act in 2020.

• Amendment to the “Guidelines on the Protection of Personal Information from Customized Online Advertisements”

  • The government plans to amend the “Guidelines on the Protection of Personal Information from Customized Online Advertisements” (the “Guidelines”) to clarify that content recommendation services based on user preferences are categorized as customized services, not advertisements.

  • This amendment would remove content recommendation services from the scope of the Guidelines, meaning such services would no longer be subject to the regulations governing the collection and use of behavioral information.

• Expanded scope of production cost deduction to include OTT-distributed video contents

  • To increase investments in new types of content such as OTT content, the government announced it will (i) invest more than KRW 1 trillion in content funds to strengthen the production capability and overseas expansion of domestic content companies, and (ii) expand the scope of tax deduction for production costs that currently applies to movies and broadcasting content to cover online videos distributed through OTT services, subject to corresponding amendments to the Promotion of the Motion Pictures and Video Products Act and the Telecommunications Business Act.

• Support for domestic OTT service providers

  • To support Korean companies’ expansion to overseas markets, the government established a “Content Global Co-Prosperity Committee,” which kicked off in April 2020.  According to a media report, the Committee is composed of (i) domestic content providers including WAVVE, TVING, KOCOWA, SEEZN, Kakao M and Watcha, (ii) content producers including A Story and Company SangSang, (iii) Korea Drama Production Association, (iv) Korea Independent Production Association, and (v) Korea Animation Producers Association.

  • The government is also considering plans to facilitate the exposure of domestic media platforms via Korean smartphones exported overseas.

• Building a level playing field for domestic and overseas service providers

  • Strengthening fair use of networks:  To reduce domestic OTT service providers’ burden of network usage and ensure a fair network usage environment, the government improved the interconnection system for internet networks and legislated guidelines on network use agreements and is currently monitoring the compliance status.

  • Building a level playing field for service providers:  Starting from 2021, the government will undertake a formal review to identify how internet companies, including domestic and foreign OTT service providers, are operating their businesses in Korea.

  • Securing stability of services:  Value-added service providers of a certain size will be required to secure measures to provide stable services to users.  In a recent interview, an official from the Ministry of Science and ICT said any such obligation to secure stability of services cannot be directly associated with payment of network use fees under the current circumstances.  He added the recently passed amendment to the Telecommunications Business Act does not set forth any matter regarding network use fees, and it remains to be seen whether network use fees are discussed as part of the amendment to the Enforcement Decree of the Telecommunications Business Act.

• Creating a prospering environment for the production and distribution of contents

  • To protect the rights of small and medium-sized content producers, in 2020, the government plans to legislate the (tentatively named) “Act on the Building of Prospering and Cooperative Environment for Cultural Industries” to address unfair practices that may occur in their transactions with the platforms.  The legislation may require written agreements and provide model agreements.

  • The government also plans to prepare guidelines to ensure transparency in transactions between platforms and content producers.