1. ICT/Contents Market Trend in Korea -KINX-

2. 1. Current Status of Korea Internet Market

3. i) Households vs Broadband Subscribers –More than 100% of households subscribe to broadband service –Households are using multiple broadband service KOREA INTERNET STATUS

4. ii) Means of Accessing the Internet –UTP is still the most dominant means of the Internet access followed by FTTH –Bandwidth for end-users has been rapidly increasing KOREA INTERNET STATUS

5. iii) Mobile Subscribers –More than 100% of Korean Population are using mobile services –80% of mobile subscribers are using smartphone and 70% are using LTE service KOREA INTERNET STATUS

6. iv) IPTV Subscribers –Newest trend in the Korean ICT market –Nearly 50% of Korean households have IPTV –Will this translate into the growth of the OTT market in Korea? KOREA INTERNET STATUS

7. The New Age : “Giga Internet” Service started in October 2014 Provided by all three ISPs Mobile version of Giga Internet Why? High penetration rate Demand for High Connectivity (FTTH) Rapid increase of traffic volume -IPTV -“Ubiquitous” Mobile Phones

8. 2. Contents Market Growth

9. Contents Market Growth unit : $ 1billion 2013 vs 2014 2013 2014 3.4% 91.2 94.3 unit : $ 1billion Recent 5 years 2010 2012 Annual average 6.4% 73.0 2013 2014 2011 83.0 87.3 91.2 94.3 ⅰ ) Revenue Korea Content Market has been growing rapidly

10. ⅱ ) Revenue Growth by Content type Publishing Cartoon Game Film Broadcasting -’A man from the Star’ Video Streaming  4 billion hits Knowledge & Info. unit: $ 1billion 20.8 20.5 20132014 0.80 0.82 20132014 9.7 10.4 20132014 4.7 5.0 20132014 10.4 11.5 20132014 14.9 15.0 20132014 -1.3% 2.9% 7.4% 6.8% 10.7% 0.1% Contents Market Growth

11. ⅱ ) Revenue Growth by Content type -Game Game eSports! “League of Legends”  No. 1 online game for 127 weeks “LOL World Championship 2014” final play-off  Live Stream viewers : 32 million  Ticket : sold out in 6 min. (at Sangam World Cup stadium) Mobile Game Market Share 25.4% of Korea Game Market Tencent CJ games Invested $480 million $9.7  $10.4 2013 2014 billion Contents Market Growth

12. ⅱ ) Revenue Growth by Content type -Knowledge & Info. Smart Phone avg. usage time : 2hr 51min daily Over 3hr : 45.7% Smart Phone at home : 92.4% (instead of using PC) IPTV Subscriber : 10 million $10.4  $11.5 2013 2014 billion Knowledge & Info. OTT Domestic Market Scale : $190 million Prospect for 2020 : $780 million unit :$100,000 OTT market growth prospect 2014 2018 192 2020 2016 306 513 780 406%↑ Contents Market Growth

13. 3. Mobile & Online Game Market

14. i) Popularity of International games –Clash of Clans –Dotop Story –Reverse World –Aura Legend ii) Direct Distribution to the Korean Market –No need for Korean SNS platform Gaming Industry

15. i) International vs Domestic Games No.Name of Game Market Share 1 League of Legends 33.10 % 2FIFA Online 316.38 % 3Sudden Attack10.99 % 4StarCraft3.14 % 5Aion2.89 % 6 Dungeon and Fighter 2.69 % 7Lineage2.63 % 8Blade & Soul2.62 % 9Black Desert2.58 % 10World of Warcraft1.98 % Gaming Industry Are Korean games really gaining popularity in Korea ?

16. i)Influx of the Chinese Mobile Games ii) Struggle of the Korean Mobile Gaming companies –Deficit for NHN, Wemade, Neowiz iii) Focus on Distribution by Korean companies iv) Legal barriers –Government’s tight control and regulation –Society’s negative view on Game Gaming Industry

17. 4. Things to note for new comers

18. Things to note Tier 1 Carriers are constructing new DC in various location to catch up the demand in Korea KLS Market Share40%35%15% Est. completion Mid 2016July 2015 New Construction SeoulPyung Taek (Kyungkido) Gumi (Kyungkido) Size (MW)40MW160MW20MW There are no carrier neutral DC from the Tier 1 Carriers. You’ve got to be a big boy to have a right to ask for the carrier neutrality. K L S

19. New interconnection regulation to be introduced in 2016 (by ministry of science, ICT and future planning) Things to note Background : -Conflicts between ISPs because of the expansion of broadband market and severe competition among ISPs -New system was introduced as a measure to directly regulate the market, since past conflicts have proven that the market cannot solve problems within itself Plans for Improvement : -Expand interconnection range -Introduction of Standard Internet connection guideline -Improvement on the method of connection fee calculation -Management of the traffic gauge and clearing house

20. No peering Only IP Transit -The usual interconnection method : IP Transit service (Domestic / International) -Measure ingress/egress ratio and charge on the higher volume Things to note New Interconnection regulation -Charges to be determined by volume of egress traffic (On same tier level) -Lower tier will be in responsible for all traffic generated to higher tiers -Government assumes that this regulation will lead to promote peering relationship -New interconnection regulation will re-organize the hierarchy of the internet market

21. Any Questions? Thank you