Even though it includes tax support, the OTT industry

The artist or the crew is rarely contracted and creating content. Tax support for production costs, not content investment costs, seems to be virtually unexpected in the field.

An official in the online video service (OTT) industry has expressed concern about the revision of the tax law announced by the Ministry of Strategy and Finance.

In the meantime, the industry has steadily shouted that it is necessary to prepare OTT support measures. The OTT industry grew rapidly with Corona 19, but was not supported because there was no legal definition of OTT.

In May, the National Assembly passed the amendment to define the OTT as a telecommunications service under the Electronic Telecommunications Business Act. Based on this, the ministry was to support the production cost of content in the OTT.

However, the industry is unfortunate in the revision of the tax law. This is because only tax support for production costs, not content investment costs. The industry argues that tax support should be expanded to investment for effective measures.

■ Content contracts that are focused on outsourcing companies, reflecting reality

According to the amendment of the Tax Law, 3%of large companies, 7%of mid-sized companies, and 10%for small and medium-sized enterprises for content production costs such as film and dramas. Tax support will be applied starting after January 1, next year. The reorganization plan will be submitted to the National Assembly in September after legislative notice, ministry consultations and councils.

The reason why the OTT industry is regrettable is that the tax support targets are limited to production. In order to receive tax support for content production costs, the cast, the writer, and the crew must sign a contract. In the case of OTT, it is difficult to receive tax support for the production cost even if the original contents are produced.

For example, when OTT invests in full production costs, the profits can be exempted from the corporate tax in accordance with the tax law amendment. However, since OTT is not subject to tax support, it is impossible to recover all investment costs.

■ OTT industry Support is needed to survive

In particular, the industry pointed out that even though it is difficult to recover content investment costs, the bleeding competition is continuing for survival. OTT's competitiveness depends on who secures more content that consumers will like. In particular, in recent years, competition for original content has intensified and investment bleeding competition has intensified.

As competition intensified, most major OTTs in Korea recorded deficits. Last year, Wave posted operating losses of W55.8bn, Teabing 76.2 billion won, and Watcha recorded 24.8 billion won. In particular, the number of subscribers is decreasing due to Corona 19 Endonicks, so the industry expects the deficit to intensify.

According to the market analysis company mobile index, the number of paid members of seven major OTT platforms in Korea was 2686 million in April. Compared to 3260,000 in January, 3.4 million people have been reduced in three months. Netflix, the No. 1 OTT in the global industry, also decreased by 970,000 in the second quarter, followed by the number of paid members in the first quarter of this year.

The domestic OTT industry emphasizes that tax support for investment costs should also be provided as tax support for content production costs is close. An industry official said, We look forward to a variety of ways to supplement the system to promote OTT and apply it to the site.

Other officials in the industry also said, OTT growth is slowing and competition is continuously becoming fierce. It.