Why YouTube can’t succeed in Korea

Recently, the video sharing juggernaut YouTube made its service available to the Korean market. Initially, many thought that the Korean-language YouTube was being service from within the Korean internet infrastructure.

However, in reality it has been simply translated into Korean and is being serviced from within the United States. Given that YouTube is the world’s most popular video sharing service, many in the Korean IT industry were concerned about the powerful company’s infringement into the Korean market.

However, in the short run it will be impossible for YouTube to be successful in the Korean market. This impossibility stems from three primary factors: the poor video quality of YouTube, an under-developed internet infrastructure for servicing traffic from abroad, and the inability for individualized private videos to find a niche in a mass consumption market.

The first obstacle in YouTube’s venture into the Korean market is its poor video quality. Given Korea’s reputation for having the world’s fastest broadband and most developed internet infrastructure, it should be no surprise that Korea boasts high standards in its video quality. The quality of video from Korean video sharing services approach high-definition quality. Specifically, the resolution of Korean video sharing services is 1280x960, 1500K, which is nearly HD quality.

In other words, Korean users of video sharing services want better video than what YouTube can offer. Although YouTube could upgrade the standards of its video service, it cannot improve upon existing low quality video. Given that YouTube currently lacks the necessary video quality to entice Korean consumers, it will have a difficult time having success in the Korean market. First impressions last forever and Korean consumers will not continue working with a video sharing service that currently does not meet their standards of quality.

Secondly, despite the impressive development of Korea’s domestic interest infrastructure, it currently is unable to offer the same speed of service for sites based on foreign locations. The Korean-language version of YouTube was developed in the home office of a YouTube employee in the United States.

In addition, the server computer for the Korean-language YouTube is also based in the U.S. Many people argue that it simply cannot be the case that Korea’s internet infrastructure currently cannot properly maintain a foreign-based web service. They claim that Korea’s interest speed is one of, if not the fastest in the world. However, they are thinking strictly in terms of domestic-based web service. In truth, the ability of Korea’s internet infrastructure in handle foreign web services is bad.

For instance, Korea’s top video sharing service currently has about 20 Gigabytes of traffic every moment. However, the National Internet Development Agency, a government organization of Korea, has stated that Korea’s internet infrastructure can only handle 48.6 Gigabytes of foreign-based web traffic. This is only half of what NTT, a Japan-based internet company, can maintain. NTT’s infrastructure alone can able to maintain a 100 Gigabytes of foreign-based web traffic.

In other words, a single Japanese internet company can maintain more foreign web traffic than the entire Korean internet infrastructure. In addition, it costs nearly ten times more to maintain a foreign internet network than it does to simply have a domestic one.

Finally, the overall quality of content on YouTube material is low and uninteresting to the average Korean. YouTube has a large amount of videos on its site, but it is mostly private material posted by individuals. For these particular individuals, their videos have much personal value. However, the average frequenter of YouTube has no interest in these postings. Thus, these videos are mostly wasted space.

The large surplus of individual video content won’t make YouTube popular in Korea. Besides, any popular YouTube video content has already been uploaded to Korea’s most popular video sharing services, such as Pandora.tv and Daum.net. In addition, due to cultural differences, many of the private videos that gain popularity in the United States are not interesting in the minds of most Koreans.

Beginning in June of last year, the video sharing service market in Korea began a slowdown in growth. YouTube had begun to sway users of Pandora.tv and Daum.net to use their service. Essentially, YouTube was seeking to expand their content library by convincing users of Korea video sharing services to post their content to YouTube. The ability of YouTube to break into the Korean market stemmed not from superior technology, but from an advantage in larger marketing budgets and investment capital. However, YouTube never made any significant investment in Korean.

Many Korean IT specialists believe that YouTube only wanted the video content of Korea, rather than a genuine interest in investing in development. The video content of Korea is as good as any of the popular content in the rest of Asia. In all likelihood, the Korean-language YouTube site will simply be a hub for Korean content to be sold to other countries using a global site.

Lifestream Aggregation and the State of Korea’s IT Infrastructure

One of the most sensitive and highly contested issues facing Korea’s IT industry is the issue of datastream and the possible implementation of an aggregate management system. By definition, datastream is the tracing of data and usage from any IT device or service. Given Korea’s rapid development of an IT infrastructure it should be no surprise that a sudden overflow of data is causing an information overflow, a “data jam” so to speak. Cyworld (Korea’s most popular SNS), Portal, mobile phones, instant messenger, etc, all are contributing to a virtual traffic jam of the cyber-world. To counter this issue, a growing sector of the IT sector have advocated for an aggregate management system to streamline the flow of date from IT services and devices. However, others argue that such a system is both unnecessary and unfair to upstart companies who are unable to secure new websites.

OpenID is one particular kind of aggregate management system being advocated for by some companies, namely Openmaru Studio. Openmaru is the brain-child of NC Soft, which is Korea’s biggest online gaming company and made famous for MMORPG “Lineage”. However, I don’t think it will be popular because many Koreans are now slowing down the flow of datastream by using fewer methods and sites for their IT usage. There, the implementation of an aggregate management system is an unnecessary development in the IT world. In fact KoreanClick, the popular internet service company similar to Alexa, has stated that more and more Korean are connecting to fewer overall sites. While overall time spent on the internet is increasing, the decrease in site usage is reducing the datastream problem greatly.

While some of these upstart venture companies might be efficient and effective, it will be difficult for them to become popular in Korea. In the U.S., aggregate management systems are a necessary tool to control and log the immense flow of datastream. However, given the reduction in site usage in Korea, such a phenomenon is not vital our IT infrastructure. In addition, the consolidation and filtering of datastream through aggregate management sites negatively affects the ability of new website to spring up on the web.

Where has the Crisis of Yahoo Come From?

Ten years ago, Yahoo was one of the most powerful companies in the internet industry. However, Yahoo’s power has steadily weakened in recent years. Thus, Yahoo’s weakened state has attracted take-over efforts by Microsoft. Given the fast pace and intensity of the internet industry, it should be no surprise that the slightest strategic blunder can mean the downfall of a former powerhouse. When analyzing the various causes of the Yahoo’s weakened state, experts have offered many different opinions. However, the primary causes are the strategic decisions not to develop “Searching” technology and to invest heavily in Broadcast.com

The first cause of Yahoo’s decline among the giants of the internet industry was the decision not to be innovative in realm of “Searching” technology. In the late 1990’s Yahoo hadn’t properly developed “Searching” technology, so the company’s advisors urged the company to do so. However, founder and CEO Jerry Yang didn’t think it was important. In fact, during a press interview in Korea he asserted that it was not necessary for Yahoo to develop such technology. Thus, when an upstart search engine company called Google pitched its services to Yahoo, the company respectfully declined. Given that other “Searching” companies such as Lycos and Altavista were on the decline, it is no surprise that Yahoo executives chose not to invest in a similar company. However, the decision would prove to be a highly regrettable one. Yahoo’s executives were not able to recognize the goldmine that was Google. Although Yahoo remained atop the market in display advertisements, they steadily fell behind in other key aspects of the internet industry. Thus, the value of the company has steadily declined.

The second major cause of Yahoo’s decline was the decision to invest heavily in Broadcast.com. In 1999, Yahoo invested some $5,700,000,000 in the video service Broadcast.com. By comparison, Google was able to purchase Youtube, a similar video service, for a mere $1,650,000,000. Youtube has since become a worldwide internet sensation while Broadcast.com has not had nearly the same success. Thus, this has proved to be a severe financial blunder on the part of Yahoo executives. Yahoo expected that Broadcast.com would become the biggest media phenomenon since the television, but Broadcast.com’s mark on the world of Media has been a minimal one.

Although Yahoo should be making bold and innovative moves in order regain its place at the top of the internet industry, the company has taken a rather conservative approach. Granted, the company did use its remaining financial clout to buy-out rival Inktomi, invest in joint broadcast ventures with the Hollywood entertainment industry, and develop Panama, Yahoo’s latest search technology. However, these ventures are broadcast-related. The market on broadcast investment is quickly bottoming out. In order for Yahoo to seriously contend with its competitors, it must be much more innovative and bold with its investment capital. A No.2 company does not have the luxury of being cautious and conservative.

In conclusion, a series of financial and strategic blunders on the part of Yahoo has made it susceptible to Microsoft’s recent takeover bid. Despite declining influence in the internet industry’s power structure, the company has not been innovative enough to make a worthwhile attempt to overtake Google. By investing in out-of-date technologies and buying out obsolete former-competitors Yahoo has put itself into a seemingly endless downward spiral.