Netflix is pushing back on demands from Korean ISP SK Broadband that the streaming company compensate the telecom for network upgrades caused by the popularity for local shows, including the recent Korean-language global hit Squid Game.
"Squid Game is just the beginning. We appreciate what Koreans have long understood," wrote Dean Garfield, VP of global public policy, in a company blog post published Sunday.
"There is so much more where this story came from. But, unfortunately we have come to a crossroads--Red Light, Green Light--where internet gatekeepers could get to decide if the next great Korean story can be watched, and loved, by the world," added Garfield, riffing on the macabre version of a popular kids game seen in Episode 1 of Squid Game.
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Prior to the emergence of Squid Game, a local court already ruled in June that Netflix owes SK Broadband for additional traffic drawn to its networks by other local Netflix hits, such as 2020 military-themed drama D.P. The assessment for Netflix's liability was valued at $23 million.
“Netflix is at least receiving network services, including management of the network quality, at a cost," the court said, according to the Korea Herald.
“This decision clearly confirms by law that Netflix needs to pay network usage fees to SK Broadband,” the internet service provider added.
The debut of the Korean-language series Squid Game--Netflix's most watched show ever after 28 days on the platform--only further highlights the issue, SK Broadband has contended.
Sensing a bad precedent, Netflix is pushing back. The streaming company earns 15% of its APAC region revenue in Korea. Paying additional fees for broadband would consume 6% of what it makes in the country.
Citing its cooperative "Open Connect" initiative with local ISPs, Garfield wrote that Netflix is "doing our part to ensure Netflix isn’t a burden on Korean broadband companies.
"Working with companies like Samsung and Cisco in the Alliance for Open Media, we built a content delivery network called Open Connect, which we offer free-of-charge to internet service providers around the world," Garfield added. "It enables Netflix content to be stored as close to our members as possible, and avoids clogging up the internet. The overwhelming majority of our ISP partners around the world use Open Connect, because why wouldn’t they? We deliver it to them for free. It’s proven to reduce at least 95% of network traffic, leaving lots of room for other content to go through. It saves cost. And most importantly, consumers are able to enjoy a high-speed, high-quality Netflix experience. In 2020 that cost saving was estimated to be $1.2B. Unfortunately, while more than a thousand ISPs around the world recognize these benefits, one of the largest internet companies in Korea is turning a blind eye. Why? Because by making both consumers, and content providers pay, they can get paid twice. Red Light, Green Light. "
