KT and SoftBank to set up KRW 40bn fund for IPTV content

April 4, 2008 – Korean telco KT and Japan’s SoftBank have formed an agreement to establish a joint fund worth KRW 40bn (US$ 41mn) to plan, finance, produce and obtain the rights to content for its “Mega TV” IPTV service, including movies, TV drama and animation.

“There have been a stack of business proposals on my desk,” said Song Jae-ho, Director of KT’s content business department.  “We couldn’t start those projects because we did not have a suitable account for that purpose.  But now that we have it, we will be busy with the proposals.”

KT and SoftBank will invest KRW 20bn each in the fund, while SoftBank Ventures Korea will be in charge of its daily management.  The two firms reportedly plan to expand it to KRW 100bn this year.

Moon Gyu-hak, President of SoftBank Ventures Korea, commented that the fund will be reinvested for the next seven years, and will be sufficient for the acquisition of around 19,000 programmes for Mega TV until 2015.  “Last year, [KT’s] average return on investment of Korean movie funds was minus 43 percent,” Moon added.  “Our fund will be different from them, since it will be invested in more diverse content, especially those that are tailored for the two-way communication of IPTV.”

KT currently has around 580,000 subscribers to its Mega TV service, of which 200,000 signed up in the past two months.