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DVD market rides 'Korean Wave'

The Korean Wave, which has sparked a Korean movie and drama fad elsewhere in Asia, is infusing fresh energy into the local entertainment sector. Its impact is also palpable at PapaDVD, a major online DVD shopping mall.
"As much as 30 percent of revenue comes from foreign clients, chiefly those in Taiwan, Thailand and Hong Kong who have a strong appetite for Korean DVD titles", said Kim Jong-rae, CEO of PapaDVD (www.papadvd.com), in an interview with The Korea Herald.

The DVD title "Memories of Murder" by director Bong Joon-ho, for instance, sold more than 1,000 copies in a month. Foreign DVD buffs are also snapping up other hit movies like "Wishing Stairs" by director Yun Jae-yeon and "The Classic" by director Kwak Jae-yong.


Kim Jong-rae, CEO of PapaDVD, Korea`s largest online DVD shopping mall [The Korea Herald]
"In the initial stage, orders mainly came from individual DVD lovers in Asia, but these days, Asian online shopping malls like Layoyo (www.layoyo.com) and YesAsia (http://yesasia.com) are also placing orders for Korean DVD titles through the PapaDVD Web site", Kim said. The PapaDVD Web site is written in Korean; nonetheless, Korean DVD buffs in other Asian countries are willing to navigate the site and place orders.

Kim said he plans to open an English-language version of the Web site to meet the surging demand.

"As the company handles foreign shipping of Korean DVD titles, major portals in Asia, especially those in the Chinese-speaking communities, are increasing orders at a steady pace, a reflection of the Korean Wave", Kim said.

The popularity of PapaDVD elsewhere in Asia is attributed to Kim's foreign shipping policy. Of about 100 major DVD shopping mall sites in Korea, PapaDVD is the only one that ships Korean titles overseas.

"At first, we thought the buyers must be Koreans living in other Asian countries, but it turned out that a majority of the clients were Chinese", Kim said. Taiwanese clients particularly like "My Sassy Girl", a Romantic Comedy with English subtitles.

PapaDVD, established in August 2001, is also offering its DVD sales ranking to major newspapers and media. It is the No. 1 online DVD shopping mall in Korea, according to Web traffic research site Rankey.com.

Kim believes his journalism background has bolstered the company's leadership in the industry: He is one of the nation's leading DVD columnists and commentators, writing contributions to major DVD magazines and helping his Web site remain ahead on the domestic market. He has been quicker than his competitors to update information about major DVD titles, while upgrading the site's features to satisfy online-savvy customers.

Kim started his business after he fell prey to the mesmerizing high-quality visual and audio effects of DVD home theater systems, ordering foreign titles en masse on the Web.

As a serious hobbyist, Kim came to appreciate the potential of the new entertainment medium: DVD players, coupled with workable home theater systems, can work visual and audio wonders, unlike video cassette tapes with fuzzy visuals and so-so sound effects.

But the problem is the domestic DVD market is not growing as fast as he expects. Korean DVD shopping malls and foreign DVD distributors suffered a setback in sales last year, hurt by the overall economic downturn and over-competition.

"The DVD market is largely limited to what we call 'manias,' or those who have in-depth knowledge about DVDs. But if the market is to grow, the user base needs to expand", Kim said.

Some foreign DVD distributors staged price-cutting campaigns to deal with the snowballing inventory last year, which resulted in a breakdown of optimal market prices. As a result, small and midsize companies that produce foreign DVD titles through licensing, faced serious troubles, dampening the market sentiment further.

Kim said the underlying issue was the lack of affordable display devices for DVD users. It is estimated that there are more than 4 million DVD players on the market, a respectable figure considering the short history of the new medium. But the actual rate of use is much lower because the display devices like flat-screen TVs are still deemed pricey.

"Even a major hit title sells fewer than 100,000 copies, which is incredibly low compared with other advanced markets like the United States", Kim said.

Another problem is the distribution of pirated movie files on the Web, especially through peer-to-peer file-sharing Web sites. As with other countries fighting online movie piracy, Korea is also struggling to block the spread of unlicensed movie files on the Web.

Kim said some of those movie files in a format called "Dvix" have DVD-like visual quality, which strongly hampers the sales of the DVD titles in question.

"DVD makers and distributors should tackle issues like Dvix head-on and put more efforts into expanding the user base to nurture the fledgling DVD market", Kim said.

By Yang Sung-jin

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