Netflix, S.Korea’s SK Broadband to settle longstanding legal dispute

Netflix Inc., the world’s top streaming service, and SK Broadband Co., South Korea’s No. 2 internet service provider, said on Monday that they have agreed to settle a legal dispute lasting more than three years over the US company’s payment for network usage in the country while also cooperating on future business expansion in one of the world's most wired nations.

Netflix, SK Broadband and its parent SK Telecom Co. announced a strategic partnership to provide better entertainment experiences to their customers in South Korea.

“SK Broadband and Netflix will end all disputes with the signing of today’s partnership, and collaborate as partners for the future,” the two companies said in a joint statement.

The legal battle started in April 2020 when Netflix filed a complaint against SK Broadband to a Seoul court, rejecting the company's demand that the streaming platform pay for network usage in South Korea. The court ruled in favor of the internet service provider in June 2021, ordering the US streaming giant to make a payment. Netflix appealed and SK Broadband filed a countersuit asking a high court in Seoul to determine the amount of the fee.

The dispute drew attention from around the world amid surging traffic loads due to the increasing popularity of over-the-top (OTT) media platforms such as Netflix and YouTube. In South Korea, eight bills related to network usage fees have been proposed to the National Assembly, while the ongoing litigation stoked similar discussions in the US and Europe.

COMPENSATION

SK Broadband is expected to receive compensation equivalent to network usage fees from Netflix in return for dropping the lawsuit although the two sides have yet to disclose any details on the negotiations, industry sources in Seoul said.

Netflix was likely to have been concerned over potential losses in the Supreme Court as well as the appeal court as a district court ruled against it, the sources said. Such possible defeats may result in similar lawsuits worldwide, they added.

SK Broadband has been struggling to continue its legal battle against the global streaming behemoth. The internet protocol television (IPTV) service operator also had difficulties competing with domestic rivals such as KT Corp. and LG Uplus Corp., which have been providing Netflix's hit programs such as Squid Game, the streamer’s biggest show ever, to local users.

The partnership is predicted to allow SK Broadband to enhance its competitiveness, domestic industry sources said.

Neither Netflix nor SK Broadband were not available for comment.

PARTNERSHIP

SK Broadband and SK Telecom, South Korea’s top mobile carrier, aim to help customers enjoy Netflix shows and films on mobile devices and IPTV with easier access and payment options, according to the statement. The two companies of South Korea’s No. 2 conglomerate SK Group will offer various price plans and products, including bundled packages.

New products for SK Telecom and SK Broadband customers will be gradually released from the first half of 2024.

In addition to the partnership, the two companies will explore opportunities to leverage their artificial intelligence technologies with Netflix to create better entertainment experiences for customers.

Through the partnership, Netflix said it will be able to establish deeper connections with customers in South Korea, a country with its pulse on the cultural zeitgeist and widely acknowledged as fostering a world-class creative ecosystem.

Netflix has attracted global users with various Korean-language originals such as D.P. 2, Kill Boksoon and Physical: 100.

Write to Seung-Woo Lee at leeswoo@hankyung.com
 

Jongwoo Cheon edited this article.