Warner's home video unit to leave Korea

Warner Home Video Korea, a video and DVD division of the Hollywood studio, will shut down operations here next month.

This move signals that the video content business has hit its limit amid the rampant piracy of copyrighted movies on the Internet.

The company said yesterday it will suspend operations as of Dec. 31, stopping its Korean video and DVD business altogether. It entered Korea in September 1999 and emerged as No. 1 player in the home video and DVD market in the past decade in partnership with other domestic partners such as Samsung Electronics.

"The illegal downloading of video content and the protracted slump in the DVD business has prompted the company to leave Korea", Warner Home Video Korea president Lee Hyun-yeol said. "The emergence of a digital infrastructure is changing the way people purchase digital content such as movies".

Warner's move caps a steady withdrawal of Hollywood studios' home video and DVD units, hurt by the slowing sales and continued illegal downloading of videos on the Web. With Warner's departure, all Hollywood videos and DVDs will be distributed through Korean license partners.

In the 1990s, major Hollywood studies including Sony, Paramount, 20th Century Fox and Universal started their home video business in Korea, but began to shut down Korean operations in 2006, due to a deep slump and the piracy issue.

Warner reshaped the distribution market in 2002 by introducing a discount store and direct channel, while attempting to make DVDs more widely available with lower prices in 2005.

It reach a deal with MBC to work together in the digital content business, and in 2007 launched a direct video download business with iMBC, a subsidiary of the broadcaster, as part of efforts to broaden income sources for movie content.

While the home video unit will stop operations, Warner said it continue to run a digital distribution unit here to take a share in the future-oriented content business in Korea. A growing number of Korean users resort to video-on-demand and other digital-oriented services on the Web, promising to spur the legal download market in the near future if related regulations are enforced properly. The Korean government is clamping down on illegal online downloads of copyrighted movies, but the practice is so widespread that experts said it will take some time before legal download services are the mainstream in Korea.

According to Korean Film Council, the value of copyright violations in the video and film segment amounted to 1.14 trillion won ($851 billion) in 2006. The council has come up with a host of measures aimed at expanding the legal download channels and improving DVD distribution channels, but a slew of DVD distributors are going bankrupt due to plunging sales.

The Korean video and DVD market was valued at 100 billion won in 2003 but began to contract in 2004, undermined by the growing availability of online download services, many of which were illegal. Last year, the home video and DVD market was estimated at 56.9 billion won.

Warner, meanwhile, is set to release its last DVD title, "The Dark Knight", on Dec. 19.

By Yang Sung-jin