Part 22. The Landscape of the Screen Industry — Changing Habits from Television to Streaming

The Genealogy of Payment Habits — A Historical Hint Book for New-Content Business Models Volume 2 · Part 22

How Did Screen Content Move from Free to Subscription?

The payment history of screen content is more complex than that of music. Music follows a relatively linear path from concert admission to records and streaming. Screen content, however, has sustained at least three different payment models at the same time.

Audiences pay admission at cinemas. Television was free for decades—or, more precisely, advertisers paid. Video carried a rental fee, cable a monthly subscription, and OTT services another subscription. Few industries support so many payment methods for the same type of content: watching moving images.

This complexity is the key to analyzing the industry’s business models. Each new method became another layer rather than replacing the old one. Every layer rested on a different earlier habit-space and offered a different reason to pay.

The Birth of the Cinema — Selling Concentration in the Dark

On December 28, 1895, at the Grand Café in Paris, France, brothers Auguste and Louis Lumière held the first paid public film screening. Admission cost one franc, and the program contained ten short films. The story that viewers fled in terror from the image of an approaching train is exaggerated, but the fact that people willingly paid for the experience remains.

It took time to understand what the space of a cinema sold. At first, it was the novelty of seeing “moving pictures.” Novelty fades with repetition, however, so cinemas needed another reason for people to keep paying.

Hollywood solved the problem from the 1910s through the 1940s with the studio system. Major studios such as MGM, Warner Bros., Paramount Pictures, and 20th Century Fox vertically integrated production, distribution, and exhibition. They owned cinema chains or supplied only their own films to theaters under long-term contracts. A star system turned the recognition of individual actors into a marketing asset: a Humphrey Bogart film, a Bette Davis film. The actor became a product guarantee.

The system did not sell one film. It sold “the experience of meeting a star in the dark.” Concentration produced by the physical space, a large screen, and emotions shared with other viewers justified admission. When the US Supreme Court dismantled the studio system on antitrust grounds in 1948, cinemas gained the freedom to choose films independently. The underlying payment structure remained.

Korean cinema followed a similar structure. After the first commercial screening of a Korean film at Dansungsa on October 27, 1919, the industry passed through the 1960s era of directors such as Shin Sang-ok and Kim Ki-young, CJ Group’s entry into film in the 1990s, and the expansion of multiplexes through CGV—whose Gangbyeon site opened in 1998—Lotte Cinema, and Megabox. Multiplexes added popcorn and beverages as essential revenue. At some theaters, concession revenue exceeds ticket revenue.

The cinema business model did not change: “admission plus on-site purchases—popcorn and drinks.” What changed was the scale and convenience of the experience.

Television and Advertising — Inventing a Business Model That Gives Content Away

Television began spreading into homes in the 1950s. It operated on a business model entirely different from the cinema. It was free—or, more precisely, viewers did not pay money.

The structure was this: broadcasters sold time slots to advertisers; advertisers bought the right to run commercials in that time; and viewers “paid” by watching those commercials. They received content without charge in exchange for attention. This was the prototype of advertising-based video on demand, or AVOD.

In this model, better content attracts more viewers, and more viewers raise advertising prices. Content investment and advertising revenue form a virtuous cycle. The three major US networks—NBC, CBS, and ABC—earned enormous profits from this structure from the 1950s through the 1970s.

Korea adopted the same structure. KBS, MBC, and SBS produced content with advertising revenue, while highly rated dramas and entertainment programs generated that revenue. Public broadcaster KBS, however, operates on dual funding: advertising on KBS2 plus a license fee. The monthly ₩2,500 fee was collected with electricity bills from 1994 until separate collection began in July 2023. It is an intermediate form between advertising and subscription.

The BBC license fee in the United Kingdom was £169.50 a year in 2024, about ₩280,000. Japan’s NHK also collects a license fee. Such fees create a distinctive payment habit: a mandatory subscription for public-service broadcasting.

Video Rental — The Habit of Owning without Ownership

Sony introduced Betamax home videotape in 1975, and JVC followed with VHS in 1976. VHS won the format contest—not because it was better, but because it offered longer recording times and lower rental costs. More important was the new payment habit the two formats created together: watching video at home combined with borrowing it temporarily.

Video-rental stores appeared. Blockbuster Video opened its first shop in Texas in 1985 and operated 9,094 US locations at its 2004 peak. Scarcity—“if you do not rent the new release early, every copy will be gone”—created rental culture. Returning a tape late incurred a fee, and late fees accounted for a substantial part of Blockbuster’s revenue.

Korean video shops followed the same structure. From the 1980s through the 2000s, neighborhood stores created a culture of watching films through the night. Together with the spread of VCRs, they let families see foreign films at home. The fee temporarily bought the right to see a particular film. It was borrowed rather than owned, but it felt like ownership.

This concept of “temporary ownership” was an ancestor of modern streaming. Streaming sells access, not ownership. Video rental first taught people the payment habit that ownership was unnecessary.

DVD arrived in 1997 with better image quality. Netflix began in 1998 as a DVD-by-mail rental service. It removed the inconvenience of visiting a Blockbuster and, through prepaid subscriptions, eliminated return deadlines. Customers flocked to the absence of late fees. In 2000, Netflix offered to sell itself to Blockbuster for $50 million. Blockbuster declined. It filed for bankruptcy in 2010 and closed all company-owned stores in early 2014. The last remaining US location in Bend, Oregon, now operates as a tourist attraction.

Cable Television’s Channel Bundle — Why Pay for Channels You Do Not Watch?

Cable television spread across the United States from the 1980s through the 2000s. Unlike free terrestrial television, it charged a monthly subscription. Premium channels such as HBO and Showtime cost extra.

Cable’s defining feature was the bundle. Dozens of channels—including ESPN for sports, CNN for news, MTV for music, Discovery for documentaries, and Comedy Central—were sold together. Nielsen data indicated that viewers watched only about seventeen channels on average, yet paid for packages containing more than one hundred. The average US household cable bill exceeded $100 in the early 2020s.

Why pay for unwatched channels? First, viewers could not choose desired channels such as ESPN or HBO individually; cable companies did not offer an option outside the bundle. Second, cable became household infrastructure. It was sold in internet, telephone, and television triple-play packages, making any single service hard to cancel. Cable remained hard to leave even when expensive because it was tied to infrastructure.

Korean cable and IPTV developed a similar structure. KT Olleh TV, launched in 2009, SK Broadband’s B tv, and LG U+ IPTV bundled internet, telephone, and television. Discounts on the combined plan locked customers in. The economic value of the package, rather than the value of its content, became the reason to pay.

The Windowing Strategy — Multiple Payment-Spaces for the Same Content

The film industry developed a structure for selling one piece of content repeatedly: the windowing strategy.

A film moved through channels in sequence: theatrical release, aircraft and hotel exhibition, DVD and Blu-ray release, video rental, cable television, terrestrial broadcast, and OTT platforms. Each stage had an exclusive period. DVDs arrived ninety to 180 days after the theatrical premiere, and cable broadcasts followed only after another interval.

The studio sold the same work many times: theater tickets, DVDs, video rentals, cable rights, terrestrial rights, and OTT licenses. Consumers paid in different ways at each stage to see the same film.

OTT disrupted this structure. Netflix began releasing original content directly without a theatrical opening. During the COVID-19 pandemic, Warner Bros. made the radical decision to release its entire 2021 slate simultaneously in theaters and on HBO Max. Universal Pictures bypassed cinemas for Trolls: World Tour (2020), offering it only as a $19.99 premium VOD rental and generating about $100 million in three weeks. Other studios began considering direct OTT distribution after seeing the figure.

The collapse of windowing threatens cinemas. Theater operators demand a guaranteed exclusive exhibition period of at least ninety days. The conflict between studios and theaters became a new subject of negotiation in the OTT era.

In Korea, the screen-quota system created a distinctive relationship between cinemas and domestic film. Introduced in 1966, it required Korean theaters to screen Korean films for a minimum number of days each year. The quota was reduced from 146 days to seventy-three in 2006, but some assessments credit it with protecting the domestic foundation that supported achievements such as Parasite (2019). Another interpretation holds that the accumulated production capability later expanded into OTT series such as Squid Game (2021).

Netflix Streaming — The Digital Transformation of the Rental Habit

Netflix began shifting from DVD-by-mail to streaming in 2007, when internet speeds had become sufficient. The new value was the ability to watch anything immediately from anywhere.

Its value proposition differed from video rental. Instead of “borrowing one film,” the customer subscribed to “access to everything.” A monthly fee unlocked the entire library. Payment no longer purchased a particular film, but eligibility to watch.

This resembled cable subscription but offered greater freedom. Cable required adherence to a schedule; Netflix let customers watch what they wanted when they wanted. It created the habit of binge-watching. When Netflix released every episode of House of Cards at once in 2013, the culture of watching an entire series in one stretch began.

Netflix entered Korea in 2016. Kingdom (2019) and Squid Game (2021) became global hits, and the combination of Korean content with global OTT created a new industry structure. Korean dramas and films began reaching the world through a global platform rather than regional broadcasters.

A Korean Particularity — Bundling by IPTV and System Operators

The Korean screen industry has a notable structural characteristic.

IPTV became mainstream in Korea earlier than in most countries. KT Olleh TV—whose service had stabilized by 2009—competed with SK B tv and LG U+ TV. Telecommunications companies operated all three, and their primary sales method was a combined telephone, internet, and IPTV package.

The payment structure is simple. Bundling costs less than buying services separately and increases the convenience of receiving them from one company. Canceling means losing every combined benefit. The package locks subscribers in.

System operators, or SOs, are regional cable businesses. D’Live, formerly C&M, and CJ Hello, now LG HelloVision, operated by region. As IPTV displaced cable, many SOs were acquired by IPTV companies. The disappearance of regional operators also reduced local content.

In domestic OTT, major players include Wavve, launched in 2019 as a joint venture of KBS, MBC, SBS, and SK Telecom; and TVING, which began as a CJ HelloVision service in 2010 and became an independent CJ ENM subsidiary in 2020. Watcha differentiated itself through personalized curation. Competition intensified when Netflix and Disney+ entered the market.

Failure Case — The Early Failures of Google TV and Apple TV

Google TV launched in 2010. Developed with Sony and Logitech, it was a platform for viewing YouTube and websites through a television browser. The technical idea of connecting television and the internet was correct. The reason for failure lay elsewhere.

Broadcasters blocked it. NBC, CBS, ABC, and Hulu prevented Google TV from accessing their streaming websites. They distrusted the new platform and sought to preserve television advertising revenue. A platform without content did not work. Google TV transitioned to Android TV in 2014 and was later reorganized under the Google TV brand.

Apple TV faced a similar problem. When it first launched in 2007, Steve Jobs called it a “hobby.” The device displayed content bought from iTunes on a television screen, but the iTunes library was not yet large enough. Before streaming services, a device limited to purchased content offered little value.

The situation changed in 2019 when Apple TV+ launched an original-content subscription service. A platform device—hardware—combined with a content subscription—software. This was the difference between Apple TV’s early failure and its later success.

The two cases teach the same lesson. A platform cannot operate on hardware alone. The content ecosystem comes first. No matter how good the device, people will not pay when there is nothing to watch. If a screen platform offers only distribution, content suppliers can shut it out.

Hints from This Part — The Many Layers of Screen-Content Payment Habits

Hint 1: Which payment habit will your screen content build upon?

The history of payment for screen content contains four models: theatrical admission, television advertising, temporary rental access, and a subscription for full monthly access. Which habit-space is already active among your target customers? If you make screen content, are they accustomed to “watching ads” or to subscribing?

Hint 2: A bundle is lock-in. Can my content enter one—or will it become trapped inside?

Cable bundles made people pay even for channels they did not watch because a must-have channel sat inside the package. If your content joins someone else’s bundle, can it become a core element that raises the bundle’s value? Or will it merely be used to justify the price?

Hint 3: Will you build the platform first, or the content first?

The early failures of Google TV and Apple TV put platforms before content. YouTube built an upload space first, then creators filled it. Netflix built a distribution platform and later produced original content directly. Which direction fits you?

The next part examines the OTT war in detail: what Netflix invented and how its model is changing; why advertising-based OTT is rising again; and which payment-spaces Korean OTT services are seeking.

Kim Dongeun · WhtDrgon@MEJE.kr · 2026