Education new hope for Asia Internet TV firms

SEOUL (Reuters) - You can spend thousands of dollars and endless hours in crowded lecture halls to gain a South Korean real estate agent's certificate.

Or you could study for the license in the comfort of your own room with a broadband connection to a TV for a fraction of the cost.

For companies selling interactive TV over the Internet, Asia's surging demand for high quality education for kids to career changers offers up potentially lucrative market and the chance to lure customers away from cable TV and the computer.

South Korea -- where children spend hours studying in a grueling battle to enter the top schools that can guarantee a job at the big conglomerates -- is at the vanguard in Asia of educational television over the Internet.

Tuition is expensive, with spending on after-school tutoring estimated to be worth 2.6 percent of the country's gross domestic product. Sought-after private tutors can earn a banker's salary.

South Korean companies, such as KT Corp (030200.KS), which plan to upgrade their Internet-powered TV services to full IPTV this year, are spearheading the move.

KT Corp says e-learning for children ranked among the most successful programming on its MegaTV, which also offers after-school tutoring and adult education courses.

"The response is strong for kids' programs in which they learn by playing games and solving puzzles using a remote control," said Yang Jae-geon, KT's director of media.

"Education is one area they can make users pay extra money," said Young Choi, analyst at Mirae Asset Securities in Seoul.

"The key is to increase the portion of paid programs," he said, noting such programs generate about 20 percent of IPTV revenue now. Choi expects South Korea's IPTV users to grow to 5 million by end-2009 from an estimated 3 million at end-2008. The overall market for Internet protocol TV (IPTV) could reach more than 55 million subscribers worldwide by end-2011, from an estimated 10 million last year, research firm Ovum says.

IPTV, with its immediacy, interactive features and easily navigable menus, bypasses the process of having to boot up your PC and trawl the Internet.

GET THEM YOUNG

Across Asia quality education is in constant demand and short supply, where students fight for places at the best schools, workers pin hopes on English skills to boost their careers, and parents look for new ways to teach their young.

"Game content and educational programs have big potential because both target a very important group of people, that's the young generation," says Rocky Li, marketing director at BesTV, Shanghai Media Group's IPTV unit.

Most IPTV companies have mainly focused on popular TV shows and sports events for growth. In Europe, operators such as BT (BT.L) in the UK gained market by offering customers free access to digital terrestrial TV. Hong Kong's PCCW (0008.HK) has the exclusive right to broadcast popular English Premier League soccer.

But operators -- many of which are fixed-line carriers muscling in on broadcasters' territory -- bet that IPTV's interactive features give them an edge in the potentially lucrative teaching market.

On IPTV, lectures can be repeated at any time and they allow students to take quizzes or post questions in real time.

In China, where history and geography programs are already offered, education is set to become the fastest-growing part of BesTV's business, Lee said.

"In traditional TV, it's difficult to find these programs," Lee said, citing inconvenient times and limited slots. He expects China's overall IPTV users to reach 2 million by end-2008 compared with 600,000 currently.

IPTV companies are also trying to add popular video games, from simple board games and racing to multiplayer on-line games, in a bid to snatch computer users away from their PCs.

Internet-enabled game consoles, such as Sony's (6758.T) PlayStation 3 and Microsoft's (MSFT.O) Xbox 360, can be used as a set-top box for IPTV as well as a channel through which online DVD lenders like Netflix Inc (NFLX.O) send movies and videos.

South Korea's hanarotelecom inc (033630.KQ) is working with Neowiz Games (095660.KQ), which develops online versions of some popular sports games by Electronic Arts Inc ERTS.O.

But some industry watchers say a living-room TV is not the best platform for interactive programming.

"TV is something shared by the entire family," said Suran Seong, a senior analyst at research firm Ovum. "Some parents are not comfortable with the idea of kids studying in front of a TV."

Operators will also need to strike the right balance between subscription fees and payouts to content holders.

"Big players will remain hesitant until IPTV starts to make money. Operators, on the other hand, are under pressure to keep fees low to expand the market," said Lee Sun-kyoung, an analyst at Goodmorning Shinhan Securities.

(Additional reporting by Sophie Taylor in SHANGHAI and Vinicy Chan in HONG KONG, Editing by Keiron Henderson and Louise Heavens)