Tving by CJ ENM(035760), which had been rapidly expanding while closely chasing global online video service Netflix, has hit an unexpected snag: a personal data leak.
Tving is internally reviewing compensation in the form of coupons that allow affected users to access its content. The plan aims to minimize user churn and keep them on the platform to regain lost trust.
According to the entertainment industry on the 31st, CJ ENM is reviewing a plan to provide Tving passes or coupons worth around 10,000 won to users affected by the Tving personal data leak that occurred at the end of May. However, the specific scale of compensation and the method of payment have not yet been finalized.
At Tving, personal data such as customer IDs, names, dates of birth, connecting information (CI), phone numbers and emails were leaked. The number of affected users is estimated at about 19.8 million.
The core of the compensation plan now under serious review is a Tving service pass. By providing a direct benefit to customers while naturally encouraging continued use of the service, the plan is seen as addressing both customer compensation and churn prevention.
It is similar to the approach in January, when Coupang provided vouchers worth about 50,000 won that could be used for its own products and Coupang Eats after a personal data leak.
The problem is that users must use Tving again to receive compensation. For customers already disappointed by the data leak and considering canceling the service, coupons may be hard to accept as full compensation.
Lee Hong-ju, a professor in the Department of Consumer Economics at Sookmyung Women's University, said, "If you want to cancel but must use the service again to be compensated, there is a hole in the compensation that induces repurchase," and noted, "Compensation that creates a structure generating sales for corporations is not pure compensation for damage."
Lee added, "Compensation should be designed separately from promotion (marketing), and there needs to be a distinction between customers who want to cancel and those who want to continue using the service."
For Tving, timing is as burdensome as the compensation issue.
In the second quarter this year, Tving posted 140.7 billion won in revenue and 6 billion won in operating profit, marking its first quarterly profit since its 2020 launch. Backed by the popularity of KBO League and original content, it had just begun to accelerate profitability improvements.
Tving's presence has also grown in CJ ENM's overall results. CJ ENM recorded 33.4 billion won in operating profit in the second quarter, up 16.9% from a year earlier. In particular, the media platform institutional sector, which includes Tving, posted 11 billion won in profit, helping improve profitability.
Having only just reached a profit track, Tving faces the burden of compensation expenses and future sanctions due to the personal data leak. The Ministry of Science and ICT and the Personal Information Protection Commission are investigating the cause of the incident, the scale of damage, and whether obligations for safety measures under the Personal Information Protection Act were fulfilled, leaving the possibility of additional expenses such as a penalty surcharge. Earlier, Coupang was hit with a 624.6 billion won penalty surcharge for a personal data leak.
Jang Hyun-kyung, Tving's chief financial officer (CFO), also indicated during CJ ENM's second-quarter earnings conference call on the 6th that future penalty surcharges and the like related to the personal data leak could become a financial burden.
Attention is focused on whether this personal data leak at Tving, which had been maintaining growth while chasing Netflix, will end as a temporary variable or become a headwind that brakes profitability improvements.
A Tving official said, "The specific scale of compensation and the method of payment have not been decided yet."