Road Voyeurism Fueling Surge in Black Box Sales in Korea; What began five years back as a way to protect local taxi drivers from passengers who run off without paying has caught on with other drivers – 2.2 million black boxes are already in use, more than the number of autos sold in Korea each year

Road Voyeurism Fueling Surge in Black Box Sales in Korea: Cars

In the world of the wired, South Koreans rule: millions got hooked on social networking years before Facebook; their mobile phones went broadband first; and Internet connections are faster than anyplace on the planet. Now they’re going pedal to the metal on the next hi-tech craze: “black boxes” for cars, devices that automatically record video and audio as well as time, location and speed. What began five years back as a way to protect local taxi drivers from passengers who run off without paying has caught on with other drivers — 2.2 million black boxes are already in use, more than the number of autos sold in Korea each year. Broadcaster SBS has enough clips from viewers that it aired more than 100 morning show segments on car crashes.Thinkware System Corp. is the frontrunner among 200-plus companies that offer about 600 types of black boxes in a market the government estimates will grow annually by 500,000 units, or 150 billion won ($142 million). While Koreans are not alone in using black boxes, their popularity in the home of Galaxy phone-maker Samsung Electronics Co. provides a clue to what may be the next big thing in automotive gadgetry.

“South Korea is globally the biggest and most developed black box market,” said Sul Jae Hoon, senior research fellow at the government-run Korea Transport Institute. “With time, other markets will be able to understand the benefits of having a black box and adopt the devices like Korean consumers did.”

More Affordable

Black boxes in Korea have come down in price in recent years and now typically range from about 100,000 won to 200,000 won each. They continuously record video and audio, even when the car is parked, though they’ll only save the 30 seconds before and after any incident that triggers the motion sensors – – long enough to catch a hit-and-run.

While they also record data — time, vehicle location and speed — these devices focus on recording video and audio, unlike the event data recorders in the U.S. that have sparked debates over privacy. Like airplane black boxes, EDRs track everything from whether the brake was activated before a crash to throttle function and determining when air bags were deployed, though they usually don’t record conversations.

So why is road voyeurism so popular in Korea? Endorsement from insurers and the government helped, as did affordability. Privacy concerns haven’t been an obstacle because the devices are installed by car owners, cementing the perception that data they gather won’t be controlled by anyone else.

And let’s not forget the national obsession with gadgets — the United Nations’ International Telecommunication Union has an index of how geeky a country is and Korea ranks first worldwide.

Insurance Benefit

Shin Kyung Seung, 39, credits the black box on his Hyundai Motor Co. sedan with proving his innocence in the eyes of his insurers after eight-vehicle pileup on Sept. 8. The recorder showed how Shin had kept to the appropriate speed and distance, turned on his emergency lights, slowed down and then halted before congestion up ahead. He then got rear-ended, spraining his neck and waist.

Although it took a couple of weeks for Shin to recover from his injuries, the incident was a lesson in how to avoid higher insurance premiums. Shin, who runs a Facebook page that compiles video clips from black boxes, uploaded the video on Google Inc.’s YouTube.

“I hope to be able to play a small role in increasing public awareness of traffic accidents through the black box video sharing page,” Shin said. “Accidents can happen anywhere.”

Motorists aren’t alone in benefiting from the recorders as they help lower costs for insurers including Samsung Fire & Marine Insurance Co., prompting them to offer discounted rates of as much as 5 percent to black box owners.

Discount, Coupon

“Black boxes help spot insurance fraud cases and simplify the evaluation process of an accident, which helps minimize costs,” said Shin Chung Kwan, an automotive analyst at KB Investment & Securities Co. “Insurance companies are very enthusiastic about this. I recently changed my car insurance and the insurer not only offered a discount on the package, they even gave me a coupon for a black box.”

Then there’s the government, which in 2008 began subsidizing the devices for Incheon city taxis. Soon, other cities followed and now all taxi operators equip their vehicles with black boxes, according to the transport institute.

Lee Sang Min, a representative in the Democratic Party, says that’s not enough. He’s leading a group of 10 lawmakers proposing revisions to the Traffic Safety Act to make black boxes mandatory in all new cars sold in the country.

‘Black Box Club’

Lee may not need to. The “Black Box Club” Internet forum on naver.com, Korea’s biggest search engine, is so popular that it has more than 235,000 members. Black boxes were the fourth hottest item of 2012, according to a survey report by Samsung Economic Research Institute.

Hyundai Motor, the nation’s largest automaker, said it has no plans yet to equip its cars with the devices, though the company indirectly makes them through its Hyundai Mnsoft unit. Other producers include Mando Corp. and Midong Electronics & Telecommunication Co., which is planning to capitalize on the black box boom by going public on Nov. 13.

Thinkware estimates its 35 percent share leads the market and has seen sales of the devices surge 17-fold to 47.2 billion won in 2012 from 2.7 billion won in 2010. The Seoul-based company has said it’s expecting further growth as it exports black boxes to China, Singapore, and the Philippines.

In Western markets, black boxes may be a tougher sell. The Electronic Privacy Information Center, a Washington-based consumer group, has called for privacy safeguards to be set up for EDRs after the National Highway Traffic Safety Administration recommended automakers install them in all U.S. light passenger vehicles from September 2014.

“The reason why the devices aren’t so popular in U.S. or Europe is because both the parts makers and customers there are concerned about privacy,” said Sul at the Korean transport institute. “That wasn’t the case in Korea. From the very beginning, the market didn’t consider black boxes as a threat to privacy.”

To contact the reporter on this story: Rose Kim in Seoul at rkim76@bloomberg.net