The entertainment and sports tycoon is investing HK$300 million to break the monopoly of Neway with a new karaoke box chain, whose name he is yet to reveal, and his goal is to take a third of the market.

Lo feels confident of success for two reasons: the size of the karaoke market, and an advantage he holds over Neway in rights to music.

He cites the Synovate Media Atlas survey of Hong Kong, which found one-third of the 1.9 million Hongkongers aged 16 to 39 went to a karaoke box at least once a week in the first half of the year.

On the music front, he has secured deals with four leading record labels in Hong Kong - EMI, Sony Music, Universal and Warner - and Taiwan's Seed Music to provide new songs exclusively to his chain.

Neway is embroiled in court cases over alleged copyright infringement with Sony Music, Universal and Warner, which Lo says will not be settled for two to three years. This means fans of popular stars such as Eason Chan Yik-shun and Kay Tse On-kay will have to go to Lo's chain to sing their songs, which Lo says gives him a big advantage over Neway.

Karaoke first appeared in local nightclubs in the mid-1980s, and four karaoke box chains emerged in the 1990s, with as many as 200 branches operating across the city. Since then the operators have been whittled down to Neway, which acquired its last remaining competitor, California Red, in March this year.

Lo has 'long been keeping an eye on the industry, [and when California Red closed] I thought it was the right time to bid for it'. He offered HK$80 million, but Neway offered HK$150 million, so Lo decided to leave it alone. Neway closed all the California Red branches, pushing their customers into Neway's branches, which Lo says boosted its business by 70 to 80 per cent.

A dozen former California Red staff then approached Lo with a detailed analysis and persuaded him to invest. 'It is just like raising a football team. If there is a group of people with high morale who are determined to devote themselves to fight for you, why don't you go for it,' the 51-year-old entrepreneur says.

The city lacks comfortable gathering places at night and people are sick of the poor quality of food, service and the environment at traditional karaoke boxes, Lo says. His focus will be on providing an alternative that offers high quality in all three areas.

'People are bored by facilities that have not changed for years... I am watching my rival to arrange my starting eleven and will focus on its weaknesses,' he says.

Lo, whose move to introduce former England and Manchester United player Nicky Butt to his South China football team stunned many soccer fans, says he has a lot of surprises for karaoke fans, but refuses to reveal them at the moment. 'Our principle is to provide the most luxurious environment with a reasonable price,' he says, adding that he expects Neway to counter by cutting prices.

Neway did not comment.

Lo will open two branches - one in the former California Red in Windsor House, Causeway Bay, and one near the K11 mall in Tsim Sha Tsui - on December 18 and expects average nighttime spending by patrons of HK$200 to HK$250.

He plans to open six to eight branches by the end of next year to compete with Neway's 26. He expects monthly turnover at each branch will be HK$4 million and, with net profit of about 10 per cent, to break even in three to four years.

Professor Leo Sin Yat-ming, of the department of marketing at Chinese University, said the market was saturated and if Lo used the current business model, a price war would result.

'It all depends on whether Mr Lo can find a 'blue ocean' - a new business opportunity. He needs to inject new value, a new concept and a new business model into the industry. It is all about uniqueness,' he said.

Whether Lo rides a wave in that ocean or eventually sinks, lovers of karaoke box will certainly have more choice soon.