Internet TV may not be enough for Ricky Wong Wai-kay, say experts

Industry players say the entrepreneur needs a service that can penetrate households and 'reach housewives' if it is to be financially viable

PUBLISHED : Friday, 14 March, 2014, 4:32am
UPDATED : Friday, 14 March, 2014, 4:32am

Internet television may be the future for both Ricky Wong Wai-kay and Hong Kong's TV industry, but difficulties in translating its impact into advertising dollars mean it is not yet a viable business, industry players say.

While the entrepreneur made his first fortune from telecom and broadband internet businesses, he still needs a television service with wide penetration that can generate impact and advertising revenue, they say.

Keith Li King-wah, a council member of the Hong Kong Wireless Technology Industry Association, said the success of Netflix, an on-demand video-streaming service founded in the US, and mainland internet television services such as Sohu TV and LeTV, showed the medium's potential.

Other internet television viewing equipment, such as Apple TV and the Xiaomi set-top box, are also growing in popularity. An authorised local seller of the Xiaomi box has sold more than 10,000 in a month.

"Even those who watch TVB dramas watch them on myTV instead of the television set," Li said, referring to TVB's internet service that is also available as a smartphone app.

Li said he believed Wong, an expert in the telecom and internet business, should have incorporated all the developments in internet television into his Hong Kong Television Network (HKTV).

"But in reality, he needs a service that can penetrate households to create an impact. Those who watch [terrestrial] TV don't use the internet, and internet users don't watch [terrestrial] TV. But you need those housewives to watch the programmes and talk about it to build the momentum," he said.

"Even if you have internet TV, Borderline can never be Triumph in the Skies II."

Borderline is HKTV's crime thriller and its first episode accumulated more than 1.3 million views over the past eight months. But TVB's Triumph in the Skies II, set against the backdrop of a commercial airline, was the talk of the town last year. It recorded an average of more than two million viewers when the show was aired.

Recouping advertising dollars is the issue. Ray Wong, a member of the Association of Accredited Advertising Agencies' media committee and head of media agency PHD, said on average terrestrial television accounted for about 60 per cent of the budget of an advertising campaign.

"But only 15 to 20 per cent would be allocated to digital spending, and internet TV will account only for a thin slice of that pie," Wong said.

He said there was no mechanism to translate internet impact into advertising dollars. He said the recent overwhelming popularity of Korean romance My Love from the Star on the internet did not bring any advertising dollars to the online platforms.

"We hope there will be more platforms available so that we have more choices to place ads," he said. "Our existing ad rates research methods are already at their best. Advertisers want to spend money only on a medium that has a track record. But internet TV doesn't have a track record yet."

Next Media, which publishes Apple Daily newspaper and its online video Action News, might offer some clues, Li said.

The company's annual report last year said the Apple Daily mobile app topped the iTunes and Android download platforms and its internet business recorded HK$157.2 million revenue last year - a 233.1 per cent increase from the previous year.

But the segment also recorded a loss of HK$124.5 million.

"Apple Daily Action News is already the most popular but its books do not reflect that," Li said.

He said no matter what, Ricky Wong would need a terrestrial service or mobile service with high penetration. "It's like the print media and online media. You read the news online but you still need the hard copy of a newspaper to maintain the impact."