Controlling Hong Kong's home-video market means going digital. The man with a plan looks to be Li Ka-shing. With Wharf Cable struggling and Hong Kong Telecommunications testing video-on-demand, an alternative strategy is emerging. Plans for an on-line video service look a play to control both video hardware and software distribution in the territory. Hong Kong people watch videos distributed by firms like Mei Ah International at stores like KPS. They watch lots of pornography and sport on Wharf Cable but prefer terrestrial channels for normal viewing. In the future this will change, although how is tough to say. Will we continue to rent videos - enjoying the ritual of choosing and queueing - or zap in the latest movie release from on-line services promised by New World Development? Mr Li's bet seems to be, both. A new medium called digital variable disk will unify audio, video and computer data making mainstream movie entertainment truly digital. Hanny Holdings, controlled by Mr Li, is to produce DVD discs in Belfast, Los Angeles and Hong Kong factories. Now, Hanny and Mei Ah are co-operating in the new, on-line video project. Mei Ah is the largest distributor of video discs in Hong Kong. Its share price has flown since December last year, increasing 600 per cent to $3.075 with substantial buying linked to interests of Mr Li. Completing the circle of control is the stores where videos are sold. Rumours persist of a possible bid for KPS from one of the Li-linked companies. If proven correct, control of the store rental market would be secured. Clearly, hurdles remain. The Government has to be convinced to grant a licence. Wharf is sure to complain since it hopes for toll income from other operators using its network after its exclusive licence expires. The New World Development inclusion looks odd at first sight, considering Hutchison Telecom could have done the distribution job. What the firm brings is deep relationships in the largely impenetrable world of movie distribution. For Mr Li, sitting atop the whole plan, control of video distribution would be secured giving huge negotiating power with the production houses. Should the Government's go-ahead be granted for on-line video, the Wharf cable gateway would be skirted, direct access to giant housing estates would be guaranteed, and huge earnings would loom. Certainly it's a very big 'if' for all concerned.
