Invasion of the TV viewer snatchers
On-demand providers will go head to head with traditional broadcasters as the battle for Hongkongers’ home entertainment spending heats up
The majority of Hongkongers are not entitled to choose who runs their city, but to those who have been yearning for freedom and democracy 2016 is still a promising year — at least in the realm of home entertainment.
Residents will be spoiled for choice this year when it comes to viewing thanks to the emergence of heavyweight newcomers, whether free-to-air television or over-the-top (OTT) subscription-based content providers.
With a population of 7.8 million and a limited advertising pie, is the city’s television industry about to enter a Warring States period which will challenge the dominance of the established players?
The first shots were fired this year when Netflix launched and LeEco (formerly LeTV) unveiled its marquee acquisitions, and another shake-up will occur when free-to-air broadcaster ATV’s licence expires in April.
But while there has been a lot of buzz about the new developments, locally produced Cantonese content is not a highlight of the offerings and commentators a lack of this lack will put be a limitation to success.
Critic and TV scriptwriter Alex Pao Wai-chung said the new players did not present significant competition to established free-to-air broadcaster TVB.
“The new players might bring those who have already given up on TVB back to watching TV, but it is unlikely for them to drag TVB’s core audiences away,” he said. “They can’t compete with TVB.”
He said local content would be key, particularly for over-the-top platforms, to success in Hong Kong.
“They need to meet the taste of Hong Kong viewers,” he said.
These views were echoed by Anthony Fung, director of School of Journalism and Communication at the Chinese University.
“There will not be a Warring States period for Hong Kong’s television industry unless there are three to four free-to-air TV stations competing with each other,” he said.
The latest weekly TV ratings report showed that TVB’s main channel Jade totalled about 23 rating points during prime time, and nearly 1.5 million tuned in to the dominant Cantonese channel.
But compare this to 2005 when a top drama series drew an average of 2.2 million viewers per episode and Korean costume drama Jewel in Palace achieved a record average of 2.9 million viewers per episode.
With free TV reaching 99 per cent of Hong Kong households in analogue and close to 85 per cent receiving digital TV broadcasts, the viewers who switched off TVB present and opportunity as potential customers for the new players.
Changes in the free-to-air arena will see ViuTV, the new PCCW free-to-air channel, begin broadcasting in April after ATV’s licence expires.
Its general manager, Lofai Lo, said the station would target viewers aged between 20 and 50 with “factual entertainment” shows that aren’t available on TVB.
These include variety and reality shows such as a travelogue series starring popular and politically vocal youth magazine 100Most co-founder Lam Yat-hei and pro-Beijing lawmaker Ann Chiang Lai-wan.
Public broadcaster RTHK will also take over part of ATV’s spectrum in April. It will screen drama and documentaries and plans to increase its output of first-run digital TV programmes from 1,345 hours in 2015-16 to 1,550 hours in 2020-21.
Also entering the fray is i-Cable’s free TV operation Fantastic TV, although its launch date is unknown.
The other key battlefront is in the realm of OTT , or over-the-top audio-visual content delivered via the internet, with operators gambling on audiences’ viewing habits migrating from a linear model to an on-demand one that allows them to watch programmes any time, anywhere, and on any device they want.
As Netflix co-founder and chief executive Reed Hastings sees it: “We live in an on-demand world and there is no going back.”
Over-the-top content is only available to those with broadband internet access or mobile data subscriptions – and in Hong Kong that is a sizeable number.
Data from the Office of Communications Authority shows there are more than 14 million subscribers of mobile services running at 2.5G to 4G. Household broadband penetration rate has reached 83.4 per cent.
OTT operators in the Hong Kong market now include Netflix, mainland content and hardware company LeEco and PCCW’s Viu, which are offering a variety of global content.
TVB will also join the battle with the launch of a new over-the-top platform in April, and PCCW’s pay-TV service, Now TV, will also strengthen its OTT platforms.
American giant Fox also plans to shoot a number of mini-series targeting Hong Kong and regional markets starring home-grown faces at US$1 million per episode.
While Netflix offers mainly US drama series and movies, LeEco is attempting to dominate the sports entertainment market through the acquisition of Hong Kong exclusive rights to English Premier League and World Cup soccer matches.
Viu OTT carries Korean dramas alongside Japanese and mainland content, riding on the phenomenal success of Korean wave, or Hallyu.
TVB group chief executive officer Mark Lee Po-on said he did not think over-the-top broadcasters would make a big difference to the local market.
“In each city or territory, local culture plays a key role. It is still the mainstream,” he said.
Lee said local content generated by TVB, current and classic, will be a highlight in TVB’s new OTT platform, alongside content acquired from overseas.
Netflix is well aware of the issue. It is offering Hong Kong viewers the chance to sign up for as little as HK$63 per month with a one-month free trial, but a number of hit shows, such as House of Cards, will not be available here due to territorial rights issues. It doesn’t offer local content either.
Hastings said Netflix was now available to more than 70 million homes in 60 countries worldwide but many programmes were not available overseas due to licensing restrictions.
He said it was a legacy from the past seven to eight years and the network is working on the issue.
It is also attempting to block unauthorised viewing of its library for content that is not available locally.
Netflix will be spending US$5 billion on programming in 2016. Hastings added that the network is producing local content globally, including a sports comedy in Mexico, a crime drama in Italy and a dystopian film about bio-engineering in South Korea.
The experience of HKTV boss Ricky Wong Wai-kay is an example of how tough it can be to sustain an over-the-top offering without a free-to-air offering to back it up.
“It is disappointing that these players do not offer local productions,” he said.
HKTV was launched initially to bid for a free TV licence but its application was turned down in 2013.
Wong went on to secure a mobile TV licence while launching HKTV as an OTT platform to showcase its Hong Kong made drama series alongside its e-commerce business.
But HKTV’s TV operation has been suspended despite it producing a number of acclaimed series, such as The Menu and The Election, as it could not reach an agreement with the government on a transmission system, and as advertising revenue could not sustain its productions, which were costing HK$1 million per episode.
“I don’t feel that there is a TV war. I have more Western dramas on my hard drive [than what is offered by the OTT platforms]. With no local productions, they won’t make any difference to the local market,” Wong said.
Loke Kheng Tham, PCCW’s executive vice president of pay-TV, said 2016 appears to be an interesting year because of the new players.
Tham, who looks after Now TV, said she welcomed competition and the station is actively expanding its over-the-top services across all platforms and devices.
Now TV has nearly 1.3 million subscribers – the largest in the city.
It offers more than 180 channels including local news, variety and entertainment programmes.
Last Monday, it carried live the TV Most 1st Top Ten Ging Cook Gum Cook Awards Distribution, a show celebrating satirical covers of Canto-pop songs that poked fun of current affairs from politics to culture and education.
The event became a trending topic on social media, even earning Now TV a hashtag of #thankyounowtv.
“Live events is one of those things that bring people together,” Tham said.
But she stressed that viewers’ behaviour has changed and the station should target the next generation of audiences, and local content is not enough.
“TV used to be a shared device but now content is viewed on individual devices. There isn’t a singular taste. People want a bit of everything. People watch a lot more TV than we think. People like Hong Kong content but they also want US and Korean dramas,” Tham said.
Ultimately, it is consumers who will decide the winners and losers in this battle.
Reaction among netizens on Golden Forum, the city’s most popular discussion forum, showed there was excitement about the greater TV choices, with curiosity about ViuTV and disappointment over Netflix’s lacklustre offerings.
Some said they could find better and more diverse content such as Japanese and Korean elsewhere. Some said they’d rather watch YouTube.