Veronica Hui gave up watching local television more than a decade ago, but she now can't get enough of it, ironically thanks to the internet. Since the launch of Hong Kong Television Network (HKTV) in November, the 43-year-old office worker has made it part of her daily routine. But unlike in the past when she had to sit still in front of her TV set at specific times, Hui can watch HKTV anytime, anywhere. With on-demand services available online, she can settle down at home via Apple TV or be on the go and still keep up with her favourite shows on her smartphone or iPad. The political drama The Election and To Be Or Not To Be , a series reflecting current mainland-Hong Kong cultural and political conflicts, got her hooked on local TV productions again. Traditional terrestrial TV, which requires viewers to fit their life around the TV schedule, is passé for viewers like Hui. "TV doesn't have to be like that any more," she says. While beleaguered Asia Television is still drowning in debt amid hopes that a white knight can be found to save it, the world has been on fast-forward mode. The digital realm is the new frontier for the television business. HKTV was forced to go fully digital as an internet TV station and online shopping mall after its TV ambitions were punctured twice. Its application for a free-to-air licence was rejected in 2013 and entry to mobile TV was denied on legal grounds. Dominant Television Broadcasts (TVB) is also eyeing the internet battlefield. TVB general manager Cheong Shin-keong told the South China Morning Post that the free TV giant would beef up its digital content by revamping its online portal myTV this year and developing new content services online. He said it would offer content free of charge and by subscription, citing the experience of US streaming services Hulu and Netflix. "We must up our game," Cheong conceded. TVB was left with no choice but to explore the digital frontier as the prospects for traditional terrestrial broadcasting look bleak. According to TVB's annual reports, Jade, the dominant Cantonese-language channel, recorded an average of 23 TV rating points (or around 1.49 million TV viewers) during weekday prime time between 7pm and 11pm in 2013, a slip from 2012's 25 points (1.62 million viewers). In other words, 130,000 viewers abandoned Jade in just one year. According to last year's interim report, the broadcaster's profit from TV broadcasting declined 6 per cent from HK$473 million to HK$444 million. TVB saw the trend in 2012, and developed a new ratings system with Nielsen to include those who watch TVB programmes on myTV. Last January, TVB launched on-demand streaming service GOTV, charging HK$499 a year. More than 26,000 people subscribed to the service. Online viewership of news rose 86 per cent in the first half of last year, and the myTV app recorded an 11 per cent increase. Despite the rise of user-generated audio-visual content on platforms like YouTube, professionally shot TV dramas are here to stay, says Cheong, but it is not an easy game. "In the world of internet, you are not competing with what's available in your country, but anything from anywhere around the world," he said. The demand for South Korean TV drama My Love from the Star serves as a good example, says Cheong. The heart-wrenching fantasy romance between a beautiful movie star and a handsome extraterrestrial has attracted millions of youngsters and some middle-aged people, not via traditional TV, but over the internet. When the show was aired on South Korean network SBS from the end of 2013 to February 2014, it earned a huge following across Asia via the internet - but the online shows were pirated feeds with subtitles added by local fans in their local languages. It made its leading stars, actress Jun Ji-hyun and actor Kim Soo-hyun, the new icons of South Korea, enabling them to spin off endorsements. Kim visited Hong Kong to endorse a beauty product last September. Fans were beside themselves with excitement. Even middle-aged women are known to have splashed out on fashion and make-up items to imitate Jun's style from the show. And all the hoopla happened before the series officially landed in Hong Kong on TVB J2 at the end of December - exactly a year after it debuted in South Korea. The upside to the case of My Love from the Star is that "the demand for dramas is there," says Cheong. But the reality is that Hong Kong "must acknowledge [that] foreign content is part of your competition ... The quality of our story-telling must reach the regional and global standard," he says. Cheong says TVB is acutely aware of the public's criticism of its production quality, but it is caught in a chicken-or-egg situation: to invest in quality, it needs to boost profits first. HKTV poured an average of HK$1 million into filming each episode of its TV dramas - with state-of-the-art high-definition cameras on location. And unlike TVB, which is often criticised by its actors for shooting without a full script ready, HKTV did not start shooting until a full script was developed, so that actors and the production team had more time for planning and preparation. But the investment and effort have yet to pay off. The total number of unique viewers recorded in a single week in late December reached 307,000. But it dropped to 297,000 in the first week of January. Figuring out a sustainable business model for internet TV remains a key challenge. HKTV is developing its online shopping mall but whether it can generate enough revenue is unclear. Advertising, on the other hand, remains the bread and butter for internet TV. Even pay-TV operator Now TV is developing a new TV audience survey through the data collected from its set-top boxes and other devices in the hope of capturing attention from advertisers. The potential for profit is there. Advertising industry figures estimate that the share of ad spend on the interactive and mobile mediums steadily increased from 4 per cent in 2008 to more than 8 per cent in 2013, while the share of ad dollars spent on TVB Jade dipped from 20 per cent to 15 per cent over the same period. "The internet is the future," says Ray Wong, CEO of advertising agency PHD. "But we need to change the viewing habit first and that is not an easy task." Wong says Hong Kong audiences have been accustomed to watching TVB for nearly five decades. The bulk of its audience is a mature group that watches TV on traditional TV sets, not online or on tablets, he says. The hardware also needs to be upgraded, he adds, as a new generation of TV sets will be needed with built-in internet connections so that audiences can watch TV shows distributed via the internet. But this shift may not happen so soon, says Wong, as last month, the government decided to push back the switch-off date for analogue TV services from the end of this year to the end of 2020. About 20 per cent or 480,000 households are still unable to watch TV via digital broadcasts. Intense competition in the internet domain also makes it harder for internet TV firms to survive. HKTV's rival is not just myTV, but also other online portals such as YouTube, Apple Daily 's Action News and other social media platforms offering audio-visual content, says Clement Chung, general manager of PHD. "Clients' interest grew significantly over the last four to five years. Some even increased their spending on digital advertising three- to four-fold," Chung says. He says currently YouTube has the largest ad share as it is a more established platform. "Videos by YouTubers are highly popular among young people," he adds. To generate advertising, sustaining stable traffic is the greatest challenge for internet TV shows, says Professor Anthony Fung Ying-him, director of the school of journalism and communication at the Chinese University. "How often do you upload programmes? What is a stable audience number? Finding the optimal point and how to maintain that audience number is the problem," Fung says. "Ad dollars are not high enough for internet TV. The traditional ratings applicable to free TV viewership should be adjusted and be made applicable to internet TV." Alex Pao Wai-chung, cultural critic and scriptwriter for HKTV's To Be Or Not To Be , agrees with the challenges facing internet TV development in Hong Kong. "It needs time to develop, and get people to get used to this new viewing habit," Pao also blames advertisers in Hong Kong for being backward in terms of ad placements. Instead of relying on traditional TV ratings surveys based on meters installed in just 800 households, mainland advertisers are already looking at the "big data". "Audiences' age, habits and demographics are very useful data, and this is very common on the mainland. But advertisers in Hong Kong don't see the relationship between this and their sales turnover," Pao says. "There's also a generation gap between the audience and advertising decision makers, who are not familiar with the world of the internet." TVB's Cheong isn't optimistic. "The truth is, Hong Kong is only a market of seven million people. The challenge won't go away," he says. The government needs to formulate its policies to support creative industries with an eye on expanding opportunities and this must include working with the mainland to expand the market, says Cheong. In the digital age, content is king, and content is not just about entertainment, says Cheong. "The TV business is not your normal business. It is a contribution to the state of mind of the people. It needs a social dimension and carries social values," he says.