New broadcaster entrants to break TVB's free-to-air dominance in Hong Kong

TVB has been the dominant player in Hong Kong's free-to-air competitive landscape for the last 30 years, and prospective new entrants have been wriggling in to share some room in the market.

Pacific Century CyberWorks (PCCW), i-Cable Communications and City Telecom (CTI) revealed their interest in a FTA license back in 2009, and now City Telecom's liquidation sale of its Hong Kong Broadband Network (HKBN) and its associated weaker IPTV business leaves it to focus on expanding on what it calls its multimedia business.

The firm is excited about its looming entry into the market, as its spectrum license approval from the Broadcasting Authority is almost a certainty, after being granted land by the government to build a TV and multimedia production centre in Tseung Kwan O Industrial Estate with a total estimated gross floor area of approximately 33 football fields. The centre is expected to go into full operation in 2014.

The Hong Kong Executive Council is set to give the green light on the other two broadcasting licenses next week. i-Cable has indirectly pushed the government to grant a license earlier by saying it may not be able to broadcast the London Olympics in time.

City Telecom believes there is room for new operators in the small domestic free TV market, as TVB's advertising revenue is "huge", commented Jessie Cheng, a corporate communications spokesperson from City Telecom. Currently, apart from TVB, second-placed Asia Television also has a free-to-air license, but it has been in the red all this while.

TVB's advertising revenue for 2011 increased by 14 per cent over 2010 as advertisers of skin care products, digital cameras, milk powder, mobile phones, watches, insurance companies and internet service providers invested strongly in TV ads.

"Also, there is great demand from the global Chinese community for Hong Kong dramas," Cheng added. To that point, Clement Chung, general manager of PHD Hong Kong, said the quality of the programmes pushed by the new operators will be the key to attracting advertisers.

Cheng told Campaign Asia-Pacific that the firm plans to spend US$129,000 (HKD1 million) on each hour of drama production. "We will shoot more real-location scenes rather than stale in-studio ones to enhance the quality of our dramas, and add elements of interactivity to enhance the vewing experience".

CTI’s business plan includes 12 channels at commencement of broadcast, of which two will be self-produced channels, four will be turn-around channels and the remaining six will be partnership channels.

Production targets of dramas totaling 260 hours and informative or entertainment variety shows totaling 104 hours for prime time broadcasting at night in 2012 have also been planned. Its first major release will be a youth musical.

Theoretically, there is room for five TV stations in Hong Kong, but how each station can monetise their channels depends on their market positioning and three words - content, content, content.

City Telecom seems poised for success in the market, observed Chung. "Its commitment and dedication is evident as it has already pumped in so much investment (HK$600 million) on shooting facilities, artistes and scriptwriters". A group of ex-TVB production crew has also jumped ship to City Telecom, which is a further advantage for the firm.

“TV is essential daily entertainment for the public, which is also an important channel for cultural heritage. Other than producing entertaining programs, we see corporate social responsibility as an important task: to enhance positive mentality in the community, to cultivate creativity consistently, to nurture talents. We hope that with our existence, TV programs will be more worth-watching and society will be more healthy,” said chairman of City Telecom Ricky Wong in an earlier press statement.

Once competition in the FTA market sets in, it will lead to TVB upping its game and its four potential rivals following suit in terms of content, which will naturally put them on a level playing field for TV ratings. Nielsen, which was awarded a new Hong Kong TV ratings service contract for 2013-2017, will have a lot on its plate for audience measurements.

But with TVB's traditional stronghold in the ratings game, other new stations may profit from focusing on other genres of programming that adds variety to the current staple of celebrity-driven dramas, as well as to segment the mass audience pool, from Chung's point of view.

Advertisers will benefit in the long run from better media rates and segmented audiences with more local terrestrial TV operators, but Chung is not worried about fragmentation in the meantime. "That will take a long time to happen."