TV's trying times

Virtually all the seven million homes in Hong Kong have one television set, most have more, representing a critical mass for TV networks and advertisers who spend hundreds of millions each year trying to sell us something. But times are changing in the world of TV and established players are bracing for change.

The strength and power of TV has been its ability to provide a mass audience to advertisers, but the digital revolution is giving birth to a whole new generation of both high-definition and standard-definition TV, challenging the pre-eminence of both free-to-air networks as well as the multi-channel subscription TV broadcasters.
In Hong Kong, local broadcasters TVB and ATV dominate the mass media landscape. Since the introduction of digital terrestrial TV on 31 December last year, both have made significant gains on the HDTV front, launching a swath of HD offerings.  But they are not the only players in town.

The internet, or IPTV, is already delivering an infinite world of new competition with help from increasingly cheaper access to broadband. Newspaper and magazine publishers like the Oriental Press Group and Next Media are both moving strong into the IPTV space. The Oriental Press Group recently launched a second wave of marketing to promote its TV-on-demand service, ontv. Insiders say the Oriental Press Group is already seeing good returns on its IPTV investment, with strong internet traffic and advertisers such as Olympus, Adidas and Blackberry signing up. And then there is the mobile phone, referred to as the third screen, which is delivering rich digital content to a growing band of younger consumers and, like IPTV, presenting big challenges to terrestrial TV.

Within a few short years, online advertising in Hong Kong has emerged as a robust  sector and currently shows few signs of slowing. Nielsen Media Research data shows that in the first quarter of 2008 online advertising spend reached $172 million. If that momentum continues, advertisers spending in the online space could top $650 million this year. Nielsen Online's quarterly AdRelevance report shows more than 1,000 advertisers in Hong Kong promoted their brands online in the first three months in 2008, with more than 2,800 advertising campaigns attracting more than 5.5 billion ad impressions. Impressive numbers that cannot be ignored.

So what's got the traditional TV groups rattled? The most pressing issue facing broadcasters today is the cannibalisation of their own ratings and advertising revenue. This is a big problem. On the flip side of this debate, if broadcasters decide to downplay the significance of this digital revolution, they'll be left behind, with considerable consequences.

Speaking at the recent Future of Media in Asia event in Hong Kong, Ivy Wong, TVB.com's COO who since joining in November last year has turned its online fortunes around, says for broadcast companies, its not that easy.

TV broadcasters are already in the media business, so they have access to programming, licensing and satellite TV. But for us, to really develop the online business we have to consider all the business units we have in regards to cannibalisation. Everyone is looking for rich media content, but we have more business burdens," Wong says.

"You will see a lot of new things happening, not only for TVB, for broadcasters all over the world."

One thing that is certain however - this is not a passing fad and technology will only continue to grow in relevance as consumers break their traditional media viewing patters.