Netflix arrival will challenge TV’s monopoly

News about the expansion of Netflix set the industry into a spin this week. The news was received with enthusiasm by TV fans and the digital industry, who believe that its arrival will help reshape Hong Kong’s traditional TV ecosystem as it did in the United States.

Netflix could also pose a threat to LeTV, however the Chinese online broadcaster welcomed its rival this week with open arms. LeTV this week published a Facebook post saying: “Netflix, welcome to Hong Kong.”

It also poked fun with Chinese internet buzzwords: “寧要神一樣的對手,不要豬一樣的敵人” which translates to “We prefer god-like competitors rather than pig-like enemies.”

LeTV said the point of the message was to make it clear that its philosophy is to work with the best-in-class, regardless of whether they’re perceived to be a competitor.

After spending years growing into one of the US’s largest, most successful internet companies, Netflix will launch in Singapore, Taiwan, Hong Kong and South Korea by early 2016. These four markets are home to 85 million people collectively and there’s plenty of competition.

The US online broadcasting titan made its first foray into Asia earlier this month by launching its services in Japan.

Video streamers including China’s LeTV and iQiyi have been targeting Hong Kong in a serious way: LeTV spent US$400 million on English soccer rights for Hong Kong market.

Meanwhile, Chinese online video giant iQiyi opened up an office in Hong Kong and will partner with one of Hong Kong’s largest advertising agencies to embark the expansion.

Local broadcaster HKTV has been trying to re-invent itself as an online TV channel, but due to plunging viewership ratings, it halts new drama production and the efforts in this area have not been paid off well.

So, does the rise of streaming spell the end of traditional TV?

UBS Global Research has just lowered its target price for TVB, and the research house believes the value of TVB as a content provider could be sustained, but as a distributor with close to monopolistic position could be challenged.

UBS also points out Netflix does not need an overwhelming success to be disruptive to TVB’s business, as it will likely permanently change how the audience consume content.

In the mid to long term, TVB may face strong headwinds on its viewership as more content is available on the new market.

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