With the rise of video-streaming services in Hong Kong, the traditional TV market has become tougher than ever. Television Broadcasts Limited (TVB) announced its profit from continuing and discontinued operations dropped from HK$1,410 million to HK$1,331 million in 2015, a decrease of 6%.
TVB’s advertising revenue from its terrestrial channels dropped 9% year-on-year, as a result of sluggish retail sales and the absence of non-recurring revenue from the 2014 World Cup.
Two key growth engines of its ads business in the past – baby milk powder and skincare – recorded a significant drop in spending in 2015. While the baby milk powder category remained the top revenue generator in the year, the actual spending was down by 13%.
Meanwhile, skincare ad spending witnessed a 38% plunge. Supermarkets, one of TVB’s top performing categories, also dropped by 31% amid a poor retail environment.
According to the company’s annual report, the increased risk of a global economic slowdown has prompted major advertisers to act more cautiously with their submissions of advertising slot bidding and annual spending commitments, which in turn adversely impacted its sales.
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The free-to-air broadcaster also said that in 2015 its broadcasting and advertising business underperformed by 42%, from a segment profit (before impairment losses and exchange losses) of HK$947 million to HK$551 million as a result of a sluggish advertising market.
In other bad news, its pay TV channel TVB Network Vision lost HK$695 million, and the company decided to abort the construction of new production studios and related facilities in Hong Kong as a result.
Charles Chan, chairman of TVB, said 2016 remained challenging because of weaker macroeconomic conditions resulting in a weak advertising market in Hong Kong. But the company is hopeful conditions will gradually improve in 2017.
The company also admitted, 2015 marked a critical year for TVB, as it witnessed an increasing trend in media fragmentation, such as the OTT service provider (LeEco) and online operator (Netflix) have commenced services in Hong Kong, offering more programme choices for viewers.