23 October 2016
Netflix and LeTV plan to lure Hong Kong viewers by offering a wide variety of streaming video content. Photos: Bloomberg, HKEJ
Netflix and LeTV plan to lure Hong Kong viewers by offering a wide variety of streaming video content. Photos: Bloomberg, HKEJ

Will Netflix and LeTV have a smooth ride into HK?

Hong Kong people have often voiced their desire for more competition in the television industry, arguing that the existing system dominated by a few players has limited the choices for consumers.

The younger generations in particular want a wider variety of content as the programming dished out by entrenched broadcasters hasn’t kept pace with modern tastes and aspirations.

How nice it’ll be if there are more players in the industry, especially online broadcasters that will offer a range of programs and allow people to watch the content on mobile devices, they say.

Well, that dream could turn into reality if plans of some internet TV and video broadcasters succeed in the coming years.

US online broadcasting titan Netflix announced Wednesday that it intends to launch its movie and TV streaming service in Hong Kong next year as part of a regional expansion plan.

The service will be available on smart TVs, tablets, smartphones, computers and Internet-capable set-top boxes, allowing people to watch their favorite TV shows and movies whenever they want.

The news has been welcomed by Hongkongers, who are hoping that Netflix could help shake up the local TV industry as it did in the United States. 

Adding to the excitement, Chinese Internet broadcaster LeTV has also outlined ambitious plans for a major foray into Hong Kong’s pay-TV market. 

The company is believed to have secured exclusive broadcast rights for Hong Kong for English Premier League matches for three years starting from the 2016-17 football season.

According to media reports, LeTV offered HK$400 million to bag the rights, double that paid by current rights holder nowTV.

The staggering bid makes it clear that the Chinese firm wants to build an audience for itself in Hong Kong.

A company executive indicated that LeTV aims to become the second-largest pay-TV operator in Hong Kong, suggesting the possibility of a head-on battle with existing players. 

Such initiatives represent good news for consumers, who are keen to see new players break into the market, which has long been dominated overall by Television Broadcasts Ltd. (TVB).

The new internet broadcasters, with sufficient funds as well as experience in offering high-quality programs, will provide wider choices of content, as well as help transform the industry to a user-centric video-on-demand model.

Netflix has promised high-quality productions as well as flexible subscription packages. Users will be able to cancel the service at any time, the company said, suggesting that there won’t be contract commitment unlike the case with other pay-TV service providers.

Netflix is popular among the elites due to its drama series such as “House of Cards” as well as a wide range of content from other sources, including movies, documentaries, cartoons and animation.

While Netflix focuses on content, LeTV from China is seeking to establish a new ecosystem for the Internet video industry.

The company is keen on bundling its tens of thousands of hours of productions into hardware like Smart TVs, set-top boxes and mobile phones. Users will need to pay a monthly fee to access content such as sports, variety shows, dramas and documentaries.

Netflix and LeTV are both experienced and know the industry well. Although they haven’t been in the Hong Kong market, they enjoy good brand awareness here, making it easier to tap the market.

The new entrants will put pressure on existing broadcasters. In the US, cable television operators have seen their subscriber numbers fall as people shifted to online video services like Netflix that represent a cheaper and flexible alternative.

In Hong Kong, the internet broadcasters may however have grapple with some regulatory issues. There is a debate whether such online video service firms need a license before they can operate.

There is a grey zone in the legal and regulatory framework that could be used to checkmate firms that ride on new technologies, as we’ve seen in the case of car-hailing service provider Uber.

Hong Kong government has been taking “extra care” of the local free television market, citing the need to protect the industry from unreasonable competition.

Such attitude led authorities to deny a free-to-air TV license to Ricky Wong’s Hong Kong Television Network two years ago.

Now, as two foreign firms are seeking to make a high-profile entry into the market, it remains to be seen if the government will put roadblocks in their way.

Will authorities argue that new players offering internet-based services constitute unfair competition for TV license holders, and thus need to be checked?

Or will the government put the interests of consumers and the overall development of the market above all else, even if it means hurting broadcast licensees such as TVB, Now TV and i-Cable?

One way or another, we’ll hear more on this matter.

Stay tuned.

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EJ Insight writer

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