Hong Kong Television Network (01137.HK) announced last week that it would abandon its long-time quest for a free-to-air television license. The company would shift its focus to e-commerce.
HKTV has struggled for years to obtain a free-to-air television license. In 2014, it was forced to launch an online shopping platform after the government rejected its license application.
Things have changed a lot since then.
The company has made some solid progress in its e-commerce businesses in recent years, while the TV business in the city has gone through big changes, making it doubtful whether getting into the industry still makes sense.
Free-to-air television needs a large number of programs to fill in the broadcasting time slots. Program production is costly and whether they can bring in advertising income is always an uncertainty.
Meanwhile, the over-the-top (OTT) model has become hugely popular. It allows a streaming content provider to sell audio, video, and other media services directly to the consumer while bypassing traditional distribution channels. The success of Netflix is one good example.
Even Hong Kong’s biggest broadcaster TVB is expanding into OTT business as traditional businesses are no longer growing.
I believe HKTV won’t apply for free-to-air television license in the future, due to high operation costs and license expenses.
Does that mean HKTV boss Ricky Wong Wai-kay should give up his TV dream? Not necessarily.
Given the immense possibility of OTT platform, I believe Wong would stage a comeback someday.
The full article appeared in the Hong Kong Economic Journal on April 3
Translation by Julie Zhu
[Chinese version 中文版]
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