Television in Hong Kong used to be simple: It was just a tale of two networks. Year after year, TVB trounced ATV in the ratings and took a major hunk of the available ad revenue in the process.

Now, things are changing. With ATV fighting back, a satellite franchise ready to roll and a cable license in the works, the tv game is becoming a much more competitive business.

By the middle of 1991, newly licensed satellite broadcaster Hutchvision is expected to have the first of its seven channels up and running. And it’s likely that the government’s Dept. of Recreation & Culture will be well along the way to drafting cable tv license provisions that actually allow a would-be broadcaster to function without crippling setup costs.

In two years, the number of players in the colony’s tv game could well double.

ATV has been steadily improving over the last few years, having increased its audience share from 10% in 1987 to 25% by November 1990 with a corresponding revenue increase from 6.8% of the available ad revenue in 1989 to 8.7% last year. TVB’s share of the available revenue for the same period was 42.1% in 1989, down to 39.2% for 1990.

The first new player is Hutchvision, whose satellite tv operation will be free-to-air and advertising funded.

Under the terms of its uplinking license, Hutchvision is limited to obtaining 4% of its revenue from Hong Kong advertisers, so most of its revenue will come from other parts of the region.

“We’re aiming for a small fraction of the $35 billion available adspend from the most affluent countries,” says George Chan,

Hutchvision’s advertising and marketing manager.

Although some have questioned the viability of Hutchvision’s revenue expectations, most industry observers agree that satellite poses limited threat to the revenues of the two terrestrial broadcasters.

Steve White, Ogilvy & Mather group media director, says satellite tv is aimed at the high end of the market – the bilingual end – and so does not really pose a threat to the mainly Cantonese programmed stations that account for most of TVB and ATV’s revenue and audience.

Henry Lai of the Ball Partnership agrees, adding, “Satellite aims at a broader geographical area, so its revenue sources will not be from Hong Kong only.”

J. Walter Thompson media director Sue Johns says Hutchvision’s success “depends on the type of product and how different it is to what viewers can get at the moment.”

All three media buyers see cable as having the greatest impact on ATV and TVB.

“Cable is intensely local, while satellite is intensely not,” says White.

He says cable’s uptake (providing subscription costs are reasonable) will be affordable for most people, and the rate of subscription should be quite high.

If the programming is on par with what’s currently on offer, a cable operation of mostly Cantonese programming would wrest its share of the audience and advertising dollars away from the present tv entertainment incumbents.

TVB and ATV are keeping tabs on the government’s progress with draft cable tv licensing.

“We are concerned if cable is allowed to produce in the same way broadcasters produce,” says Selina Chow, ATV’s chief exec officer. “Although we feel we do have a role to play in working with a cable network.

“We have a big library of Cantonese programming and we would like to be a supplier for cable.

“Already we produce over 3,000 hours of programming per year, over 600 hours of which is sophisticated drama.”

Nick James, TVB topper, says that providing a second telecommunications network is not a condition of a cable license, TVB would be keen to join a consortium for a license bid.

TVB produces about 40% more programming per year than ATV and so it also sees cable as an outlet for its product.

For ATV, the highly successful method of programming that relies on netting big figures for one-off events will continue to form the basis of its attack, although it will be looking to improve its drama productions.

For TVB, Nicholas James says that 1991 will not see a marked change in strategy either.

“We still continue to program quality drama and variety programs, it’s been a successful format for us in the past. We expect it to remain so for the future.”

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