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H.K. LEAPS INTO THE VOD

Video-on-demand venture inks content pact

HONG KONG — The video-on-demand battle heated up Sunday with the announcement by Hongkong Telecom IMS that it had signed an exclusive deal with a new joint venture company formed by Golden Harvest Entertainment and China Star Entertainment. The film companies will supply Cantonese movie titles for Tele-com’s VOD service, which launches in July.

The move comes just a week after four local companies involved in the entertainment and property development businesses said they were planning a similar VOD service.

Hongkong Telecom, which is the territory’s largest phone company, is expected to invest at least HK$300 million ($38.8 million) over the next two years to purchase content for the service.

It has been reported that the other joint venture will spend the same amount to set up its service, which is still in the development phase. Those four companies are video distributor Mei Ah, New World Development’s Chinaland, DVD maker Hanny Holdings’ subsidiary Maximum Potential and film studio Win’s Movie.

William Lo, managing director of Hongkong Telecom IMS, a unit of the phone company, declined to disclose the value of the five-year agreement with Golden Harvest and China Star. He did add, however, that Telecom will in-vest HK$1 billion ($129 million) over 10 years in its interactive business, including VOD, home shopping and home banking. Lo said the company expects to break even on all its interactive services after four years.

”One of the critical success factors for VOD is content,” said Lo. ”This strategic alliance with the two largest local studios in Hong Kong will enable us to provide a plethora of high-quality movie titles for our customers and let them choose what they want, when they want it.”

All of the new competition is good news for the depressed Hong Kong film industry, said Woody Tsung, chief ex-ecutive of the Motion Picture Industry Assn. (MPIA). ”The producers will be glad to see it. When there’s more competition, the producers love it. I can only think of positives now,” he told Daily Variety.

Indeed, the partners appear eager to develop this new outlet for their wares.

”We are very pleased to see the emergence of VOD opening a new delivery channel for the entire entertainment in-dustry,” said Peter Choi, a director of Golden Harvest. ”This will help increase the total movie viewership.”

Added China Star head Charles Heung: ”We see a huge potential in Hongkong Telecom IMS’ VOD service and we’re proud to be one of the key content providers for this world-first innovative technology.”

Telecom expects to sign up 3,000 customers in the first three months. The official commercial launch will follow in October. For the first two years, the company has set a target of 25,000 to 28,000 customers. The service is ex-pected to be available to about 80% of Hong Kong’s 1.6 million households by the middle of 1999.

Tsung of the MPIA said he believes that Wharf Cable, the territory’s lone cable operator, ”should be the most con-cerned” about the VOD services. And Wharf, which now offers four pay-per-view channels and wants to increase that to nine, is definitely aware of the competition.

”We’ll be watching with close interest, of course,” Wharf spokesman Garmen Chan said.

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