PCCW vs. HK Cable TV
Introduction
The Pay TV industry in Hong Kong is continuously progressing; this has been made evident by the continuous developments that Pay TV cable service providers are undergoing. In the country, HK Cable TV (HKCTV) has long been considered as the leader of the industry. This was mainly because during the early times, HKCTV monopolize Hong Kong’s subscription TV station. This gave the company the chance to dominate the pay-TV market. However, the HKSAR government decided to entertain bids that will enable the development of the Pay TV market as well as the provision of more product choices to the consumers. This was initiated in 1999 and was opened officially in July 2000. While this transition had increased the market for Pay TV and product choices had been diversified, this has also significantly increased the level of competition within the industry. In particular Pay TV companies have started to compete for programs and market share. As a result, extensive promotions and business strategies had been used.
Based from the Hong Kong Annual Reports in telecommunications for 2003, a total of four local pay television program service licensees are operating in Hong Kong. These include HKCTV, PCCW, Yes TV and Galaxy. At the end of 2003, it has been noted that 130 pay TV channels had already been made available in Hong Kong and subscribers have grown considerably, which is more than 860,000. As new business entrants are continuously being established in the country, the competition within the Pay TV is expected to increase further in the future. Pacific Century CyberWorks Limited (PCCW) is among the main operators in the Pay TV market in Hong Kong and has been struggling to be the leader in the industry. While this position is currently with HKCTV’s possession, PCCW has the opportunities to be the country’s leading Pay TV company. This paper will then identify the inherent potential of PCCW to be a Pay TV leader in Hong Kong.
HK Cable TV and PCCW
HKCTV is a company owned by i-CABLE Communications Limited and is the first to offer subscription services to Hong Kong television viewers, providing over a hundred various pay channels. The company produces about ten thousand hours of television programming annually and offers about a hundred local and international channels. Programs ranging from drama series, news, documentaries, movies, science, sports, music and culture are offered by the company. Over the years, technology has begun to play a significant role in the development of the Pay TV industry.
HKCTV made the most of this trend by developing a multimedia service center in 1999. This allowed the company to offer dial-up internet services; within a short span of time, the company was able to acquire a total of 185, 000 subscribers, taking up 10% of the total market for internet services. In early 2000, service has developed due to the introduction of broadband technology. By October of the same year, about 700,000 households are already connected through broadband services. This achievement made the company among the fastest to expand with cable modem service worldwide (2006).
Initially, the company targets subscribers from the middle class markets who are willing to avail and pay for a more diverse television program selection. Eventually, HKCTV applied a pricing strategy where subscribers from the working can also enjoy the services offered by the company. Aside from this, product packages with less expensive phone line services and broad band internet access services had also been offered. Through these competitive strategies, the sales of the company have increase significantly with more than half a million subscribers (2006).
The success of the company did not stop it from introducing new services. In 2005, the company has launched the Multimedia on Board (MMOB), a service that public transit vehicles can use. Through this feature, HKCTV can provide news broadcasts for Kowloon-Canton Railway (KCR), one of the most important transport systems in the country. These broadcasts can be viewed through the Passenger Information Display System. This new service further supported the company’s aim of provided up to date news to viewers even if they are not using their computer or television sets. The MMOB and its instantaneous feature has also been an effective marketing strategy for HKCTV as it helps in attracting more and more clients for home subscriptions (2006).
With these major achievements, it becomes clear how HKCTV was able to become the leader in the Pay TV industry. Nonetheless, there are also several other contenders that could rival HKCTV. One of which is Pacific Century CyberWorks Limited (PCCW), which is considered as the biggest telecommunication enterprise in the country. The company was actually established by , the younger son of , one of Hong Kong business tycoon and billionaire. One of the important deals that made PCCW a major company in Hong Kong was its acquisition of the Hong Kong Telecom in 2000. From a small dot-com holdings company during the 1990, PCCW became one of the country’s largest corporations. In addition, the company has also been a major Internet service provider through the Netvigator brand ( 2006). Though PCCW is not leading the Pay TV industry in Hong Kong, the company actually has a number of inherent strengths that could support this goal.
Opportunities for PCCW
One of the important strengths of the company that could support its aim of becoming the Pay TV leader is its financial records. Based on the reports for 2005, the company was able to achieved considerable profit increase by 43%, from HK7 million to HK.1 billion. The net profit from the shareholders had also increased by 25%, while consolidated revenue was increased 9%. Furthermore, the administrative and general expenses of the company were successfully reduced by 10%. A 33% reduction in its net debt was also achieved for the same year. Along with the positive financial outlook, the market share of the company is also growing constantly. Specifically, the company’s customer base for broadband television was at 441,000 (PCCW, 2005). With these financial advantages, PCCW clearly has access to important resources that will support its business strategies in the future. In addition, these results imply that the company has the ability to balance its expenses with that of their earnings, suggesting efficient financial decision-making capabilities. The company should then utilize this strength especially in introducing new services and using company resources that would pave the way towards market leadership.
Aside from financial strengths, the business strategies employed by the company can also be considered as competitive. In one article written by (2006), PCCW was able to successfully introduce its new broadband television services called the Now Broadband TV; report stressed that this new service has been considered a market hit among Hong Kong viewers, and its growth showed no indications of stopping. Based on 2005 report, the customer base for Now TV has reached 549, 000 or 52%, where about HK4 or US is spent by every subscriber. The chairman of the company noted that they are expecting further growth in customer base for 2006. The company had already attempted to pursue this type of service since 2000; however, the projects had been nothing but costly failures. Despite this outcome, the continuous development of the company towards this project enabled it to develop a fiber-optic infrastructure, which supported the launch of its IPTV service.
The a la carte style of subscription offered by the company also led to the success of this strategy. In particular, this subscription model enables the customers to purchase individual channels. This is more cost-effective as compared to the bundle model applied by other service providers. Now TV also comes with a set-top box which prevents cable piracy, ensuring the quality of the programs the consumers are subscribed to. Subscribers can also access viewing statistics with this new service. Copying this strategy may be quite difficult for other cable operators since offering similar services especially to less populated areas in Hong Kong may not be a cost-effective strategy. However, it is noteworthy that other companies had been interested in PCCW’s breakthrough are interested in employing a similar tactic ( 2006).
Conclusion
HKCTV is currently considered as the leader of Pay TV industry in Hong Kong. Years of operation and satisfactory services are some of the important aspects that support its present market position. Nonetheless, based from the brief description given, PCCW apparently has distinctive competitive advantages that are not yet employed by similar companies like HKCTV. Through these unique offers and strategies, it is likely for PCCW to gain considerable market share; moreover, the support of its latest financial status can also contribute to the development of other strategic plans of the company. Aside from these, the company also has good strategic and decision-making skills that could promote success. With these important factors, PCCW has a good chance of becoming a leader in Hong Kong’s Pay TV market.
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