Market Insight

PCCW strikes new content deals to drive subscriber growth and boost visibility through partnerships

August 13, 2019  | Subscribers Only

David Scott David Scott Associate Director – Research and Analysis, Service Providers & Platforms

Want to learn more?
Have an expert contact you.

Hong Kong’s leading pay TV operator Now TV has signed a content deal with the multi-platform media company BeIN Sports for the Hong Kong broadcast rights of the 2019 Rugby World Cup, which will be held across 12 cities in Japan between September and November 2019.

PCCW-owned Now TV will exclusively broadcast all matches live on a dedicated channel, BeIN Sports Rugby, via its pay TV platform as well as across its virtual pay TV platform Now E, launched in May 2018.

Meanwhile, the PCCW-owned pan-regional OTT video streaming service Viu announced its first content collaboration with Discovery Networks Asia-Pacific in August 2019. Under the deal, Viu’s eight-episode reality travelogue production No Sleep No FOMO will be launched on Discovery Channel and Discovery Asia to over 22 million households across 14 markets in August 2019. The series, titled on the premise of fear-of-missing-out (FOMO), features local language subtitles and reaches over 12 million followers via social media.

Our analysis

The content deals extend PCCW’s offering of licensed and self-produced content under the Now TV and Viu brands.

The 2019 Rugby World Cup marks the first time the tournament will be held in Asia, which will appeal to a wider audience in Hong Kong given that matches will be held during primetime. Rugby has established a sizeable fanbase in Hong Kong over the past few years due to the growing popularity of the Hong Kong Sevens Rugby tournament. As such, the deal will attract new subscribers to Now TV in 3Q 2019, like the boost in subscriptions experienced during the 2018 FIFA World Cup, which PCCW had the exclusive rights for.

Return to growth for PCCW’s traditional pay TV business

Now TV has the largest pay TV subscriber base in Hong Kong, ahead of I-Cable Communications. 2018 marked a return to subscriber growth for Now TV after two consecutive years of decline. The 2018 FIFA World Cup was the key driver of growth but the acquisition of shared UEFA Champions League rights and the reacquisition of exclusive English Premier League (EPL) rights also boosted subscriptions. Now TV first began broadcasting the coveted EPL matches in 2007 and regained the rights in 2018 after rival LeEco experienced financial problems and the Hong Kong arm of the company was liquidated. Now TV retained its rights to broadcast every EPL match in Hong Kong in January 2019. The deal runs from August 2019 to May 2022.

Now TV’s subscriber base reached 1.341 million by the end of June 2019, down less than 1% compared with the end of December 2018 after the contracts of customers who subscribed for the World Cup were up so they cancelled. Despite the decline, Now TV still achieved a net gain in subscriptions following the FIFA World Cup with total pay TV subscriptions still above the 1.301 million at the end of 2017.

The Now TV service features 160 linear channels and an on-demand library of local, Asian and international programming. Now TV revenues for the six months ending June 2019 were down 2% to HK$1.358 billion (US$173 million) compared with H1 2018, which were boosted by the impact of the FIFA World Cup. Subscription revenue accounts for 91% of total revenues, with the remaining revenue from advertising and other sources. Average revenue per user (ARPU) was HK$174 (US$22.19) at the end of June 2019 down from HK$180 (US$22.96) at the end of December 2018 and its peak of HK$197 ($US$25.12) at the end of December 2015.

Viu continues to expand in fiercely competitive local and international OTT markets

Now TV faces fierce competition in the subscription video market following the entrance of Amazon and Netflix to the Hong Kong market. This has led to a change in business models and consumer viewing habits for traditional media companies in Hong Kong, such as free-to-air broadcaster TVB and DVD and music retailer HMV Digital, who have shifted their respective businesses to digital media. TVB’s MyTV Super is the largest online video provider in Hong Kong, followed by Netflix and Viu.

Viu revenues for the six months ending June 2019 grew 12% to HK$441 million (US$56.2 million), up from HK$394 million (US$50.2 million) for the corresponding period a year earlier. Monthly active users increased from 20 million at end June 2018 to 36 million by end June 2019. Viu is available in 17 markets across India, Southeast Asia, and the Middle East, of which its largest markets are Thailand and Singapore. The service also continues to gain traction in Indonesia and was most recently launched in South Africa in March 2019.

A key driver of viewer growth for the company is its original content productions such as Spotlight 2, The Bridge and High Jack. Viu intends to release more than 80 original titles in 2019. These titles continue to drive not only an increase in viewership but also new revenue by way of partnerships, such as the collaboration with Discovery Networks Asia-Pacific for No Sleep No FOMO. Viu’s partnership with Discovery serves as a good model for future collaborations between Viu and other channel providers. As such, the release of new original titles in 2019 and beyond is expected to facilitate further growth for the company in the future by way of an increase in subscribers/viewers through partnerships.

Share facebook Twitter Google Plus Linked In Add This Contact Us