Industry Analysis – Does Printed Media Industry in Hong Kong have future?

Print media is at a critical stage when its business models need to be re-examined and
adjusted amid the rise of digital media, evolving advertising models and changing reader
behavior.

One needs to ponder if print media will lose its edge in the digital age — and if not, how it
should modify its business models to embrace a brave new world of technology.

Hong Kong has over 4.4 million Facebook users, more than half of the city’s population;
according to a report from market research firm TNS last year. The explosive power of social
media brings excitement as well as challenges to print media.

While social media allows print media to engage its readers and amplify messaging in ways
previously thought impossible, these social platforms generate an enormous amount of free
content and a range of digital advertising alternatives, which could hurt newspapers’
subscription and advertising revenues.

Should print media be afraid of the future in the digital age?

Statistics suggest online media have yet to overtake paid print media among local audiences.
According to research last year by the Chinese University of Hong Kong’s Centre for
Communication and Public Opinion Survey, 63.1 percent of respondents read paid
newspapers, compared to 56.5 percent who read news from the Internet.

That said, the boom in online media, which mostly publishes free content, marks growing
competition with paid newspapers for readers’ time and attention. Given readers’ limited
time, the longer time they spent on online media reveals a threat to print media.

Hong Kong Economic Times, which takes pride in being rated as Hong Kong’s most credible
Chinese newspaper in another CUHK survey last year, has approximately 99,000 followers
on Facebook.

The House News, a former Chinese news portal founded in 2012, has more than 275,000
followers even though the portal was closed since last July. The closure of The House News
also indicates that high traffic does not guarantee success in monetization.

1
Many publications are aware of the threat and are willing to catch up with the competition in
online space.

A research piece entitled “New media – a game changing challenge for Hong Kong
newspapers” by the Hong Kong Trade Development Council interviewed a local major
newspaper which had made an investment of US$15 million to develop and expand its
website.

As a result of the investment, the publication had increased its readership by roughly 50
percent including overseas readers. Nevertheless, as its online subscription pricing was much
lower compared to the print version pricing, growth in readership did not guarantee revenue
growth.

Take the South China Morning Post, for example: its retail price is HK$9, three times more
than its daily online subscription (HK$21 per week). Although online subscription does not
involve printing costs, the profit margin per subscription is still lower than print. The
giveaway newspaper AM 730 came in third with 28 per cent while Apple Daily was on 27
per cent, Oriental Daily News, which claims to have Hong Kong’s highest newspaper
circulation, was on 23 per cent.

Interestingly the only English media outlets to make any kind of impression on Hong Kong
news readers were the international broadcasters, BBC and CNN, who registered with 12 and
10 per cent of users respectively.

Figures for purely online news consumption are markedly different, although TVB news
remains at the top of the tree with 44 per cent of respondents using it, closely followed by
Yahoo! News on 43 per cent. Apple Daily was the top newspaper brand at 37 per cent. Again,
in the English language sphere, only the BBC and CNN registered among top brands, but did
so with just 9 per cent each.

It should be stressed that this survey was undertaken well over a year ago and that the rapidly
evolving world of digital media changes much faster than the traditional media, so it is
entirely possible that a newer survey would produce markedly different results.

Significantly, in 2017 Stand News, a non-mainstream digital-only newspaper, came in for the
first time with usership of 11 per cent.

Other challenges to the established media outlets, including HKFP, are also gaining
impressive readership.
2
It is therefore likely that more non-mainstream outlets will start registering in future surveys.
Less likely however is that a new survey will give much comfort to the established media
organisations, who have yet to discover a method of making money out of their online
presence

On top of subscription problems, advertising in newspapers is at risk of being overtaken by

other digital advertising offerings in the market. Pricing is one thing; traceable return on
investment is another.

For instance, the minimum daily budget for any ad set on Facebook is only US$1 and the
platform allows a wide spectrum of filtering options ranging from geo-targeting to
demographic segmentation and personal interest.

While most publications charge advertisers based on cost-per-impression (CPM) model,

social media platforms use cost-per-click model (CPC). While the former highlights
exposure, the latter emphasizes audience response, which is widely considered as a better
indicator of the ad effectiveness than ad impression.

So, is print media losing its edge in the digital age?

“Content is king,” as the saying goes. It applies to both subscription and advertising. A
dominant free content provider might overtake newspapers as a source of information, but the
proven success of some international media indicates that readers are willing to pay for high-
quality content.

Financial Times, for instance, is regarded as the pioneer of metered charging model, which
allows registered users to have access to certain number of articles for free before requiring
paid subscription.

According to FT’s 2014 results cited by The Guardian, the model helped FT achieve a print
and digital circulation of 720,000, and two thirds of its readers have digital subscriptions, a
21 percent year-on-year rise.

Meanwhile, advertisers have started looking into shifting from traditional advertising to
content marketing. Some may think that digital media has an edge as its content is sharable
and engaging.

It could be true but there is also room for traditional media to stand out from other digital
advertising alternatives by leveraging their thought leadership, the capacity to shape an
audience’s thinking and to influence opinions.
3
Advertorial, sometimes known as sponsored content, appears the most common way to
achieve that. Although it existed before the digital age, online and social media unlock
tremendous possibilities to make newspapers’ advertising offerings more creative, engaging
and “out-of-the-box” than other digital advertising alternatives such as web banners on search
engines and social media platforms.

Monetizing print media’s online content need not be advertorial. Take The Economist for
example: The publication runs regular online debates, which allows audiences to vote and
comment, and some of these debates have a sponsor.

In this case, the publication retains its editorial independence and the advertiser benefits from
brand association and being seen as an advocate, who supports intellectual dialogue around
defining issues.

The question remains: should print media be afraid?

According to statistics from media-monitoring agency admanGo cited by South China

Morning Post, Hong Kong’s total ad spending had reached HK$49.9 billion in 2014, a 16
percent increase compared with the year before.

And traditional media outlets — including television, newspapers, magazines, outdoor

billboards and display — accounted for 90 percent. The figure gives a good reason for
traditional media including print to stay positive.

After all, digitalization is a long winding road but there should be no fear for forward-
lookers. High quality content with the right business model will pay off in the end.

Question:

1. Apply 5 forces Model to identify how competitive the printed media industry is and will
be?
2. If you are potential investor, would you invest in such industry based on your analysis
findings?
3. If you are looking for jobs, would you join newspaper corporations in Hong Kong?

4
 ATTRACTIVENESS
1 2 3 4 5
(1) Rivalry among
Competitors
(Strong-Weak)
(2) Threat of Substitutes
(Strong-Weak)
(3) Barriers to Entry
(Weak-Strong)
(4) Power of Suppliers
(Strong-Weak)
(5) Power of Buyers
(Strong-Weak)
OVERALL
ATTRACTIVENESS
(LOW) (HIGH)