i-CABLE

MSc. in New Media

CHEN Yanjuan
LIANG Weishan
LUO Meng
YE Xuelin
ZHONG Xingyu

01 PROTEIN framework Analysis

Outline

02 Five Forces Analysis

03 Strategy

Introduction

Introduction
i-Cable Communication Limited ---1999
integrated communications companies
Residential fixed-line

PayTV service (Free TV in the coming year

Dial-up internet access service
Broadband internet access service
Multimedia contents

Introduction
Customers
Television
126,000
201,000

Broadband

Telephony
120,000
199,000

1,089,000

1,074,000

Dec-12

Jun-13

HKCTV
Hong Kong Cable Television (HKCTV)---1993
Owned and operated by i-Cable Communicatio
n Limited
More than 100 channels and programmes over
30,000 fresh programming a year, including 10,
000 hours of its own production

HKCTV---Programming
News
Self produced professional news
Introduced in-depth reports, sharing unique perspective of the most to
pical news & current affairs on the mainland China.

Sports
Exclusive
Diversity
Official broadcaster of the 17th Asian Games Incheon 2014

Entertainment
FAN Entertainment Channel
CABLE Drama Channel

HKCTV---Viewership
Viewing Share Among Pay TV Operators
60%
50%

50%

40%
30%

27%

20%

15%

10%
0%

Source: Nielsen HKTAM

HKCTV
Pay TV viewers aged 4+
Jan Jun 2013, All Day All Time
* Excluded 8 TVBNV channels via Now TV platform
^ Included 8 TVBNV channels via Now TV platform

7%

NOWTV

TVBNV

bbTV

i-Cable Homeline (Fixed Line)

CABLE HomeLine Service offers users unconventional

fixed line telephone service, which allows customers to
enjoy great convenience by providing value-added-servi
ces
iFAX
MobileLine

i-Cable Broadband
Hong Kong's 2 nd largest Broadband Internet access
service provider
Cover over 90% of the 2-million households in Hong
Kong.

Multimedia
All media rights with extensive live & archived coverag
e in multiple formats across media platforms
Pay TV content based
Portals on news, sports, horse racing, stocks, etc.
Mobile Apps

Player

 Integrated communication company

Pacific Century Cyberworks Limited (PCCW)
Hong Kong Broadband Network Limited (HKBN)

Other PayTV supplier

Television Broadcasts Limited Network Vision (TVBNV)

Other fixed line & broadband suppliers

Hutchison Global Communication Limited (HGC)
New World Telecom (NWT)

Player--- PCCW

PCCW

Formed in 2000, PCCW is the first quadrupl

e-play provider in Hong Kong and offers a ra
nge of innovative media content and services
across four delivery platforms fixed-line, b
roadband Internet access, TV and mobile.

PCCW---NOWTV
Now TV
Launched in September 2003
Currently NOWTV is the largest pa
y-TV station in Hong Kong.
Offers more than 190 channels,inclu
ding 19 channels from TVB pay versio
n. Now TV is not only Hong Kong but
also worldwide pioneer in IPTV .

a la carte pricing : allow subscribers

to take on just those channels that th

PCCW---Fixed Line, Broadband & Multimedia

PCCW's fixed-line service
eye Multimedia Service and PCCW eye2
Hong Kong Telecommunications (HKT) Limited.
NETVIGATOR is Hong Kong's premier broadband provider, reac
hing 97% of all households in Hong Kong and serving broadban
d users with a wide choice of Internet access speeds.
Multimedia Platform:
Now.com.hk--- 5,000+ streaming video contents

--- Hong Kong's largest multi-platform digital music service

Player--- HKBN
PayTV----bbTV
IPTV
Net TV

Internet access
Fixed line
Multimedia services

Revenue model

Subscription

Revenue
Model

Advertising
Content licensing
Televisions related
service
Network
maintenance

Revenue Model---Subscription

PayTV---HKCTV
Broadband Service
Fixed Line
Bundling

Subscription---HKCTV

Plan

Family
Select

Package

Service

Price(Monthly)

Basic Pack

74 channels

$319HKD

News+Entertaionm
ent Pack

47channels

$158HKD

Entertainment
+Movies Pack

47 channels

$158HKD

Subscription---Bundling
Package
CABLE
TV
Basic
Pack+
50M
Broadband
CABLE
TV
Basic
Pack + HomeLine
Service
CABLE
TV
Basic
Pack
+
130M Broadband +
HomeLine Service

Service

Price
(Monthly)

75 channels+50M

$419HKD

75channels+homeline
$379HKD
service
75channels+130M+
homeline service

$509 HKD

Subscription

Revenue
Model

Advertising
Content licensing
Televisions related
service
Network
maintenance

Revenue Model---Advertising
Portal banner ads
In-stream video ads
Mobile apps ads--pop-ups
TV commercial
Cable Guide ads
MTR Newsline
Express ads

Subscription

Revenue
Model

Advertising
Content licensing
Televisions related
service
Network
maintenance

Operation
Technology

Company visit: How news are produced

in HKCTV

 i-CABLE owns and operates one of tw

o near universal coverage two-way in
teractive telecommunications networ
ks in HK.
It delivers domestic pay television pr
ograms, Internet and VolP services m
ainly by hybrid fiber-coax (HFC) netw
ork, supplemented by MMDS and sat
ellite transmission.

Source Broadcasting Authority Annual Report 201

HFC (Hybrid Fiber-Coax )

HFC architecture is an optimized combination of fiber in

the trunk and coaxial cable in the feeder and drop.
decrypted

encrypted

Microwave trunk transmission system

Retained to serve a small number of subscribers in remote areas o

f the territory.

MMDS (Multi-channel Multipoint

Distribution Service)
Low frequency;
Less susceptible to interference.

Satellite:

Transmits broadcast signals from

satellites orbiting the Earth;
Receive radio signals using
satellite dishes.

Held, G.(2001)

Ecology

CASH
$
$
Music
Progra
m,
produc
er,
artist

Content
Origination

Cable

i-CABLE

Syndica
tor

Content
Production

Satellit
e
Wireles
s
Operat
or

Home User
(STBTV,
Telephone,
Internet)

$
$

Distribution
&

Wireless
Users

Content
Consumption

Intelligence
Property

exclusive
prized contents E.g.: sports
License fees for

programme, appealing
channels/Royalties of music from CASH

illegal decoders

illegal online content

Threa
t

Taskforce

Technology

Conditional Access System (CAS) Digital rights management (DRM)

Set-top box and smart card
Multi-terminal devices
Content keys or embedded watermar

Over-the-top

1.delivery of voice, video and data service straight

from the provider to the viewer via public Internet,
without going through the MSOs or telecoms.
2. Consumers can access OTT content any time,
any place to any terminal devices.
3. pay TV operators to partner with OTT providers
or run OTT service itself.

Free TV-Is it a good thing?

1 generate new ad
revenue from its wellregarded content
production
2 attract more
customers to subscribe
to its pay-TV service

need to produce
massappeal
programme to compete
with TVB ,such as soap
drama,
too expensive to
produce
too long to build
critical audience

01 PROTEIN framework Analysis

Outline

02 Five Forces Analysis

03 Strategy

Rivalry among Existing Competitors

Service

1
HKCTV

NOW TV

TVB Network
Vision

bbTV

Channels

112
(HD 12)

216
(HD 30)

74
(HD 18)

94

Pricing
Model

Pay-perpackage

la carte
pricing

Basic package
Pay-perchannel (for
premium
channels)

Movie channel
package
Pay-perchannel

Source A List of Licensed Broadcasting Services in Hong Kong (As at 15

November 2013) Office of the Communication Authority

Content

2
HKCTV

NOW TV

TVB Network
Vision

bbTV

Channels

112

216

74

94

Selfproduced
channels

21

32

17

3 (preview
channel and
program guide)

Rate of
Selfproduced
channels

18.8%

14.8%

23.0%

3.2%

Source: Official websites of NOW TV, i-Cable ,TVB Network Vision

& bbTV

Penetration

3
HKCTV

NOW TV

TVB Network
Vision

bbTV

Subscriber
s in
2012
(Household
s)

1,089,000

1,183,000

Nearly 170,000

195,000

Subsribers
in 2011
(Household
s)

1,106,000

1,140,000

Nearly 200,000

181,000

changes

-17,000

+43,000

-30,000

+ 14,000

Source: Annual Report (2012) of i-Cable, PCCW, HKBN ; Annual Report (2011) of TVB, PCCW, i-

Exclusive rights of sports channels

HKCTV

Football

NOW TV

TVB Network
Vision

J1

bbTV

Financial review

HKCTV

NOW TV

Turnover
million

820
(-4%)

1299
(+3%)

EBITDA(earnin
gs before
interest, tax,
depreciation
and
amortization )
(million)

-6.9
(2012: 20)

29
(2012: 28)

EBITDA margin

0.2%
(2012: 3%)

17%
(2012: 17%)

(2013.1-2013.6 )

Source: 2013 Interim Results of PCCW & i-Ca

Technology

Transmissi
on Mode

HKCTV

NOW TV

TVB Network
Vision

bbTV

HFC, MMDS,
satellite
(Digital)

Broadband
network
(Digital)

Satellite ,
broadband
network
(Digital)

Broadband
network
(Digital)

Source: broadcasting authority annual report

Bargaining power of customers

1. Differential advantage of industry products close substi
tute similar types of channels

Bargaining power of customers

2. Buyers scale
Total number of subscribers of licensed
domestic pay television services (September
2013)

2,445,000

Penetration of licensed domestic pay

television services (September 2013)

101%

Source: key communication statistics. Office of the Communication A

Bargaining power of customers

3. Buyer switching costs
Contract expiry: no actual cost
Service cancellation fee: 800 or remained monthly fee

. 4. Buyer information availability

Stalls set up in neighborhood
Hong Kong Street Fighters

Bargaining Power of Suppliers

Content Suppliers
Unique selling point: News and current affairs; Entertainment
Dependence on content suppliers

Cable TV

exclusive broadcasting
Content suppliers
rights

auctions and biddings (Intern ational channels

e.g. TV series and sports programmes
and external
organizations)
Weaker financial background and business support system than NOW TV >>> less likely to bid

higher price

Bargaining Power of Suppliers

Technology Supplier
Self-owned transmission network and service:
Hybrid Fiber Coaxial Cable (HFC)
supplemented by
Microwave Multipoint Distribution System (MMDS)
and
satellite transmission

By March 2012, HKCTVs network covered around 2.3 million househol

ds, i.e. 97% of the total households in Hong Kong (Broadcasting Authori
ty Annual Report, 2010-2012)

Bargaining Power of Suppliers

Threat of New Entrants

Market dominance of three domestic pay television pr
ogram service licensees:
Hong Kong Cable Television Limited
PCCW Media Limited
TVB Network Vision Limited
High entry barriers in the pay TV market
Finance: high start-up and operation cost

Technology: high requirement of technical expertise

Operation License: government approval

Threat of New Entrants

Approval of free TV broadcast license to Fantastic Televisi
on by
HK government
Doubled free-to-air TV operators >>> Growing competition in the free
TV market
More support for the free TV channel
I-Cable: investment of HK$1 billion in the fist six years (Bloomberg, 2013)
Decreasing support for pay TV channels >>> competitiveness weakene
d

Low threat of new entrants

Threat of Substitute Products or Services

Substitutes regarding Transmission Modes
Digital terrestrial television (DTT) Free-to-air TV
Free of charge;
More television channels;
High-definition television programmes

Broadband network (IPTV)

TVB Pay Vision could be accessed via the same set-top box of PCCW Media wi
th a separate electronic programming guide which is distinguishable from th
at of PCCW Medias now Broadband TV service.

Threat of Substitute Products or Service

s

Coverage of Different Television Transm

ission Modes in March 2012

(Broadcasting Authority Annual Report, 2010-201

Threat of Substitute Products or Service

s
Similar types of channels/ programmes
Fully digitized platforms of all the pay
televisions

Other pay
TV
services

Zero switching cost after contract expiry

Illegal

Crack passwords to unlock pay TV

decoder

decoders

retailers

Pirate viewing of Cable TV programmes

Loss of potential customers of Cable TV

Threat of Substitute Products or Services

OTT TV (Over-the-top)
On-demand service
Multiple platforms access: tablets, smartphones, connected
TVs, STBs and web
Delivery of video and audio over the Internet by third party c
ontent providers: Now TV, Netflix, Hulu

High threat of substitute products or

Porters Five Forces Model

low

medium

low

high

Strategies

Embrace all screens

Glenn Britt, CEO of Time Warner:
Embrace all of the screens;
There is no such thing as a TV anymore.
Interview: Alan Cheung Controller of
i-CABLEs New Media Development
Department.
With movies, TV programs and videos
more readily accessible on mobile devices
thanks to the expansion of Wi-Fi network,
quality and screen size become essential.
Tablet, game console

Elevate program
content

HKCTVs most prominent advantage over the others

is its well-established news channels.
Bid for exclusive rights to broadcast sports
tournaments rationally.
More dollars into producing high-quality self-made
programs.
Fantastic Television New free TV license.
Purchase high-quality TV dramas from
independent producers; Develop creative
entertainment programs (e.g., reality talent shows) to
grasp young audience market.

Enrich subscription
flexibility
Advanced set-top box and the
gradual move to IP will increase
cable TVs flexibility.
HKCTV: 16 fix-priced TV
subscription packages (14 to 83
channels).

HKSAR Govt : 1/5 of HK population were below poverty line in 2012

Flexible, scaled-back & cheaper subscription packages

Think forward to Over-theTop

The future of cable television lies

in on-demand services
delivered over multiple platforms.

3
In the future, i-CABLE may

OTT providers still have

several hurdles

to jump
before displacing traditional pay
TV.
they must offer live events and
sports (Arker, 2010).

consider an if-you-

cant beat emjoin-em approach in

face of OTT challenges.
E.g., COX: started to provide
video service on the internet
from Jul. 2013.

THANK
THANK YOU
YOU