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Web> Business> Finance
UPDATED: December-18-2006 NO.47 NOV.23, 2006
Content Is Key for Digital TV
One industry leader says content is fundamental to making digital TV more mainstream in China

Sure, digital TV is a lot prettier than standard cable because of its high-quality images, but one industry leader suggests the new medium's enhanced content is what consumers will really be thrilled about.

"I don't agree that content rules in the traditional TV industry, because it is in the era of digital TV that we will see content really ruling," said Liu Shabai, Vice President of Hunan TV and Broadcast Intermediary Co. Ltd. (TBI).

In a competitive sector, understanding and implementing valuable content in the midst of technological innovation may eventually give TBI and like-minded media companies wider profit margins.

"Content without limits" is the key to profitability in the digital TV age, said Liu, having reached this conclusion after touring Hangzhou and Qingdao, both digital TV revolution leading cities.

A content-heavy investment

To understand the importance of content to TBI, which is handling the rollout of the company's digital TV in the province, understand this: the company began preparing digital TV content a year ago even though nothing has been aired yet.

"We haven't yet distributed set-top boxes" for digital TV, Liu said. "We are very confident in the content that we will provide."

In terms of TBI's investment in digital TV, it's big.

"When we first invested in the digital network setup, many people found it hard to understand what we were doing because the investment involved several hundred million yuan-a large sum of money by anyone's standards."

The presumption is that each installed household would eventually pay a fee of 200 yuan per year.

"It will be quite a while before we see any returns," he said. "We can't predict the future, but we expect to stabilize the revenue generated by digital TV after completing the network. Looking back, establishing a strong network was a very smart move. Digital TV content can be compared to a large supermarket where you can buy anything you want."

In his view, traditional TV tends to position each channel specifically. For example, Hunan TV positions itself as an entertainment channel. Digital TV, however, enables limitless content.

Further, traditional TV channels only prepare 24 hours worth of content since they broadcast 24 hours a day. Digital TV, however, interacts with the audience and therefore must have diversified content-more traditional TV content and content from other media sources. All information can be stored in the limitless database for the viewer to check any time at home.

In Liu's words, "We provide what you want as well as many things you don't expect."

For Liu, digital TV will be multi-functional, also essentially working as a computer, newspaper and telephone.

"Digital TV is a revolution," Liu said. "TV is no longer a mere entertainment tool, it has evolved into a comprehensive information terminal."

So how will this dream be realized?

Liu said it will require the collaboration of digital TV operators and other media organizations. For instance, magazine content could be inputted into a digital TV database and profits shared between the digital TV operator and the magazine on a "per-click" basis. To magazines, digital TV can provide higher readership numbers with no additional cost while enriching the content for digital TV operators. Liu estimates that as long as there are "benefit sharing" systems in place, many media organizations will be interested in such collaboration.

Tapping into big money

When studying the progress of digital TV in other provinces, Liu found that high-end digital TV subscribers (IPTV subscribers) spend an average of 2,500 yuan annually, which equates to 10 years of cable TV fees. For example, there are more than 300,000 household digital TV subscribers in Hangzhou, among which, 80,000 are high-end subscribers. As a result, the revenue from those high-end subscribers is approximately 200 million yuan per year. Given such a high spending power in Hangzhou, Liu reckons the potential in the vastly populated Hunan Province is immense.

But will consumers flock to digital TV as quickly as TBI predicts?

"It will take time," said Liu, optimistic yet cautious in his view. It will take time for audiences to embrace digital TV, as once was the case for cable TV. And while he acknowledged that there would be some difficulties in getting audiences to move from free TV to paid digital, "content will change everything."

Some people say that content rules on traditional television today, but Liu does not agree. In his opinion, most of the content on the 2,000-plus domestic channels tend to be very similar.

But in the digital TV era, Liu said, content will truly be king. The audience will pay if the content attracts them, he said.

This is one important reason why TBI is producing content prior to the distribution of set-top boxes. "We won't launch until the content is substantial and all platforms are in place,"said Liu.

Once demand within Hunan Province has been met, Liu wishes to promote digital TV content nationwide. TBI intends to negotiate with digital TV operators in each province and region and collaborate with them.

"The digital TV project shows great promise given the strength of Hunan TV," he said.

(Xinhua Finance)

DISCLAIMER: The information contained herein is based on sources we believe to be reliable, but is provided for informaional purposes only, and no representation is made that it is accurate or complete. This briefing should not be construed as legal, tax, investment, financial or other advice, and is not a recommendation, offer or solicitation to buy or sell any securities whatsoever.  

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