Inspiration in high definition

IF you want to kick off a lifestyle TV channel that embraces Asia's
rising affluence and sophistication, 2009 is not the best time, not when
the global financial crisis was still an open wound. Yet, Li, Life
Inspired did exactly that, and almost two years later, it has signed up
with more pay-TV stations in this region than has most of its rivals. Li
(pronounced “ell eye”) has its content carried on 11 platforms in Hong
Kong, Indonesia, Taiwan, Singapore and Malaysia, and it plans to add
four or five more platforms in these markets in the coming months. “In
Asia, there are now so many regional and international channels. We
launched during a recession. In 22 months, we are on more platforms than
a lot of our lifestyle competitors,” says Anne Chan, general manager of
LI TV Asia Sdn Bhd, the channel's Petaling Jaya-based operator. The stations that air Li's programmes are Astro
(Malaysia) mio TV (Singapore), Now TV (Hong Kong), Hong Kong Broadband
BBTV (Hong Kong), Indovision (Indonesia), First Media (Indonesia), Aora
(Indonesia), Grovia TV (Indonesia), New TV (Taiwan), KBRO (Taiwan) and
Chunghwa MOD (Taiwan). In contrast, the Asian Food Channel (AFC), which
has been around for over five years, is available on eight carriers.
Launched more than three years ago, BBC Lifestyle is present in Asia via
five broadcasters. [You must be registered and logged in to see this image.] Chan: Star’s entry as majority shareholder paves the way for collaboration in content and advertising.
The
decision to make Li “Asia's first HD (high-definition) lifestyle TV
channel” is a big reason for its ability to distribute content on that
many platforms. Chan explains: “The first-mover advantage actually gets
us through a lot of doors.” Although transmitting in HD is two to
three times more expensive than in standard definition (SD), choosing
the former has worked out well for Li because the broadcasters are
clearly enthusiastic about offering shows in HD. However, it is still a
young market segment. Despite Li's larger number of platforms, its
viewership of between 3 million and 4 million based on a total number of
subscribers of close to one million is dwarfed by the 35 million
viewers that AFC claims to have. AFC's content is in SD. HD takes off Nevertheless,
there is reason for the Li team to be optimistic. The demand for HD
content is swelling, and the channel hopes to have two million
subscribers next year. According to a May 2011 report by Media
Partners Asia, a provider of information services, subscribers with HD
pay-TV reached 12.4 million last year, and will rise to 45 million by
2015 and 81 million by 2020. “Excluding China and India, HD penetration
of digital pay-TV subs across the region reached almost 30% in 2010 and
is likely to grow to approximately 60% by 2020, driven by continued
growth in Australia, Japan and Korea as well as new growth in Southeast
Asia,” says the firm. Li has also made the right bet by adopting
MPEG-4 technology, which allows it to halve its use of satellite
capacity. “We were able to launch the channel at a fraction of the cost.
This is the case even now,” says Chan. She points out that Li
has relatively low operating costs because it has a lean team that
operates out of Malaysia, instead of Hong Kong or Singapore, like most
other Asian channels do. Another avenue for controlling costs is to team
up with suitable partners to produce original content instead of going
it alone. Now Li has a new wellspring of ideas and possibilities with the emergence of Star Publications (M) Bhd as its majority shareholder. On Tuesday, Star inked a deal to take up a 51% stake in LI TV Holdings Ltd, LI TV Asia's parent company, for RM35mil. The remaining equity is held by Juita Viden International Ltd, a member of the Juita Viden Media Entertainment Group, a TV programme distributor in Malaysia. Star's entry as majority shareholder, says Chan, paves the way for collaboration in content and advertising. “With
TV combined with print, we have the best of both worlds. I look forward
to working very closely with Star's editorial team. They know the
content, and we know production. We can merge both. Magazines and
dailies know how to tell a story. What we can do is turn those stories
into shows,” she adds. She points out that Star and Li can offer
large lifestyle advertisers (such as Rolex and Mercedes) advertising
packages that cover both print and TV. “That's a very compelling
proposition,” she says. Getting the right partners On
the revenue end of business, Li relies significantly on the number of
pay-TV subscribers with access to its content. It also gets income from
advertising. “As a growing channel, initially you're looking at 70:30 in
favour of subscription,” says Chan. To determine its
subscription income, the channel typically has two kinds of contracts
with the platforms. In the revenue-sharing model, the channel receives a
percentage of the revenue from the pay-TV operator based on the number
of subscribers. Chan explains: “If the retail price is say, US$21, we
split it 50:50 maybe. We get a cut.” In the other arrangement,
the channel is guaranteed a minimum base fee. When the number of
subscribers rise to a certain level, the channel will earn revenue based
on the number of subscribers. “Normally, the big platforms offer
minimum guarantees because they want to secure you against their
competitors, so that you won't go to other partners,” adds Chan. But
it is not always about the money. She says: “We also look at the
strengths of the partners. Are they trustworthy? Do they get' our
channel?” Such questions will be asked again and again over the
next several years, as Li expands its reach. For its second phase of
growth, the channel is looking at countries such as Thailand, China,
Vietnam, the Philippines, South Korea, Japan and Australia. In places
such as China, South Korea and Japan, the content will have to be highly
localised and that may mean tying up with local partners and even
launching new channels. But for now, Li is focused on its
existing five markets. “Our strategy is to fully penetrate these markets
and we aim to consolidate within these markets in the next six months
to a year. We want to market it right, basically to let people know
about the channel. In Malaysia, for example, we hope to achieve higher
awareness so that everybody knows about Li,” says Chan. It is not
merely awareness; it is branding. She adds: “We're still at the
beginning. I would like Li to be a successful lifestyle brand, that when
people talk about inspired living, they say it's very Li'. I've yet to
see a TV channel that becomes almost like the Apple brand. Apple is a strong brand. People get excited about it. Nike
is a strong brand too. I would like people to look at Li as more than a
TV channel. It's a concept. It's cool. People would go, I'm very Li.'”