OTT taking more entertainment revenue in Hong Kong, China

Also, according to PwC's latest entertainment and media forecast, total digital revenue is growing at a 5.1% pace in Hong Kong and a 7.2% clip in China.

Special programmes by Hong Kong OTT service provider Viu in anticipation of the World Cup.
Special programmes by Hong Kong OTT service provider Viu in anticipation of the World Cup.

Total digital revenue (advertising plus entertainment) in Hong Kong is expected to reach US$5.8 billion by 2022, growing at a compound annual growth rate (CAGR) of 5.1%, according to PwC’S Global Entertainment and Media Outlook 2018-2022, released yesterday.

Total entertainment and media revenue is expected to reach $343 billion in China by 2022, growing at a CAGR of 7.2%. In 2017, that category amounted to $242.16 billion, with digital revenue taking up almost 60% of the share. The figure is unsurprising, given that China is the second largest market globally after the US for internet advertising, with total revenue worth $45.7 billion last year. That category is expected to grow at 11.8% CAGR through 2022.  

Noting the vast difference between the two markets, Cecilia Yau, entertainment and media leader with PwC Hong Kong, noted that the density of Hong Kong contributes to ongoing effectiveness of traditional mass media.

The projected industry growth across for Hong Kong between 2017 and 2022 has been readjusted to 2.1%, down from 3.0% last year and in comparison to 4.4% globally. The top segments in the CAGR forecast for Hong Kong are OTT video (14.1%), internet advertising (9.9%) and video games and esports (4.9%).

Yau attributed the prominence of OTT to the rapid growth in the local scene following the convergence of content distributors with platform channels. The OTT segment, which only surfaced in Hong Kong two years ago after the global launch of Netflix, had arevenue of $60 million in Hong Kong last year.

Wilson Chow, global, China-Hong Kong technology, communicatons and telecommunications leader, PwC (left), and Cecilia Yau, entertainment and media leader, PwC Hong Kong.

“The paid model is not dying, it’s only the transmission medium that has been changed to capture the taste of the new generation,” said Yau.

Likewise, OTT is seeing healthy growth in China, with revenue reaching $2.4 billion. PwC noted that the Chinese market is characterized by an organic structure that prioritises subscriptions over ad-based revenue. Tech giants Baidu, Alibaba and Tencent account for 60% of the market with their OTT platforms iQiYi, Youku Tudou and Tencent Video, respectively. Revenue models over the next five years will be shifting from free-to-air to premium, with the platform owners producing more content (just like Netflix has done), while incremental services will add $2.7 billion to the revenue.

Virtual-reality entertainment is also expected to grow at an impressive clip.

Related Articles

Just Published

1 day ago

Dentsu organic revenue declines 2.4% in 'encouraging...

Organic revenue fell 0.9% in Japan and 3.5% internationally in the first quarter, but overall underlying profit grew 20.8% as margins improved.

2 days ago

Singed by antitrust fine, Alibaba posts first ...

The tech giant posted an operating loss of RMB 7.6 billion ($1.1 billion) due to a RMB 18.2 billion ($2.78 billion) fine levied by China’s market regulator.

2 days ago

Thai mom-and-pop shops get a free geo-targeted boost

With help from Dutchmill Group and Wunderman Thompson, more than 200 micro retailers are starring in their very own ads and enjoying higher revenue. This delightful initiative has made Ad Nut's week.

2 days ago

Campaign Crash Course: Tips for marketers to tap ...

As marketers look for more effective ways to target consumers, gaming is rapidly emerging as a great way to catch their attention. Here's how marketers can tap this opportunity.