Terrestrial TV has never before made such compelling viewing. The major broadcasters in Hong Kong and Singapore are reaching deep into their pockets to fund top-name game shows, dramas and movies that pull in the punters.
Advertisers, meanwhile, are being offered far more for their money.
But observers and industry players say this renewed focus on wooing viewers and advertisers is not down to competition from the growing number of pay-TV operators in Asia, nor even the threat of broadband broadcasting in the future. Rather, it is a battle with each other for market share, and in some cases, a determination to win back viewers who have become so disenchanted that they have taken to public protest in an effort to bring about change.
In Singapore, the contest is particularly intense. After years with just one free-to-air broadcaster, MediaCorp, the Government last year granted Singapore Press Holdings the right to operate as a terrestrial station.
The industry stalwart, which had been comfortably raking in about US$300,000 a year in advertising for its five channels, according to Nielsen Media Research figures, very quickly found itself up against a nimble, more creative rival. At the same time, the pay-TV market has been expanding, and Singaporeans now have up to 40 pay channels to choose from.
Forrest Didier, managing director Asia-Pacific with Nielsen Media Research, says competition from pay-TV is bound to have an impact on terrestrial offerings in Singapore, as it has done around the world.
"A lot depends on the quality of the programming. If the viewers are happy with the programming on free-to-air, then free-to-air is attractive from an advertiser's perspective if you want to deliver to a mass audience with one campaign."
But Manpreet Singh, managing director of MindShare Singapore, says that while pay-TV is a factor, it is competition between the old and new terrestrial players that is primarily driving change on the box. According to Manpreet, newcomer, SPH MediaWorks, has already snatched more than half of MediaCorp's prime-time viewers with its Mandarin-language Channel U, which launched in May 2001.
Channel U offers Hong Kong and Taiwanese movies, along with popular reality infotainment shows and other big-rating features. And SPH's alter ego as a print publisher has allowed it to bundle advertising packages on both Channel U and in its Chinese-language print titles.
Manpreet says MediaCorp has responded by offering advertisers production facilities to bring new clients into TV. MediaCorp has also invested heavily in big-name game shows, including a just-launched local version of Wheel of Fortune. And the fight looks set to intensify, with SPH's English-language Channel i beginning to take off with its nightly menu of movies and strong series titles, giving MediaCorp another reason to shudder.
"The beneficiaries are the consumers, says one industry analyst. "I grew up watching movies from the West a few times a year, and those films were repeated and repeated. Now we have brand-new ones all the time and if you talk to anyone in Singapore, they'll say the choice on TV has never been better, he says.
Perhaps that explains why spending on terrestrial TV advertising is growing so robustly; Nielsen says it grew 11 per cent last year in Singapore, at a time when total adspend grew just three per cent. Spending on pay-TV advertising in Singapore is not monitored, butestimates put it at just five per cent of total television spend.
"If cable and satellite operators bring in new and exclusive programming they will get a share of the market - we saw that during the World Cup," Manpreet says.
With a line-up comprising international channels such as Discovery, BBC and CNN, pay-TV operators cannot be flexible with their advertising packages.
In some cases, they are allowed only two minutes advertising time per hour. Hence they can do little more than offer basic spots.
It is a similar story in Hong Kong, where changes in programming and advertising strategy are also taking place. Most observers agree that the catalyst for change lies somewhere other than in the city's brewing pay-TV war. Taiwan-based pay-TV operator Pacific Digital Media (Hong Kong) has just launched, with a plan to charge about one-third of the subscription fee of the market-dominant i-Cable. Yes Television soft-launched its Hong Kong pay-TV services in February this year and charges roughly the same as i-Cable. Observers say price cuts by Yes and i-Cable are inevitable, especially when a fourth player, Galaxy, is up and running. But there is not expected to be a direct knock-on effect to terrestrial TV's offerings to either advertisers or viewers.
One Hong Kong pay- TV insider says of competition with the terrestrials: "Our markets are completely different. They're targeting the majority Chinese market and we're mostly targeting English-speakers. The battle for them is not to put themselves in a position of competing with cable and satellite channels but to increase their exposure among their specific markets. They're under public pressure to improve."
Viewers, particularly those who don't speak Cantonese and have no free-to-air choice other than the two English-language channels, Pearl and World, have been increasingly vocal about their dissatisfaction. The letters to the editors pages of local newspapers have been a common outlet for frustration - especially with the vast number of programming hours devoted to horse-racing in Macau.
It is worth noting, however, that it is not just terrestrial channels that have come in for criticism. During i-Cable's hugely-successful broadcast of the World Cup, there were countless complaints about the style of its studio coverage.
K.K. Tsang, managing director of MindShare Hong Kong, says that if any terrestrial channels are going to be hurt by the growth of pay-TV, it will be the English-language offerings that suffer first. Tsang says guaranteed CPRP (cost per rating point) packages are being offered for the first time, but ads from each station's Chinese channels are being used as fillers on the English channels when no English ads are allotted.
Vincent Lam, vice-president (programme) at underdog station, ATV, agrees it is logical to expect English channels to be worst affected by pay-TV, but says there is no sign yet of either the English or Chinese channels being hit.
"We have recorded profits for the last two consecutive years and our ratings are very steady over the years. Our competition has been, and will still be in the foreseeable future, the other free-to-air TV station, namely TVB."
TVB is a formidable rival, taking 80 per cent of advertising revenue and viewers. It has what Andras Vigh, general manager of Zenith Hong Kong, calls a "bullet-proof strategy to advertising. It takes payment a year in advance and calculates rates based on the previous year's spend. As such, advertisers face a huge disincentive to cut back for a year, even in a recession.
ATV has a similar policy on advertising, although without the high ratings of TVB to back it up. Vigh says ATV has recently brought in programmes that rate well, but that once a particular show is over, viewers switch straight back to TVB. "The consistency's just not there," he says of ATV.
TVB's head of external affairs and programming, Stephen Chan, says: "We used to rely a lot on blockbuster movies on our English channel, but we've changed our strategy mainly because of the growth in VCD and DVD. Also, the pay-channels have a lot of movies so people's perceived value of blockbusters on free-to-air has become smaller, Chan says.
As with programming, advertising is also evolving. "We're more flexible now in a sense because we've responded to the advertising market's needs.
People in the old days just wanted to buy spots, now advertisers want something more creative, something tailored to them, he adds.
Chan says the impact of pay-TV has been negligible. "But competition, however small, is still competition, and we can try to improve our programming to maintain our share and at the same time find new sources of revenue."
Nielsen's Didier says that in both Hong Kong and Singapore, the terrestrial world has been jolted by the effect of the World Cup stealing viewers in vast numbers.
Didier says improvements in programming on terrestrial channels are bound to result as pay-TV takes a stronger grip. But he adds that there will always be room for mass broadcasting, particularly the Chinese-language dramas that are so popular in both cities, with families who like to watch television together. "I think the more quality programming you have, it will drive programming quality up, and the better your programming, the more viewers you'll have, and the more viewers you have, the more attractive you are to advertisers, Didier says. "The whole industry has potential to grow."
