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.
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.’”
