Li changes tack for NOW
BEN KWOK
Pacific Century CyberWorks content provider Network of the World (NOW) will move towards a subscription-based service to help generate revenue, according to chairman Richard Li Tzar-kai.
The company fears the advertising revenues that it depends on now will not be sufficient in the future.
NOW - which began in May last year - delivers entertainment, sport, documentary and other visual content over the Internet.
Mr Li yesterday assured analysts - many of whom are worried about NOW's cash-burn rate - that the broadband content provider still had a viable business model.
"Scale-back is our philosophy," said Mr Li, referring to NOW, "because we expect advertising revenues will be scarce, or nil.
"Wherever it is possible, it will be a subscription-based and encryption-based service."
With annual capital expenditure capped at less than US$200 million, Mr Li said CyberWorks' business-to-consumer unit, whose major component is NOW, would break even in less than four years.
He said NOW was still committed to its content production centres in London, Japan, Hong Kong and India, despite the global collapse in Internet investment.
But many industry watchers have criticised NOW, and company officials spared just a few words about its development at Wednesday's conferences for analysts and the media.
Asked whether Mr Li would take back NOW from his CyberWorks flagship, executive director Jeff Bowden denied this and said it would take away the chance of the creation of shareholder value.
Reflecting the company's guidelines for future Internet investment, Mr Li said any proposed ventures must be valued internally at US$2 billion to US$3 billion to be worth doing.
"If we cannot build a business that is worth US$2 billion to US$3 billion, then we should get out of it and not do it," Mr Li said.
"So the fact that we are still aiming for it [NOW] and pushing for it, means there's a strong reason for that."
A detailed outline of NOW's restructuring plan will be disclosed in 90 days.
CyberWorks, which has reported a loss of HK$6.9 billion for last year, had a negative equity of HK$14.1 billion due to the goodwill write off in acquiring HKT.
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