Costs set to shrink ambitions at NOW
Wednesday, July 4, 2001
CAROLYN ONG
Network of the World (Now), Pacific Century CyberWorks' converged television and Web service and the core of Richard Li Tzar-kai's dream of becoming a broadband Internet powerhouse, is expected to be integrated with PCCW's other consumer content portal - Netvigator - in a further attempt to cut escalating costs.
The restructuring, which will be announced this evening, is also expected to affect Now and Netvigator staff in an effort to achieve better efficiencies. However, lay-offs are not expected to take place before August.
The changes represent a drastic cutback in Mr Li's initial ambitions for Now - originally intended to be a broadband Internet portal where consumers from all over the world could access original interactive TV and Web content in multiple languages over broadband connections with revenue coming from advertising, e-commerce and subscriptions.
"Now was originally supposed to be a regional play and it expanded to become a global play, and now it's probably becoming more of a Hong Kong play. It certainly hadn't met the potential Richard meant it to be," said Francis Cheung, telecommunications analyst at Merrill Lynch.
Mr Cheung added that PCCW's move to cut costs made sense. "Figuring out what to do before making future investments is wise," he said.
When Now was first launched in June last year, it was meant to bolster the newly acquired broadband network built by Hong Kong Telecom (HKT). Now has offices in London, India, Japan and Hong Kong.
PCCW spokesperson Joan Wagner told Time Asia in March last year that the merger with HKT would boost PCCW's investment in Now.
"The great thing about HKT is that they've got this network. But no one subscribes because they basically don't have much content going down the pipes," said Ms Wagner.
A year later, it is apparent that broadband alone is not enough to give Now the mass audience it needs for advertising dollars to come through.
One hurdle for PCCW is the pace of broadband growth in Asia, which is steady but small. Now's reach, distributed through satellite, cable and Internet, is small due to the low number of broadband users in Asia.
According to Merrill Lynch, there are just 8.8 million broadband users in Asia, with Korea taking most of the pie at 5.8 million users. There are 440,000 users in Hong Kong, according to Hong Kong's Office of the Telecommunications Authority. Merrill Lynch predicts 14.6 million broadband users in 2002.
PCCW has not yet revealed Now advertising and user figures.
According to data from Internet metrics firm Iamasia, Netvigator.com was visited by 675,000 home Internet users in Hong Kong during April, which corresponds to a home-audience reach of 31.8 per cent.
Steve Yap, director at Iamasia said Netvigator consistently reached the top 10 of Hong Kong content sites.
"Now.com did not attract enough visitors to register on our radar. It achieved less than 2 per cent reach during the month," said Mr Yap.
Since December, the London-based service has embarked on a different strategy moving from being a producer to an aggregator of content.
The company laid off 20 of 30 Now staff in London that month and announced that spending on broadband initiatives this year would be halved from the US$400 million spent last year.
According to a source in PCCW, the company quietly laid off its small four-person English-language content team based in the Lan Kwai Fong office.
In March, PCCW announced that Now would be moved to a subscription-based service to help generate revenue.
Mr Li told analysts and reporters then that "scale-back is our philosophy because we expect advertising revenues will be scarce or nil".
Mr Li promised then that Now would break even in less than four years.
Many promises made by Michael Johnson, the former head of Now and the man who first pitched the concept to Mr Li, were never realised. Mr Johnson, who at one point held the title of executive creative director at PCCW, was removed from the division in December. According to a report in Digital Asset, Mr Johnson was re-posted from London to Hong Kong to work on "migrating the English Now to Asian language models".
It is not known if Mr Johnson is still employed by PCCW. |
