Analysis: What are the challenges and opportunities for Disney+ in Hong Kong?

The Walt Disney Company will launch in Hong Kong, Taiwan and South Korea in November 2021. Audiences in these markets can access a wide selection of films and episodes of content from Disney, Pixar, Marvel, Star Wars, National Geographic and Star, which includes a growing stable of local and regional content.

The entry of Disney+ into Hong Kong will be one riffed with competition. In fact industry players MARKETING-INTERACTIVE spoke to largely say that Disney+’s entry into the Hong Kong market comes rather late, and an earlier entry would have enabled the platform to tap into the “golden time” of content when consumers were cooped up at home.

Scotty Ho, strategy director of Wavemaker said that launching in November 2021, will be a big challenge for Disney+ as it will have to compete with the well-established players who were already successful in luring subscribers during lockdowns.  While the launch of Disney+ could attract a group of Marvel fans and potentially family with kids, the size of these target groups in HK may be limited.

Currently, in the streaming space, Disney+’s biggest competitors in Hong Kong would be the likes of Netflix which launched in 2016, viu which established its presence in 2015, and myTV Super which has been around since 2016. A study done last December 2020 by Omnicom Media Group Hong Kong, found that respondents in Hong Kong spent 3.5 hours on Netflix, 3.2 hours on myTV Super and 2 hours on Viu. 

The study titled, Hong Kong's Video Content Viewing Landscape (Wave V), also said that Hongkong-ers spend approximately with 23 hours a week on streaming platforms, while the number reached 67 hours when it comes to videos on any platform.  The survey also unveiled that respondents in Hong Kong spent 3.5 hours on Netflix, 3.2 hours on myTV Super and 2 hours on Viu. 

Sharing findings from Havas, Duncan Bell, head of strategy at Havas Hong Kong said the entry of Disney+ is not going to cause a huge increase in video streaming adoption, but rather Disney+ will need to fight for the eyeballs of that the 15% of the total audience who will inevitably have a streaming platforms.

To really stand out and grab the attention of consumers, Bell said advertising is definitely an avenue Disney+ must explore. If Disney+ wants to grow the streaming market in Hong Kong, build market share quickly and then keep customers watching, making a big splash at launch in November and keeping momentum afterwards during the important family occasions such as Christmas and Chinese New Year holidays is key, he explained.

Bell also added that advertising will allow Disney+ to distinguish itself from its closest competitor Netflix which largely banks on digital advertising rather than offline advertising “Netflix has zero offline advertising presence in Hong Kong, and has essentially saturated its growth via digital.  If Disney+ really wants to make a fast inroad into Hong Kong then dominating offline share-of-voice is an easy open goal for them. And despite what many people say – mass media advertising works,” said Bell.

Opportunities

Despite challenges ahead, Disney+ still has an advantage which is its library of exclusive Marvel TV series content - which it has very cleverly kept close to its chest. In April this year, Disney shut down the majority of its TV channels in Hong Kong in a bid to focus on and grow its streaming services. Quoting The Walt Disney Company, Channel NewsAsia reported that the consolidation of its media networks business is part of the company's "global effort to pivot towards a direct-to-consumer-first model and further grow" its streaming services.

Currently, Hong Kong audiences do not have too many channels through which they can access Marvel content. As such, the arrival of Disney+ can certainly mitigate these needs. When asked how Disney+ can set itself apart in Bell said, “Content. Content. Content. Disney+ has the biggest franchises in Marvel, Star Wars, Pixar and a decade long back catalogue all under one roof. In terms of the highest quality entertainment content, nobody can match Disney+.”

Meanwhile, Ho suggested that Disney+ can work on three areas to set it apart from competitors. The platform would need to be able to offer better original content, higher quality video content, and affordable subscription plans are the three key areas that create brand consideration and preference for a paid video streaming service.

“The highly anticipated Disney+ exclusive Marvel TV series content, that HK consumers had no access before, is one of the big differentiations and unique edge of its services,” Ho said. She elaborated that  Disney+ also has a strong advantage to take its services and consumer experiences to the next level. Leveraging the high affinity groups of the different Disney+ iconic brands, Disney+ can extend the services and experiences across on-platform and off-platform.

For instance, Disney can set up fans club or community on specific topics with chat rooms, research libraries and exclusive events and collectable items. “These could help to increase attachment and deepen the engagement with Disney+,” said Ho.

Doris Kuok, head of strategy, media, dentsu international Hong Kong, commented, "Many of Disney+’s key attractions are heavily integrated into Disney’s popular cinema releases. Disney+ offers content for fans to 'complete' their viewing experiences. For example, Marvel fans often feel the need to watch the previous Marvel series before they go to upcoming Marvel cinema releases. This could be a unique offering that no other competitions can provide. However, to attract subscribers beyond existing fans, Disney+ will have to strengthen its content that are not dependent on the already popular franchises."

When the launch of Disney+ in Hong Kong was first announced, Luke Kang, president, The Walt Disney Company Asia Pacific said the response towards Disney+ across APAC, in general, had exceeded the company's expectations. This is because consumers sought diverse entertainment content and were drawn to its portfolio of brands and franchises. To prepare for its  business in the Hong Kong market, the company also started ramping up its operations, appointing Winradit Kolasastraseni as general manager, direct-to-consumer for Hong Kong, Taiwan and Southeast Asia (excluding Indonesia), and general manager of the Walt Disney (Thailand) company effective 1 June.

Kolasastraseni has since been spearheading the company’s growth in the dynamic direct-to-consumer space, and will lead business teams across the region to deliver Disney’s storytelling to consumers in the evolving ways that fans and families around the world prefer to experience Disney’s content.

Pricing strategy

Hong Kong consumers are known to be price sensitive value seekers. Bell explained that one way to acquire new users would be to enable flexibility and low purchasing barriers in a bid to win the audiences' hearts. “Rather than having to fix-in for a two year contract or having to buy everything all at once, Disney+ can offer a one-month subscription plan or allow audiences to pay per movie," he said.

Cutting down barriers of purchase and cancellation, such as conversations with sales reps or forms can also lure convenience hungry consumers, Bell added.

Citing a GroupM report, Ho said 29% subscribers are looking for  control over the content to watch and when to watch. Meanwhile, 28% prefer fewer or no ads that disrupt their watching experience; 24% liked to access a wide variety of video content; and 24% quality of video content and video itself are both important.

"For Netflix, the monthly subscription fee is equivalent to a cinema movie ticket, which is affordable for the majority of Hong Kong consumers. They will be willing to pay if Disney+ could provide such entertainment and experiences to them," Ho said. 

The future of traditional TV stations

The Video Content Viewing Landscape (Wave V) study also unveiled that Hongkongers were consuming more content on streaming platforms (23 hours per week) than free TV (21.4 hours).

Ho added that with more streaming options, there will no doubt be a shift of viewership from the traditional free-to-air broadcasters to the paid video streaming provider, particularly among the younger segments who are likely to be attracted by the wide variety of content. “Quality and experience are the key offerings from the paid video streaming services, it will drive a more intense market competition for quality of content,” she said.

As such, traditional TV stations need to increase its standard and quality of the content and program to survive.

Kuok believed that the share of time spent in viewing traditional local broadcasters will further decrease. "With more and more viewers getting control of their viewing time and content, appointment viewership of traditional broadcasters will continue to drop," she explained. 

Bell also agreed adding that traditional TV stations, such as TVB and ViuTV (the terrestrial version of Viu streaming), have to invest more on customer service and focus on what customers want, not what is the easiest and cheapest for the broadcaster to deliver.

"In addition to customer service, they’ll have to ensure they keep the quality of their content as high as possible. While TVB or ViuTV can’t compete with the global budgets of Disney+ or Netflix, they have the on-the-ground knowledge of what Hong Kong viewers find engaging and relevant and will have to continue to leverage that expertise," Bell concluded. 

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