Now TV, Hong Kong’s most popular pay-TV service, has embarked on its long awaited journey to start selling channels in packs rather than a la carte, trialling genre-based bundles with new subscribers in January before introducing them to all subscribers last week.

A la carte made sense when Now TV – an IPTV service run by local telco PCCW – made its debut with just 23 channels in 2003, but the proposition became increasingly cumbersome and inefficient as the portfolio expanded, reaching more than 190 channels today.

Simpler packaging, however, is just the first step in a bigger campaign to re-articulate the value of pay-TV to consumers in Hong Kong, where high broadband penetration has heightened competition for eyeballs between legal and illegal services.

“We want to make sure all the content we have is distributed far more broadly than it has been before,” explains Tham Loke Kheng, EVP of pay-TV for PCCW’s multimedia and entertainment arm, PCCW Media.

“We need to get much more of it within the homes, build the stickiness to the breadth of content and continue to drive that usage with all the features we have, and the new features we will be rolling out.”

Tham also plans to launch a ‘paradigm-shifting’ user interface later this year, supporting wider channel reach with improved content discovery and recommendation.

A DVR upgrade will follow later in the year, comprising more channels (from 50 to 75), as well as a hard-disk offering to replace the current network-based service.

At the same time, Tham is also pushing for more HD channels as well as SVOD rights, including authenticated multiscreen viewing for existing subs as well as OTT offerings for new customers, adding to existing standalone services anchored around football and kids content.

“If we can demonstrate we are worth paying money for versus completely free options, and there are many ways to do that, then I think you take care of your competition,” she tells Media Business Asia.

Pirated content is arguably the biggest threat facing all of Hong Kong’s pay-TV operators, which also include cable incumbent i-Cable, majority owned by local conglomerate Wharf, and a recently revamped satellite and IPTV service, TVB Network Vision, backed by free-to-air leader TVB.

For Tham, it’s a battle over perceived value, with Now well placed to take the initiative, marshalling resources behind a better TV experience, and communicating that to pay-TV and non-pay-TV subscribers alike.

Migrating away from an a la carte offering will help Now make a bigger impact with its marketing, she notes.

Channel partners that used to be in direct competition for subs can now pool their resources, while Now can reallocate below-the-line forays focused on specific channels into a more cohesive above-the-line message geared towards the entire household.

“We are going to be a lot more visible,” Tham says. “With a la carte, you are focusing on very targeted vertical segment marketing. With the repackaging, we have a proposition that really engages the whole family, that recalibrates the value proposition.”

Consumer research indicates that Now is seen as poor value within the mass market, but Tham is optimistic that the new packaging will prompt more people to sign up.

Consumers are also dissatisfied with the quality of viewing provided by third-party set-top boxes that connect TVs to online streaming services, she says, making it a good time to highlight the appeal of user-friendly curated services.

“The market seems to be saying back to us that there is an opportunity,” Tham observes. “I have to find a way to unlock that opportunity, whether it is marketing engagement, sales engagement or customer engagement. We are doing a lot on that front.”

Last year, Now TV’s installed subs base reached 1,285,000, a 4% year-on-year gain, with Arpu also up by 4%, from HK$187 to HK$195 (US$24 to US$25) per month.

Topline revenues for PCCW Media Group rose by 7% to HK$3,231 million (US$414 million) although Ebitda tumbled 11% from HK$508 million to HK$482 million, reflecting costs of Premier League football, as well as investments in music, OTT and free TV services.

Year-on-year, Ebitda margins for the media business contracted from 17% to 14%.

Early indications suggest that Now's new channel packs are encouraging people to spend more, pushing up per subscriber revenues, although growth in the overall base will bring in lower-Arpu customers too.

Increased viewing will also lift ad sales, another revenue push for the operator, which tends to attract ad spend for its audience profile, rather than ratings.

Last December, Now announced that it had commissioned research agencies CSM and Kantar to provide data on individual rather than household viewing to bring more advertisers on board.

Tham is preparing to release that data too, anticipating a bigger share of ad spend this year ahead of a more sustained lift in 2016, following annual spending commitments by advertisers.

New OTT services can also bring new customers into the fold, with a new team in place to devise new products and market these to individual customers, although Tham anticipates most revenue gains coming from set-top box based services for the home.

“All of us believe we should be running after double-digit growth,” she says.

Channel providers have also signed new contracts, moving to cost-per-subscriber deals from a mostly revenue share model in the a la carte regime.

Converting the whole subs base to Now’s new packs will take time however, at least until the end of 2016, although Tham is also prioritizing low engagement subs who don’t watch much or subscribe to many channels at present, as well as those whose contracts are about to expire.

“The base is so diverse,” she says. “This will probably complete within two years.”