Chunghwa Telecom Co (CHT, 中華電信), the nation’s largest telecom operator, yesterday said it has signed an agreement with US video streaming giant Netflix Inc to offer ultra-high-definition, or 4K, content for its Internet TV subscribers by February at the earliest.
Chunghwa Telecom announced the tie-up at a ceremony to celebrate the company reaching its target of 2 million subscribers.
That means its media-on-demand (MOD) business has reached an economic scale and is finally on track to turn a profit.
“We hope the MOD would eke out a profit in the second half of next year,” Chunghwa Telecom chairman David Cheng (鄭優) told reporters.
Turning around the video streaming and Internet TV business has been a priority since Cheng took office in 2016.
The MOD business has lost NT$31.5 billion over the past 13 years.
The company has made the “impossible mission possible” by adding 700,000 new subscribers in more than a year, Cheng said.
It began to see substantial subscriber gains in summer when it won exclusive rights to air the FIFA World Cup.
“Our next step is to further enhance our content. The collaboration with Netflix is an important part of this effort,” Cheng said.
“We believe the introduction of Netflix content would help boost the MOD subscriber number, given its rich content library,” he said.
Longer term, the two companies could deepen their cooperation to produce original titles together, Cheng said.
“It is natural to take that step, but as of now, our cooperation is still in the initial stage,” he said. “This is a win-win situation.”
The collaboration with Chunghwa Telecom gives Netflix, which has more than 130 million subscribers worldwide, access to MOD’s viewer base.
With new titles from Netflix and new value-added services to come online next year, Chunghwa Telecom has set an “aggressive target” of increasing MOD’s average revenue per user (ARPU) by 20 percent, Kao Wu-sung (高武松), vice president of Chunghwa Telecom’s Digital Convergence Business Department, told reporters.
Increasing advertisement income would also provide a boost to ARPU, Kao said.
Chunghwa Telecom is developing a 4K set-top box supporting Netflix’s standard and technology, Kao said. That would give MOD subscribers a better viewing experience than users streaming Netflix on smartphones or laptops, Kao said.
Cheng again urged the government to relax rules to allow Chunghwa Telecom to compete with its local rivals in a fair way.
The company is only allowed to stream movies, TV shows and other content from channel operators. It is banned from creating its own streaming packages.
Cheng said those restrictions are major obstacles to MOD making a profit.
Local rivals with half the size of MOD’s subscriber base have been making generous profits, while the MOD is still making losses, he said.
Commenting on the Ministry of Culture calling on Chunghwa Telecom to create a “national team” in the over-the-top (OTT) video market, Cheng said the company would seriously consider it.
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