ERA Group (
CyberWorks will initially invest US$10 million to develop and broadcast programs using high-speed Internet links, ERA Chairman Chiu Fu-sheng (邱復生) said in an interview. CyberWorks owns 55 percent of the content venture and a quarter of the company developing online broadcasting technology, he said.
The expansion of ties with ERA could be a key element of CyberWorks' soon-to-be announced consumer Web strategy, as the company, controlled by Richard Li (李澤楷), seeks a viable business model for unprofitable multimedia Web site Network of the World.
"Pay-TV is the way ahead for CyberWorks," said Chris Cheung, an investment analyst at Worldsec International in Hong Kong. "Unlike NOW, a strategy based around pay-TV will be easily understandable and marketable."
Improving interactive entertainment service could boost use and improve the chance of success of Li's plan to charge fees for Network of the World, which now loses money as an advertiser-supported site providing games, music and sports programs.
The second ERA venture will use Web-streaming technology to compress and repackage video programs in a way suited for wideband transmission, Chiu said. CyberWorks will send out programs developed by ERA and other producers.
"ERA, as a company, is a good choice for us," said Raymond So, executive vice president of CyberWorks in Taiwan. "It has a content niche in this region and good at content aggregation," putting together programs for the Web from other mediums.
Slowed Burn CyberWorks, which lost US$886 million last year, has vowed to keep business-to-consumer Web losses to US$200 million this year, and is reducing spending.
Earlier this year, CyberWorks canceled plans for a Taiwan production studio to employ 300 workers to develop a Chinese-language NOW service, So said. Last week, the company scrapped free e-mail and Web-site hosting on another Taiwan Web.
In February, CyberWorks announced plans to fire staff at the London office it opened less than a year ago, saying demand for broadband service outside Asia lagged forecasts. The UK office handles programming for the Web entertainment service.
"If CyberWorks doesn't water down Web-related investments, investors will be displeased." said Billy Chan, who manages more than US$4 billion in Asia ex-Japan for Invesco Asia Ltd.
"The market still cares about the high burn rate of the company." Broadband Boom Still, ERA's Chiu said broadband access will help revive slumping demand for Web services by provide Internet access at speeds at least three times faster than phone lines connections.
CyberWorks owns a 7.5 percent stake in ERA Communications, investing US$50 million last year after failing to link up with GigaMedia Ltd (
The ERA ventures may help CyberWorks expand NOW regionally.
In addition to ERA Communications, ERA Group owns half of satellite television broadcaster TVBS and a baseball team.
CyberWorks is also seeking a content partnership with Television Broadcasts Ltd, Hong Kong's biggest terrestrial broadcaster, which has a library of more than 80,000 hours of Chinese-language programming.
"Broadband transmission will make Internet services, especially video streaming, feasible," Chiu said. "The stumbling Internet industry will receive a new boost with broadband."
Shares in CyberWorks have lost almost 90 percent of their value since their peak in February 2000. The stock declined 1 percent to HK$2.425 today, their lowest level since May 3, 1999.
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