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Financial Secretary


Entertainment Goes Beyond Boundaries with Web3

Voyaging in the virtual world, and interacting, adventuring and exercising with comic characters, or having your avatars dressed in glamorous design from globally renowned fashion designers on a runway – these brand-new experiences, combining the reality and the virtual world, are not only injecting new excitement into our leisure life, but are also creating new economic values with enormous business opportunities.

The application and evolution of innovation and technology (“I&T”) applications are one of the major locomotives for the rapid expansion of the entertainment industry in recent years. Empowered by digital technology, the digital entertainment (or “digitainment”) industry is bringing immense potential to the economy. Some studies estimate that the global market for online entertainment will expand from USD 184.2 billion in 2021 to USD 653.4 billion in 2027, with an annual compound growth rate of 21%.

I delivered a speech at the opening ceremony of the 2023 Digital Entertainment Leadership Forum last Friday.

In the past decade or so, the fast popularisation of and continuous improvements to mobile Internet and smartphone technologies have given rise to the exponential growth of music and video streaming, social media platforms and mobile gaming. Going forward, the next wave of breakthrough will likely be powered by Web3 and blockchain technologies. Many entertainment giants around the world are now investing resources in areas such as non-fungible tokens (“NFT”), GameFi, Play to Earn and immersive entertainment.

A couple of days ago, Cyberport organised the three-day Digital Entertainment Leadership Forum with the theme of “Power Up! When Entertainment goes Beyond ‘3oundaries’”. Some 90 speakers from more than 30 countries and regions shared how digitainment could bring new experiences for art, education, sports and living in the Web3 era, as well as the relevant applications and opportunities of Web3 in daily lives. Over 3 500 people participated in the Forum physically and online, showing the vibrancy of digitainment business in Hong Kong.

The Forum is also one of the highlights of the “Happy Hong Kong” campaign. With elements such as Augmented Reality games, smart sports walls, motorsport stimulation and application workshops, as well as snack booths with local characteristics, it was a great place to go with relatives and families at weekend.

The Forum is also one of the highlights of the “Happy Hong Kong” campaign. Prof Dong SUN, the Secretary for Innovation, Technology and Industry, and I had a taste of Augmented Reality games.

Quality entertainment experience can stimulate consumption and thus economic development. We are striving to tap into this new wave of opportunities arising from digitainment growth. Cyberport currently has more than 170 digitainment companies engaging in businesses such as metaverse, game development, game big data analysis, e-sports appliances and related research.

Among these companies, many are actively tapping into Web3 and other latest technologies with notable achievements. For example, a local digital health start-up has been collaborating with Marvel Entertainment to launch the world's first immersive interaction fitness adventure application, with which players can exercise together with comic characters. Meanwhile, a metaverse game developed by another start-up company has entered the Japanese market, having gathered more than 145 000 members in its social media channel within six months.

The application of fast-developing Web3 is not confined to digitainment or virtual assets. The blockchain technology underpinning Web3 is characterised by disintermediation, security, transparency, immutability and low cost. With innovations in technology and application, it has the potential to solve many difficulties and pain points encountered in finance, business, trade, supply chain management and even day-to-day life.

On the same day, I also officiated at the opening ceremony of the Web3 Living Lab and had a look at the exhibits.

On the day of the Forum, I also opened Web3 Living Lab, which showcases how local companies deploy Web3 technologies and innovative ideas in different life and business scenarios, which would help boost efficiency and create new economic values. For example, in light of the difficulties of financing faced by farmers, a start-up has developed, using blockchain and Internet of Things technologies, a real-time system to monitor the location, health situation and growth of livestock. With blockchain's data immutability, the data is sufficiently credible for financial institutions to accept livestock as collateral for financing. On the other hand, one local bank is developing a programmable payment solution in Cyberport, introducing programmable tokens to smart contracts to facilitate more effective public, commercial and personal payments. Another local start-up, in collaboration with a globally renowned fashion designer, makes use of 3D scanning technology to allow participants to dress up in famous designer fashion in the virtual world. These case examples all demonstrate our local start-ups' spirit of innovation as well as capacity to make breakthroughs.

The HKSAR Government is also actively applying Web3 technologies. For example, the Hong Kong Monetary Authority issued tokenised green bonds in February this year, which were the first of its kind issued by a government globally. This has brought together bonds and other related financial instruments, participants and activities on a single digital platform, enhancing the efficiency of the entire process and significantly reducing the lead time normally required for traditional bond issuance from five business days (T+5) to one business day (T+1).

To accelerate Web3 development, I have allocated $50 million to Cyberport in this year's Budget to expedite the development of a vibrant Web3 ecosystem, including attracting enterprises and talent, and organising related educational and promotional activities. So far, Cyberport has amassed more than 180 companies with Web3-related technologies including a unicorn and a licensed virtual asset trading platform. More than 20% of these companies are from the Mainland and overseas.

The Task Force on Promoting Web3 Development, which I chair, had convened its first meeting. The Task Force brings together leaders and professionals in relevant sectors to assist the Government in promoting the vibrant and sustainable development of Web3 in Hong Kong in an orderly and prudent manner, covering the regulatory framework, ecosystem, infrastructure, talent and training, education and promotion, etc.

As an international financial centre and a metropolis placing much emphasis on I&T, we must be aware of the urgency of grasping the trend of I&T and advancing its development. With prudent and appropriate regulation, we will actively lead more innovative exploration and progress so that Hong Kong may prevail and rise in this highly competitive wave of technological innovation. By doing so, we hope to make greater contributions to our economy and bring real benefits to our residents.

August 27, 2023

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