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Understanding the online-video universe of China

18 Sep 2013

Social-Smart-TV-China

We always hear experts stating that “the future of TV is mobile”. But if you take a subway in any major Chinese city, you’ll be very likely to change the statement into: “The present of TV is mobile”.

Video entertainment in China is a big, big deal, from every possible perspective.

Local productions are booming – in December 2012 Lost in Thailand became the top-grossing Chinese movie ever, scoring over US$200 million in the country – and there’s an always greater demand for TV shows from Taiwan, Hong Kong, South Korea. And of course, for Hollywood products too.

All of this is increasingly driven by young Netizens: as reported by Wandoujia app store, in China entertainment products are consumed in the fragments of time, mostly between overtime and long commutes.

“In China virtually every TV show is quickly and legally available to watch online”. Which, in 2013, it means on a mobile phone.

Who’s been leading this revolution?

 

All the big fish

All the major names of the Chinese digital scene are jumping on the bandwagon, integrating Smart TV services and handsets to their assets.

They range from e-commerce giant Alibaba (read about its Smart TV on TechCrunch) to booming phone maker Xiaomi, which launched the set-top “Xiaomi Box” in 2012 and the “Xiaomi TV” in 2013 (the latter at the hyper-competitive price of 486 US dollars).

 

 

It doesn’t just happen in China, of course – recent news was made by number 1 Japanese online shopping company Rakuten, that recenlty bought Singapore’s TV-shows distributor Viki for 200 million dollars (source: Gigaom).

But China seems to be moving even faster than the rest of Asia – and the world too – as noted in this tweet by China observer Bill Bishop (@niubi):

 

https://twitter.com/niubi/status/375558514627723264

 

Let’s now analyse the main players in the online and social TV scenario of the Middle Kingdom:

  • Youku-Tudou
  • Sohu Video
  • PPTV
  • V.QQ.com
  • iQiyi (Baidu)

 

Youku-Tudou, China’s video giant

Back in 2007, which means 6 year ago, during an interview (still available here) the co-founders of Tudou stated that the website was streaming more minutes of video content than Youtube: 15 billion minutes/month versus 3.5 billion minutes/month. Although it was hard to determine the accuracy of the figures, the statement made big news.

Tudou – which literally means potato – is a video-sharing platform launched in China in 2005, known as the “second biggest video website in China”. In 2012 it merged with Youku, a platform launched in 2006 and known as the “biggest video website in China”.

Now Youku-Tudou is without any doubt the biggest video hosting service in the People’s Republic of China – second in the world right after Youtube.

 

Youku Tudou

 

A part from web series and user-generated videos, the two platforms legally deliver full-lenght movies and TV series – including several American products – to mainland China’s users. Which obviously means Hollywood producers are selling them the rights.

This article by the HollywoodReporter speaks by itself: Hollywood’s New Gold Mine: Youku Tudou. American productions are encountering an always greater success in China. According to the report, The Walking Dead has been watched by over 160 million people in China, becoming the most popular US-made show in the country.

Here’s Youku-Tudou Head of content Zhu Xiangyang’s take on it:

“Hollywood TV content has got great stories, characters, performances and mature packaging and marketing, all of which work in the Chinese market.”

  

The Walking Dead Youku

 

Sohu Video

A big competitor in this fast-growing market is the Internet TV platform launched by Sohu, search engine and online gaming company.

Recently Sohu has been making some pretty smart moves: like distributing American TV shows like Breaking Bad, and broadcasting a handful of successful TV dramas from South Korea.

In 2013 the Beijing-based company acquired the exclusive rights to distribute The Voice of China, worldwide popular reality show that has an its own section of the Sohu Video website, with social media-integrated interactive activities and extra contents.

 

Sohu The Voice China

 

Needless to say that the Shou Video mobile app has been among the most downloaded apps on the Wandoujia store in July 2013, with over 450K downloads in a month.

 

PPTV, the newcomer

PPTV entered the market in early 2011, starting as a Huazhong University project. It became popular for its large library of TV shows and dramas from Korea and Taiwan, growing at an incredibly fast pace and becoming the biggest TV streaming platform in China, with 34 million daily users in 2012 (source: Tech In Asia).

PPTV is a peer-to-peer freeware based on the online video cloud platform PPCLOUD™, and it’s available on a variety of devices, from PCs to Smart TVs.

Of course including smartphones: PPTV’s mobile terminal counts over 150 million, and some 70 million monthly active users. Based on these astonishing figures, PPLive Corporation released PP Index, a series of reports on mobile video users.  (source: PR Newswire).

 

PPTV

 

Rumours emerged about a possible PPTV’s acquisition by Alibaba – worth US$400M – but the deal hasn’t been confirmed, especially since PPTV owners reportingly prefer to stay independent (source: caijing.com).

 

V.QQ.com, aka Tencent Video

Chinese social media colossus Tencent is a big player in the field, with its video-sharing portal v.qq.com – also available on mobile apps for iPhone, iPad, Android and Nokia phones.

The platform offers a number of TV shows and movies from abroad – including a rich catalogue of Hollywood movies – but also entertainment formats and short movies produced by Tencent itself, available in a specific section

 

v.qq.com

 

The movie section (film.qq.com) works with a Netflix-alike monthly fee; it allows users to watch a variety of movies online and it’s getting an always greater importance in terms of business for Tencent.

In September 2013 the Shenzhen-based company closed a massive distribution deal with Disney, to show movies on the Tencent platform Hollywood VIP. The company previously signed similar deals with other American producers – among them Warner Bros., Universal, Miramax, and Lionsgate, although numbers were not disclosed (source: Hollywood Reporter).

 

film.qq.com

 

Baidu gets in the game with iQiyi

In November 2012, another Chinese Internet giant entered the local video market. That was when Baidu bought a majority stake in iQiyi – a deal that was defined on The Next Web as “China’s Google buying China’s Hulu”.

iQiyi is a video sharing platform launched in 2010 by Providence Capital Investment, an American private equity firm. It became one of the main video sharing platforms in Mainland China for delivering free and high-quality content in a number of different categories – from sport, to music, to anime, to foreigner TV shows.

 

iQiyi

 

Needless to say that iQiyi traffic is moving towards mobile; here’s why an iOs app called HotChat has been launched, allowing users to discuss in real time what’s hot, rating videos and joining dedicated chat rooms (on a side note, HotChat already has over 100K fans on Sina Weibo)

 

HotChat

 

And that’s not it: in order to give a further boost to its position in the market, Baidu announced the launch of their own Smart TV, partnering up with Chinese manufacturer TLC.

The handset – dubbed TCL-iQIYI TV+ – will finally make the digital distribution system merge with the traditional TV business, allowing the Beijing-based company to fully exploit the potential of iQiyi, Baidu Video and Baidu-owned peer-to-peer streaming network pps.tv. (source: ZDNet).

 

Conclusions

Everyday more astounding figures are leading to a ruthless competition between network owners, content distributors and device makers, in a constantly changing scenario worth billions of dollars – the adv spending on Smart TVs will reach US$2 billion in 2013 (source: South China Morning Post).

One thing is sure: the trends of online entertainment consumption in China are having a huge impact at the global level. And Hollywood already knows it quite well.

Guido Ghedin

Guido Ghedin

After his University years between Italy and California, today he deals with Market Research and Digital Scenario Analysis at Young Digitals. You can follow him on Twitter: @guido_ghedin.

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