Chinese Internet Giants in Online Video Arms Race

Streaming video in China offers a potentially lucrative revenue stream, but China is maintaining tight control over who’s allowed to compete.
Chinese Internet Giants in Online Video Arms Race
Commuters watch movies on their mobile phones and tablets in a metro car in Beijing, Nov. 17, 2014. Fred Dufour/AFP/Getty Images
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Beijing and Shanghai may lie almost 1,000 miles apart, but their metro riders share one thing in common. Each morning, commuters hunch over smartphones or tablets to watch the latest Chinese or Korean TV drama or Hollywood movies downloaded from the Internet.

Chances are, those videos are downloaded or streamed for free—via legal means or pirated.

But that may be set to change.

Internet and media giants are making massive bets in content and technologies, aiming to disrupt China’s long-standing culture of free Web entertainment.

Their goal: encourage people to pay for content.

Appetite for Videos

China’s online video market is expected to reach RMB 36.8 billion (US$5.8 billion) in 2015, a 50 percent increase from 2014, according to iResearch, a Chinese Internet consultancy. Around RMB 15.2 billion of that figure comes from online video advertising, with the remainder consisting of subscriptions and purchases.

While that’s seems high, online video is still a small portion of the RMB 209 billion (US$32.9 billion) Chinese Internet users expect to spend in overall online entertainment, which includes music and games.

This fragmented environment cemented China's reputation as a market where copyrights go to die.
Fan Yu
Fan Yu
Author
Fan Yu is an expert in finance and economics and has contributed analyses on China's economy since 2015.
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