As China enters the era of fourth-generation (4G) wireless communication, several industries stand to gain from the lightning speed in mobile data transmission. Streaming media will be one of the key beneficiaries since 4G will enable viewers to have a better experience on the go with video on demand.
According to a survey findings released during the China Network Audiovisual Industry Summit, which was held in Shanghai last week, nearly 7 out of every 10 netizens in the country, or 405 million people, have become accustomed to enjoying their favorite videos online.
Huge audience base and an ever-growing viewership are bolstering the businesses of key domestic video portals. Youku Tudou (YOKU.US) saw its loss shrink 65 percent in the third quarter from the preceding three months, with the fourth quarter expected to turn in a profit, the Shanghai Securities news reported.
Sohu.com (SOHU.US), another New York-listed portal, also said its revenue from video ads last quarter jumped 300 percent from a year earlier. As for Web television player Leshi Internet Information & Technology Corp. (300104.CN), it posted 56 percent growth in third-quarter earnings on the strength of strong commercial income.
While the outlook is improving and the potential is immense, one should also bear in mind that competition in the market is heating up. To ensure audience retention, leading websites have to constantly enrich their media libraries by snapping up rights for popular content.
To keep the outsourcing cost in check and to differentiate themselves from rivals, major online video providers have begun to produce content on their own. The trend seems to be a positive development for the emerging industry.
By shaking off the traditional reliance on television programs and outside production studios and instead focus on own content, video portals can not only compress their costs but also gain larger room for creativity and flexibility. Thus, it is not surprising that a player like Youku Tudou is planning to produce more TV dramas next year with briefer storylines and shorter episodes, aiming to lure mobile viewers, who are usually in a hurry, with tailor-made content.
Meanwhile, home productions can also bring in additional income stream for the video portals. For instance, Leshi, through embedded advertising in its programs and title sponsorship, is able to retrieve all the filming cost of its productions even before the content is officially aired. So, whatever on-air ad revenue that is generated later is pure profit.
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