Date
24 August 2017
The rise of broadband internet has telling implications for state television broadcaster China Central Television and a host of provincial television operators already grappling with declining numbers. Photo: Bloomberg
The rise of broadband internet has telling implications for state television broadcaster China Central Television and a host of provincial television operators already grappling with declining numbers. Photo: Bloomberg

POLICY WATCH: Online video turning media industry on its head

China’s online video sector is undergoing consolidation, driven by government efforts to maintain control over its content and distribution.

The State General Administration of Press, Publication, Radio, Film and Television, the nation’s media regulator, wants state-owned media companies to tap the fast-growing market using private capital, Luo Jianhui {羅建輝}, director of internet video supervision, said on Dec. 5.  

China already has some of the world’s toughest media regulations and some of the most stringent content distribution rules.

By keeping a lid on domestic television broadcasters and approving only a handful of foreign satellite operators to connect to hotels, the government has maintained an iron grip on the media industry.

However, the rise of broadband internet, which enables people to easily access a wide range of content, presents a new regulatory challenge and threatens to turn the media industry on its head. 

This has telling implications for state television broadcaster China Central Television and a host of provincial television operators already grappling with declining numbers.

The regulator has issued licenses to 608 online program distributors, 26 online TV broadcasters, 11 internet content providers and six mobile TV content aggregators. All have seen robust growth in user numbers and revenue.

The video sector is also catching the attention of internet portals, traditional broadcasters and telecom operators despite its lack of a sustainable business model. Competition is on the rise.

The regulator will work with industry players to drive innovation, improve the market mechanism, monitor online content and ensure the healthy and scientific development of the sector, Luo said.

Original content and diversification will be encouraged to reduce reliance on entertainment and variety shows.

At the same time, traditional media will be asked to embrace new media and help unleash the potential of e-commerce and online public services.

Online portals such as Sina, Sohu.com and Tencent Holding dominate the online video market as content providers while YoukuTudou, Aiqiyi of Baidu.com and several others have a lock on advertising dollars.

China’s online video market was worth 3.25 billion yuan (US$535.2 million) in the third quarter, up 37.3 percent year on year and up 6.7 percent from the previous quarter, according to statistics by iResearch released in November. The growth was led by popular variety shows and TV series, driving up advertising revenue across the industry.

Advertising revenue accounted for 81.7 percent of the industry total, up 4.6 percent on a quarterly basis.

Consolidation in the online video market has picked up in recent years as major players snapped up smaller rivals. Baidu acquired Chinese peer-to-peer streaming video network PPS for US$370 million earlier this year. Youku and Tudou merged in 2012, creating China’s largest online video operator by market share.

– Contact the reporter at [email protected]

RA

EJ Insight writer

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