China’s internet TV operators are buying foreign TV shows and films to attract viewers and advertisers, defying a government policy to protect the domestic industry.
Sohu.com Inc, Youku Tudou Inc., backed by Alibaba Group Holdings Ltd, and Baidu Inc have spent US$1 billion on TV series and movies in the past two years.
These shows are primarily from the United States, Britain and South Korea.
They are trying to convince China’s 632 million internet users to keep coming back to a video streaming service because it has more of the best content, Reuters reported Tuesday.
Revenue comes from advertisers who pay largely based on how many users the video sites have.
“You see this dragged-out war of attrition where everybody’s scrambling to buy the best content,” said Mark Natkin, managing director of Beijing-based Marbridge Consulting.
“This will ultimately narrow it down to the smallest handful of Goliaths, and then people start to make money.”
China’s regulators have been targeting the internet TV industry with quota restrictions, helping the domestic TV and film industry develop with less competition from mature foreign media, the report said.
It also means the state can use regulation to limit the amount of foreign programming and remove what it considers “harmful” content, such as pornography and obscenity, from the internet.
Youku Tudou, nearly one-quarter owned by Alibaba, dominates the market with its foreign content, with 1,451 US, UK and Korean TV seasons.
Sohu has 509 and Tencent Holdings Ltd. 471.
Youku Tudou’s video content costs rose 15 percent in January-September from a year earlier, while Baidu’s content costs, mainly for the iQiyi.com video site, were more than 2.5-times higher.
Sohu’s commitments for video content purchases rose 42 percent.
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