China video sites confident public will pay

2014-01-14 11:13
A US woman accused of sharing songs online owes record companies $222 000 for wilful copyright violations, a federal appeals court has said. (Duncan Alfreds, News24, file)

A US woman accused of sharing songs online owes record companies $222 000 for wilful copyright violations, a federal appeals court has said. (Duncan Alfreds, News24, file)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

kalahari.com

Beijing - When media studies student Liu Zhiqi settles down to watch a movie or TV drama at the home of the San Francisco family she lodges with, she misses the convenience of downloading content for free like in China.

For Liu, an on-demand streaming service such as Netflix isn't worth the $7.99 a month subscription. "As a Chinese, I am not used to paying to watch TV," said Liu, 20, from Jiangmen city in southern Guangdong province. "Instead I watch free websites."

Liu's attitude encapsulates the dilemma that has faced China's video-on-demand industry: How to persuade people to pay to watch in a country where piracy is still rampant and licensed content such as American TV dramas is free online due to deals between Hollywood and site operators.

Some companies believe the answer lies in expansion of the mobile internet, making it convenient for people to watch and pay and getting movies out before the pirates do. Revenue from nascent pay services has grown rapidly and one Hollywood studio says it is very optimistic about the prospects for making money here.

In China, pirate DVDs in stores and on the street were traditionally the fastest way to get access to a film, and cheaper than going to the theatre. A few years ago, piracy also dominated online.

Online piracy

Today, China's major video streaming sites have deals with Hollywood studios and others and are filled with licensed content but get most of their revenue from advertising. To protect their investments, a group of video sites announced in November they had teamed up with the Motion Picture Association of America to sue other Chinese sites they accuse of copyright violations.

Charles Zhang, CEO of Sohu.com and its video unit, said it would buy "many more" Hollywood movies this year and charge users to watch them on a pay-per-view or monthly subscription basis following the "huge victory" of Chinese authorities naming top search engine Baidu and software company QVOD as the biggest video-copyright violators last year.

The 30 December announcement showed the government was cracking down on online piracy, he said.

Whereas TV dramas have several episodes which allows more time for advertising, for movies "the only viable business model is by charging", said Zhang.

He estimated that video site companies would pay $100m - $150m this year for American TV shows. By 2016, if there are 10 successful video sites in China, purchases from the American entertainment industry alone could total $500m, Zhang said.

Domestic content dominates online in China but Hollywood movies and US, British, South Korean and Japanese shows are also popular.

British drama Sherlock was available on China's Youku site 30 minutes after its BBC broadcast ended on New Year's Day. Chinese fans had bombarded a web chat with British Prime Minister David Cameron when he visited China in December to tell him they were tired of waiting for the new series.

Smartphones

Internet-based and other on-demand video has taken off in the last few years and is now expanding through tablets and smartphones. YOU On Demand, which brought video-on-demand to China, changed direction recently to become "a mobile-driven company", said CEO Liu Weicheng.

"People pay to buy a large-screen phone, they've got to have a reason otherwise what is the purpose for you to carry this thing other than making a phone call, talking to someone," he said.

It has developed an app in conjunction with Huawei that pushes two new-release Hollywood movies per week to the 15.4cm-screen Huawei Mate phone. Its Hollywood studio partners receive a guaranteed payment and then share subscription revenue.

Liu believes the phenomenon of people watching movies on mobile devices will gather pace, providing consumers have the option of a box or component that allows them to also watch the content on their TV.

Daniel Solnicki, head of worldwide franchise development for DreamWorks Animation, whose blockbusters include Kung Fu Panda 2 and The Croods, said the migration from DVDs to digital consumption offers great opportunities for content-providers.

He said US studios were pricing their content in China at levels intended to compete against local piracy, for example, 5 yuan (80c) to watch a new release compared with $5 in the US.

China's online video sites make most of their money from the advertising that accompanies free-to-watch content. China online video revenue hit 2.85 billion yuan ($470m) in the second quarter of 2013, up 43% from a year earlier, according to iResearch.

Video subscriptions

The major catalyst for this growth was rising advertising revenue. The current number of paid subscriptions is tiny, but video sites are confident of growth.

"Perhaps only one in a hundred would be happy to pay to watch a movie online three years ago in China, but today maybe three to five out of a hundred feel it's ok to pay for that," said Zhu Huilong, senior vice president of Youku Tudou, which runs two leading sites.

Zhu said subscription revenue grew 300% in 2013 compared with the year before, and expects it to continue growing at the same rate over the next three or five years. He expects the industry's revenue from online video subscriptions to grow to one billion yuan ($164m) in the next three years.

To some extent, online video sites have already killed off physical piracy. In one pirate DVD and music store in a basement of a shopping centre full of knock-off bags, t-shirts and winter boots, the 10 yuan ($1.60) per disc price was failing to pull in many customers. Game of Thrones, The Good Wife and How I Met Your Mother were among titles on display.

A year ago, they had about 20 customers per day. Today, there's only about five or six who ever intend to buy, said the seller, dressed in a fake leather jacket and trendy hairstyle. People prefer to download for free, he said.
- AP
Read more on:    internet
SHARE:

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Inside News24

 
/Music

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

Up to 40% off fashion accessories

Save up to 40% on selected handbags, purses, watches, jewellery and more. Offer valid while stocks last. Shop now!

Save up to R2000 on top electronics

Get every day mind bowing savings on top electronics. Offer valid while stocks last. Shop now!

As seen on TV - New book releases at only R199 each

Get mind blowing book savings on new titles. Offer valid while stocks last. Shop now!

Save up to 50% on Women’s month treats!

Celebrate the awesome women in your life with awesome treats like beauty products, fashion accessories, bestselling books, electronics and more. Offer valid while stocks last. Shop now!

Up to 60% off - clearance sale!

Save up to 60% on appliances, books, electronics, toys, movies and more. Offer valid while stocks last. Shop now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

Horoscopes
Aquarius
Aquarius

The spotlight may be on you and you need to perform. This can be overwhelming and you need to stay as focussed and centred as you...read more

There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.