China’s Online Video Boom Has Global Implications (and Ambitions)

December 15, 2014/0/0
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With many young, digitally savvy Chinese leapfrogging straight to online video, watching 698 million hours of video on Youku Tudou and an estimated 569 million hours on iQiyi this August, the country’s online video market has become big business. As consumers increase their time watching streaming TV shows and films — particularly on mobile devices, which account for around 60 percent of Youku Tudou’s more than 500 million users — the country’s online video market is expected to double in size to $6.5 billion by 2017. In the second quarter of 2014 alone, Chinese online video sites reportedly raked in $662 million in ad revenue, an increase of 43 percent year-on-year.

The rapid emergence of China’s online video market has disrupted the industry not only within China, but around the world, as powerful homegrown players have spent heavily on securing the China rights for foreign film and TV content while investing ever more in producing original content. In the third quarter of 2014, Youku Tudou and iQiyi launched in-house movie studios, and within the next year, iQiyi plans to produce seven local films and 500 web series, up from 300 such series this year. In total, research firm EntGroup expects Chinese video sites to produce 1,700 original episodes this year, a rise of 70 percent over 2013.

For these sites, creating original content is a no-brainer: production costs are around one-third those of traditional programs, and the speed with which concepts can be churned out means producers can quickly jump on hot-button issues and resonate with viewers.

As producers in China pump out new shows, international developments illustrate the growing footprint (and ambitions) of China’s online video market. In the US, home to nearly 275,000 international Chinese students, new Mandarin-language productions such as “Looking For Angels” — which follows a group of young affluent Chinese residents in Los Angeles — provide a window for Chinese consumers to learn about international lifestyles, brands, and fashion. (And for brands to influence these viewers, as they have via Korean television programs with rabid followings in China.)

With Chinese tourist arrivals in the US expected to triple to nearly 6 million by 2020, and overseas spending on luxury items and consumer goods remaining strong, smaller brands in particular may find online video to be a more cost-effective way to attract Chinese shoppers in the US or Europe. Meanwhile, the seamless nature of online video gives brands a new and valuable avenue to tap viewers in China via emerging e-commerce sites and tools like Alipay’s ePass or Asia Checkout.

To discuss “Looking for Angels” sponsorship and partnership opportunities, contact CLA at renee [at] chinaluxuryadvisors.com.

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