More than 700 million people are projected to be watching online video content by 2015 in China, according to new McKinsey Research. In the last three years, the scale of China’s online video market has more than doubled each year, and the advertising income of this market reached RMB 2.1 billion (around $331.1 million) in the first quarter of 2012, up 218% year on year (Source: Xinhuanet & McKinsey Quarterly).
Since YouTube is blocked by China’s “Great Firewall,” a large number of national portals capture this opportunity, dominating the vibrant video ecosystem in China. Youku and Tudou — China’s two giant video portals — will be merging in an all-stock deal, consolidating the two companies’ leadership in the fragmented marketplace and giving the combined company powerful influence in setting prices for online advertising. The combined entity will control 49% of the Chinese online video market, with the next biggest being Xunlei at only 11.3% (Source: Ad Age Global & TechCrunch).
It’s undoubted that the growing online video market in China presents a huge opportunity for marketers and is becoming a crucial channel that targets a wide range of Chinese viewers. Multinational and national brands that wish to take full advantage of this opportunity should deepen their understanding of the demographics of Chinese online video viewers, the ecosystem of China’s online video market, as well as the potential marketing opportunities.
China’s online video market is witnessing a drastic increase in advertising avenues. As a matter of fact, Chinese video sites devote more space and time to advertising than their Western counterparts — 45 seconds of pre-roll ads are common. On some sites, ads flash on the screen when the video is paused, and one site even has advertising in the middle of videos. The first quarter of 2012 generated RMB 2.1 billion ($425 million) online video ad revenues, a 24.7% rise from the previous quarter, reported by Analysys International, a local research firm in China.
The easy access of Internet and diversified media platforms speed up the growth of China’s online video market. A recent study of Starcom Media Vest Group indicated that Chinese Internet users spend more of their time watching videos on their mobile devices and computers than on TV. As advertising in TV dramas is banned in China, online video advertising and marketing presents a big opportunity. Moreover, China has the largest number of mobile users, with 152 million users having access to 3G, and 247.7 million smartphone users, as indicated in “China Embraces the Era of Mobile Commerce.” The large base of mobile users provides a substantial pool of mobile video viewers.
China has a longstanding practice of censorship, which plays a double role in the progress of Chinese online video marketing. The censorship prevents the access to several popular foreign websites, including video-sharing site YouTube, which, on the flip side, enervates the competition from foreign portals and strengthens the development of domestic video service providers. Nevertheless, China’s broadcasting and Internet regulators require domestic online video providers to prescreen all programs before making them available, tightening state censorship of increasingly popular online drama series and mini-movies.
Chinese online video viewers are younger, more educated, and spend more time watching videos online. 50% users have an advanced diploma education, with an average monthly income over RMB 7000 ($1100), and 80% of users are under 30 years old. Additionally, 47.9% of Chinese video users spend four or more hours a day watching online video content, such as movies, television programs, and live sports — double the time spent by U.S. users, according to iResearch. Unlike YouTube, where much of the content is user-generated, a critical majority of Chinese video sites are extensive libraries of television programs and movies. Online video viewers show higher brand awareness, deeper product understanding and higher preference and intention to purchase. Hence, the evolving online video is becoming an efficient marketing strategy for brands to approach to Chinese millennials, especially after China ordered a ban on advertisements during TV dramas as part of its reform of cultural activities last year (Source: China Internet Watch).
The following is a list of China’s key online video portals:
Youku, known as China’s YouTube, is the biggest online video site in China. On March 12, 2012, it was announced that Youku reached a definitive agreement to acquire its rival Tudou in an all-stock deal worth over $1 billion, and the combined entity will be named Youku Tudou Inc., but will still remain separate brands. This new entity will establish a clear and dominant leadership position in China’s online video sector and become one of the largest Internet properties in China. Youku has partnered with over 1,500 license holders, including TV stations, distributors and film companies that regularly upload media content on the site.
Ku6 is another leading online video sharing site in China, focusing on User Generated Content (UGC). On May 2012, Ku6 entered into an agreement of partnering with the popular Chinese SNS website Kaixin001.com. Ku6 will assist Kaixin to add a brand new video sharing function by providing technology support to all video uploading activities on Kaixin. Users on Kaixin can enjoy a one-stop service that enables them to upload, store and share their videos without leaving the website.
PPS Net TV (PPStream), established in January 2006, is the world’s largest net television service provider. This service is available in diversified platforms, including iPad, iPhone and computer, providing video encyclopedias, video searches, online videos, synchronized TV programs, games, information, downloads, communities and other multivariate products and services.
56.com, with over 30 million registered users, is a Chinese video and media sharing site, which allows users to upload and share videos and photos with others.
Here is the version of this post in Chinese:
英特网的普及和日益多样化的媒体平台加速了中国在线视频市场的发展。Starcom Media Vest Group的一项近期调查报告指出，相比于观看电视而言，中国的互联网用户愿意花更多的时间在他们的手机设备和电脑上收看视频。由于中国已禁止全国各电视台在播出电视剧时中间插播广告，因此中国的在线视频成为了广大广告营销商新的商机。除此之外，据China Embraces the Era of Mobile Commerce介绍，中国拥有世界上最大的手机用户，1.52亿的3G用户和2.477亿的智能手机用户。这个庞大的手机用户成为潜在的移动视频观众。
中国的在线视频观众普遍比较年轻，受教育度更高，并愿意花更多的时间观看在线视频。据iResearch 报道，50%的用户接受过高等教育，并且每个月的收入超过7000人民币（1100美元），80%的用户是30岁以下。除此之外，47.9%的中国视频用户花将近或者超过4个小时的时间观看电影，电视节目和体育实况等在线视频。YouTube上大部分的视频是用户自创的。与YouTube不同的是，中国大部分的视频网站是电视节目和电影。（来源: China Internet Watch)