Battle between TV firms and video sites heats up

Before China Central Television, the State broadcaster, kicks off its annual prime-time advertising auction on November 18, local TV broadcasters and video websites have been busy promoting their 2015 programs to advertisers and trying to earn a bigger share of the advertising market.

Video websites' advertising revenue was equivalent to just one-tenth of that of TV broadcasters in 2013, according to a report released by CSR Media Research on October 23. But the growth potential of the Internet platform has made some TV broadcasters nervous, and they are taking steps to hit back.

Rights denied

Hunan TV announced Thursday that it would stop selling broadcasting rights for its most popular TV programs to other video websites.

Almost all of its most popular TV programs, including Happy Camp, I'm a Singer, and Dad, Where Are We Going? will be exclusively broadcast on its own video website, hunantv.com, Zhang Ruobo, president of the website's operator Happy Sunshine, said at a marketing event in Beijing.

"The move highlights Hunan TV's ambition to develop its own new media branch despite a negative effect on its short-term revenue," Chen Shaofeng, deputy dean of the Institute for Cultural Industries at Peking University, told the Global Times Monday.

Last year, Hunan TV sold the broadcasting rights for five of its TV shows to video website iQiyi for 200 million yuan ($32.6 million).

The reality TV show Dad, Where Are We Going? generated Web traffic of nearly 1.5 billion viewers for iQiyi between June 20 and mid-October, the company said on October 17. Letv.com, a video site that bought the exclusive broadcasting rights for I'm a Singer, also said in mid-April that the show's viewers surpassed 1.5 billion between January 3 and April 11.

The popularity of these shows also attracted advertisers. Video websites' advertising revenue amounted to 4.25 billion yuan in the third quarter of 2014, surging 53.8 percent year-on-year and accounting for 62.3 percent of their total revenue, according to data in a report released on October 28 by iResearch Consulting Group.

The fast growth in advertisement revenue was mainly due to TV shows such as Dad, Where Are We Going? and The Voice of China, iResearch said in the report.

But analysts have expressed doubts about whether hunantv.com has the capability to compete with major video websites, as its market share is relatively small.

"Hunantv.com's entertainment programs will attract a large number of young viewers, but as a latecomer, it lacks diversity in video content compared to major video websites," Luo Lan, an analyst with IT consultancy Analysys International, told the Global Times Monday.

Pricey programs

Hunan TV's move, along with upcoming stricter regulation of foreign TV programs, will make premium video content more scarce for video websites, Chen said.

Foreign TV shows and movies broadcast on China's video websites need to be approved by the authorities, and licensed foreign video content cannot be more than 30 percent of the domestic content that a video website purchased in the previous year, the State Administration of Press, Publication, Radio, Film and Television said in a statement released on September 2.

Fierce competition among video websites in the past few years has already raised the prices of content and also brought copyright disputes.

Tencent Corp spent 250 million yuan on buying the exclusive online broadcasting rights for The Voice of China for the 2014 season, more than twice what sohu.com paid for the previous season.

China's video websites spent 4.2 billion yuan in total on copyright content in 2013, compared to just 400 million yuan in 2008, Beijing-based entertainment consultancy EntGroup Inc said in an industry report released in September.

Youku Tudou Inc's content costs were 418.3 million yuan in the second quarter of 2014. It posted a loss of 164.4 million yuan during the period, up 57 percent from a year earlier. Its third-quarter results have not been released yet.

iQiyi has not gone public, but its listed parent Baidu Inc said that its content costs, which are mainly related to iQiyi, were 498.1 million yuan in the third quarter of 2014, according to Baidu's quarterly financial report released on October 29.

Youku and iQiyi have also been involved in a copyright dispute. Both of them claimed in late October that they had the Internet broadcasting rights for Beijing TV's reality show Dream Maker, which is scheduled to be broadcast in December.

iQiyi and Yuanchun Media, the producer of the show, said in a joint statement on October 29 that iQiyi had attained the exclusive online broadcasting rights for the show.

"Youku signed a contract earlier than iQiyi with Yuanchun on the online broadcasting rights, but Yuanchun violated the agreement later as iQiyi offered a higher price," Chen Ji, a PR officer at Youku, told the Global Times Monday.

An unnamed member of Yuanchun's PR staff told the Beijing News Friday that the firm had talked with several video websites including Youku and iQiyi, but finally signed the contract with iQiyi.

"We will take legal action to protect our rights if there is any infrigment on our copyright," Zhang Tiankuo, a PR officer with iQiyi, told the Global Times Tuesday.

Do it yourself

Video websites have increasingly turned to producing their own programs to attract viewers.

iQiyi produced 15 series totaling 6,785 minutes in 2014. It plans to produce more than 30 series totaling 15,000 minutes in 2015, Ma Dong, chief content officer at iQiyi, said at a marketing event in Beijing on Friday.

Its self-produced show Let's Talk, anchored by musician Gao Xiaosong and TV host Kevin Tsai, has sold the sponsorship rights to clothes company Meters/bonwe for 50 million yuan, the highest for a deal of this kind, according to Ma. The show is scheduled to be broadcast on November 29.

Youku also announced on October 28 that it is partnering with entertainment firm Endemol to launch the Chinese version of global reality hit Big Brother in early 2015.

Endemol said in a statement that partnering with Youku will allow the company to bring Big Brother to a young audience, while Youku said it aims to provide its users with higher-quality original content.

iQiyi said it plans to invest 5 million yuan per episode for self-produced drama The Grave Robbers' Chronicles, which is being adapted from a bestselling novel. But generally, the cost of producing original content is just one-third of the price of buying broadcasting rights, according to EntGroup.

"High-quality self-produced programs could also help video websites attract advertisers and increase their profitability," Luo said.