China’s Video Streaming Landscape and Why It Is Still Undervalued

As I’m planning my next trip back to China, I’m reactivating my accounts with Tencent Video (腾讯视频)and iQiyi (爱奇艺), two platforms where I can watch U.S. movies, TV shows and other original video content while I’m in China. With Netflix and other video streaming services like Hulu, Amazon Prime and YouTube blocked in China, the Chinese market is wide open for domestic video streaming platforms to flourish. For international marketers, brand managers or anyone wanting to utilize Chinese social media and content platforms to sell your product or service, it’s imperative to start paying more attention to the development of Chinese video streaming platforms if you want to stay relevant in your industry in the long run.

Tencent’s Exclusive Deal with ESPN

Tencent is the parent company of WeChat, which is the most popular social media platform in China. Back in 2016, an exclusive agreement was reached between Tencent and ESPN, which gave Tencent’s video platforms exclusive rights in distribution and promotion of ESPN’s sport content. It’s very common that Chinese businesses expect exclusive partnerships, whether it is to distribute digital content or physical products. This is largely due to the competitive business environment in China. Chinese enterprises are willing to invest in millions of dollars on original contents which will give them a competitive advantage over other platforms. The technology and business framework have become easy to duplicate with capital investment, but not original content.

Moreover, Tencent owns the exclusive streaming rights to the HBO series Game of Thorns in China. Tencent has over 43 millions of paying subscribers. But don’t be surprised that some of the episodes you watched in China seems shorter; it’s a result of censorship in China. However, without movie content rating system, the reedited content is released to mass market audience.

iQiyi, the Chinese Netflix.

iQiyi, majority controlled by search giant Baidu, is the second largest video streaming platform in China. It is often compared to Netflix. The $15.2 billion company has evolved from a video platform to a brand boasting its own original content including TV shows and reality shows. In an effort to increase revenue, iQiyi is planning to focus on movies in the next two to three years. This month a plan is announced to invest in six films in 2019, each with a budget of between US$2.9 million and US$7.2 million.

Unlike Netflix, iQiyi has both paid and unpaid content. Advertisement usually last nearly one minute or longer, which is another key source of revenue.

Youku Tudou, Alibaba’s Online Streaming Strategy

Most people know Alibaba as an eCommerce platform. In 2015 Alibaba acquired video platform Youku Tudou. One might wonder, why an eCommerce giant wants to be in the digital media and entertainment business at all? It’s possible that Alibaba is following the direction Amazon takes with Amazon Prime and original content, which is to expand its ecosystem and compete with other video giants Tencent and IQiyi.

Unlike Amazon Video, Youku Tudou are not integrated or connected with Alibaba’s eCommerce ecosystem. However, the video platforms are key to Live@Alibaba strategy, which enhances its core commerce business with video features, which enable merchants to sell their products through live streaming videos.

Though, Alibaba's digital expansion trailed far behind Baidu and Tencent's. Youku Tudou still ranks third in the streaming video market behind Tencent Video and iQiyi, it is worthwhile to point out that YouKu Tudou has more user-generated content. Similar to YouTube, internet influencers utilize the platform to build a follower base and profit from subscription accounts. For the fitness industry, YouKu Tudou is critical to brand’s digital marketing strategy because it’s easier to target fitness consumers,also not to mention, the convenience in bringing audience to brands’ Taobao or Tmall stores.

How Much their Subscription Cost?

  • Tecent 20 RMB per month

  • iQiyi 19.8 RMB per month

  • Alibaba YouKu Tudou $15 RMB per month

Why This Matters to Your brand?

Original Content has become commodities in China

Because of Chinese regulations, video content can only be distributed in China through local videos platforms. Even DisneyLife, a content channel launched by Disney in China back in 2016, had to be closed down within a few months when Chinese regulators ordered the service suspended.

Due to Chinese internet users’ limited access to video content from outside China, whether your company is a content creator or a brand with strong focus on content marketing, your original and quality video content have the potential to bring you profit in China. For example, if you are a sport nutrition brand with hundreds of workout tutorials and nutrition education videos, you can launch a channel on YouKu Tudou and charge fees to subscribers. You can also release them free of charge but to build followers and drive traffic to your online stores in China, which will save you thousands of dollars in paid ads on Chinese social media. Few sport nutrition brands have video marketing strategies in place, even established legacy brands are slow to adapt to the growing trends.

Advertising Opportunities

These three Chinese video streaming platforms also offer advertisement packages to brands and marketers. Global advertising technology leader, The Trade Desk, Inc. (Nasdaq:TTD), now enables brands to reach and engage millions of consumers in China through integrations with China’s premium media companies, including:

  • Baidu Exchange Services

  • iQIYI, Baidu’s video streaming service

  • Tencent Social Ads

  • Youku, Alibaba’s video streaming service

One might not realize, the US-China trade situation has no impact on global content distribution and promotion in China. Brands and marketers can focus on content marketing to drive consumers demand and utilize cross-border eCommerce platforms to facilitate transactions. Meanwhile, it’s time for industry content creators including, Generation Iron Fitness Network, Inside Fitness Magazine and Muscle & Strength to rethink their China strategy.

Video marketing is grossly undervalued in China. When many brands are trying to find Chinese investors as a solution to compete with companies who are spending hundreds of thousands of dollars on trade shows, they might be actually sitting on hundreds of YouTube videos with untapped potential to bring profit for them in China. Fundamentally, what really many international consumers are buying from sport nutrition and fitness brands is not a product with ingredients they cannot pronounce, technologies pr innovations too complicated to understand, nor a celebrity sponsorship they know they are paying for. Rather, they are buying a lifestyle, a pursuit of bettering one’s self and a culture that entertains, excites and inspires them. It’s the stories you are selling and video is the best medium to tell that story.