Online video: Heat is on for audiences in China

As the movie Star Wars: The Force Awakens was preparing to break box-office records around the world, viewers in China were launching a different record into orbit: online audience figures.

The Legend of Mi Yue《芈月传》—an 81-episode costume epic set in the fourth century BC—became an instant hit when it aired on Beijing Television and Dragon Television on November 30. But it was its performance online, streaming on Tencent’s v.qq.com and LeTV (now LeEco) that really raised eyebrows. 

Within just 24 hours, the first two episodes of the show had racked up an astronomical 700 million views on the two platforms, and in the weeks that have followed the dial has kept whirring at an unprecedented rate. At latest count, the series had been viewed over 11.4 billion times on LeTV and more than 10.9 billion times on the QQ site. 

And while these viewing figures look astounding, they are not totally unprecedented. Hunan Television’s 58-episode period martial-arts drama The Journey of Flower 《花千骨》and Nirvana on Fire 《琅琊榜》, another Beijing TV/Dragon TV historical drama, have each clocked up over 3 billion views across 54 episodes on Youku since they first aired in September.

With YouTube, Vimeo and other popular international video-sharing sites blocked by the country’s internet censorship firewall since 2009, China has developed its own clutch of video portals. The market has been dominated by Youku and Tudou—particularly since their merger in 2012—but that crown is now under threat from challengers such as iQIYI, LeTV and Tencent’s v.qq.com. 

While domestic media opt for blanket coverage across all portals—and continue to draw the lion’s share of ratings—competition in the sector is heating up over exclusive rights to international content. Over the past three years, Chinese video portals’ international sections have moved from being a dumping ground for direct-to-video B-movies and low-rent sitcoms to a respected delivery route for the latest hit TV shows and Hollywood blockbusters.

Youku, for example, hosts Marvel’s Agents of S.H.I.E.L.D. 《神盾局特工》and DC Comics’ The Flash 《闪电侠》 and Arrow 《绿箭侠》superhero dramas—all available for free streaming as soon as they air in the US. The first seasons of each have drawn 250 million, 190 million and 180 million views, respectively. 

Walt Disney and 20th Century Fox made headlines in September when they struck an exclusive deal with Tencent to release all six films in the original Star Wars《星球大战》 trilogy and its prequels through the QQ portal. The deal has been widely seen as a savvy marketing coup to expose the world’s second-biggest cinema market to the epic saga ahead of its latest installment, which was released in China in this month.

For Tencent, however, the deal was just a small part of a major investment in content as it makes a play to become the market leader. In November, the company unveiled a portfolio of new content deals, including Mission: Impossible—Rogue Nation  《碟中谍5：神秘国度》and with Paramount Pictures for the complete catalogue of James Bond films and an online premiere for the franchise’s 24th movie, Spectre 《007：大破幽灵危机》.

Thirty Sun (孙忠怀), Tencent vice-president, said there had been significant growth last year in two areas: pay-per-view and self-produced content.

“We hadn’t expected these two areas would make such progress in 2015,” he said, adding that the willingness of consumers to reach into their pockets had far exceeded expectations. “In tier-two and tier-three cities in China, most people are willing to pay for content. They are prepared to pay Rmb 20 [US$3] or Rmb 25 to watch something that they actually want to see.”

Tencent is taking its model from HBO, which began heavily investing in producing its own shows just 20 years ago. “We are walking the same path,” Sun says. 

The company is banking on big-budget direct-to-online productions this year, headlining with Ice Fantasy《幻城》, a 50-episode fantasy (almost akin to a Chinese version of The Lord of the Rings), followed by an upcoming adaptation of Zhang Muye’s (张牧野) best-selling Ghost Blows out the Light《鬼吹灯》novel series.

The success of The Legend of Mi Yue coincided with a report from China Netcasting Services Association (CNSA) showing that mobile viewers of online video outpaced PC and laptops last year. Almost 77 percent of the country’s 461 million online viewers regularly chose to watch content on their smartphones, compared with 54 percent opting for computers. The association’s 2014 report had the two formats tied at 71.9 percent to 71.2 percent, respectively. 

This massive shift is illustrative of China’s mobile-first, mobile-only generation: as data packages have fallen in price, young commuters glued to their smartphones catching up on the latest TV show have become an increasingly common sight on urban metro lines.

“They can watch what they want, whenever and wherever they want,” says Pablo Aguilera, business development manager at Fanatic Films, a Shanghai-based production house specialising in content marketing and advertising. 

Aguilera believes that the growth of video platforms has been a transformational event in China’s cultural development. “Having such open platforms for content is the beginning of freedoms for this country,” he says. “These are exciting times.”  

While the market is young, viewers “will consume anything that you throw at them”, Aguilera says, but warns that tastes are maturing quickly and audiences should not be taken for granted.

“The audience is there, the platforms are there … we just need better content made in China for the Chinese,” he says. “The quality is already rising, but there is a lot of room for improvement.” 

Our view: China’s online and mobile video platforms are now the main screen. Will brands and local content producers be swift enough to seize audiences with quality local content?