China has seen a massive boom in its online video industry market. Like America has Netflix, China has its own fair share of video sharing powerhouses such as Tudou, Youku and PPTV where one can watch the latest professionally produced movies and television shows (see Figure 1 for trafficking statistics) at their leisure. The value proposition for many of these businesses is that unlike on Netflix where you have to pay for subscription, these sites deliver their content to their customers free of charge. This has led to a change in consumer behavior causing many Chinese people to branch out from watching shows on the traditional television model to more and more consumers choosing to watch TV online instead. The statistics reflect this growth, as currently China has 450m online-video viewers, and according to iResearch it is projected to grow to 700m by 2016.

Like Netflix, many of these Chinese video sites also generate their own content (Figure 2). Producing and releasing their own content has allowed many of these business to cut down their cost of licensing shows from production houses. However, a problem with this is that like Netflix which had only one hit release House of Cards up to date, many of these in-house production shows fail to market. This failure would not only result in a loss of production cost, but would inevitably tarnish the company’s brand name. Thus, the only way for these Chinese video sites to continue expanding is for them to choose the optimal growth strategy. It seems that a viable option for many of these businesses is to continue licensing most of their shows and creating their own content sparingly whilst doing appropriate market research on the latest consumer viewing trends beforehand.

Figure 1: Trafficking for Chinese online-video services as of September 2013

Figure 2: PPTV will be releasing a new in-house produced reality show called “The Office Goddess” later this month

Works Cited