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Internet Consumption Outpaces Traditional TV in China

Growth in OTT boosts fortunes of burgeoning streaming companies

Across the globe the TV industry is being disrupted and turned upside-down by the explosive rise of OTT content consumption — and China is no exception.

As high-speed internet continues to roll out in the country, and 5G transforms the mobile universe, China’s OTT growth is forecast to soon be double that of traditional television.

The astonishing increase not only continues to fuel the power and market shares of China’s OTT streaming giants, but also helps to export Chinese drama serials abroad, as online series of high production value by companies including Tencent, iQiyi and Youku are being acquired by overseas online streaming platforms.

According to PwC’s forecast, China’s OTT sector is expected to see a 16.3% growth in revenue from 2017 to 2022, almost twice the growth rate of traditional television and home video, which are estimated to have a growth rate of 7.9%. OTT will take share from TV and home viewing over the next five years, the report said, as an added 148 million households will install high-speed internet access and 381 million more will be equipped with high-speed mobile internet connections through 2022, along with the rollout of 5G.

A mid-year report on China’s online streaming trend by Gudou Media, which surveys internet streaming content, stated that although the number of web series released in the first half of 2018 has been down by 21.6% to 145 titles compared to the same period last year, the total number of views went up to 76.4 billion — 56% up from the first six months of 2017 and 300% up from the same period in 2016. The most popular genres are period dramas, romance and stories of court rivalries.

Web-only series have been on the rise. According to the 2018 Report on Television Industry in China by Capital Think Tank of Film and Television Media Development (a joint effort between Beijing Municipal Bureau of Press, Publication, Radio, Film and Television and Tsinghua University School of Journalism and Communication), 52% of the 465 titles released in 2017 were streaming on the internet only, while the rest were released simultaneously on web and television. Youku’s suspense fantasy “Detective Samoyeds,” which spanned two seasons, topped the 2017 online viewership with an accumulated 10 billion views. The report said that the show cost 120 million yuan ($17.5 million) to produce.

Chinese web serials are achieving what Chinese films couldn’t have done. Sales to international platforms such as streaming giant Netflix and other outlets allow Chinese content to reaching a global audience in places where Chinese films are not released.

Last year Netflix acquired the rights to Youku’s acclaimed suspense web series “Day and Night,” which accumulated more than 6.4 billion views in China. Earlier this year, iQiyi’s suspense fantasy “Tientsin Mystic” and crime thriller “Burning Ice” both landed the global streaming giant, which operates outside of mainland China. IQiyi also took part in “Rise of Phoenixes” (pictured above), a Mandarin-language series co-produced by Netflix along with Croton Media (China Syndication), K. Pictures, Hao Mai Culture, COL Group and New Film Assn. The 70-episode show was available from Sept. 14 and is updated weekly.

But it was “Legend of Fuyao,” a fantasy series co-produced by Tencent’s Tencent Penguin Pictures and Linmon Pictures, that took international release of web series to a new level. Based on the novel “Empress Fuyao” by Tianxia Guiyuan and directed by Yang Wenjun, the show was aired on streaming giant Tencent and Zhejiang Television on June 18 and was simultaneously available on western platforms like YouTube, Viki and Dramafever in English subtitles. The show generated 14 billion views in China within 50 days and earned a fanbase abroad.

At a panel discussion at China Intl. Film & Television Programs Exhibition in May, National Radio and Television Administration’s international’s head of international cooperation department Ma Li said China’s export of TV content and services reached more than $400 million in 2017.

“The scale of export continues to grow, with greater varieties of programs reaching out to more markets, from Southeast Asia to significant growth in Africa, Middle East, Europe and America,” she said.

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