This article is part of CMO.com’s September series on the state of media and entertainment. Click here for more.
Mention the term “binge-watch,” and Netflix is typically one of the first thoughts that springs to mind—at least in the West.
In the East, it’s a different story, where the choices include Youku Tudou, TMall Box Office, Iqiyi, and QQ Tencent Video. These options offer binge-worthy and even personalised consumer content.
China, in particular, is an area worth paying close attention to. Within five years, the world’s most populous nation is poised to own almost half (47%) of APAC’s subscription video-on-demand (SVoD) market, according to the Asia Pacific SVOD Forecasts report. That’s no small number: Individual SVoD subscriptions in the Asia-Pacific region are tipped to swell to an estimated 157.78 million by 2021, up from 41.68 million in 2015, the report found.
“Chinese viewers are accustomed to local alternatives of the most popular online global giants, including Baidu for Google and Alibaba’s Youku for YouTube,” wrote Yoel Zanger, CEO of video-streaming solutions company Giraffic, in a recent article on TechCrunch. “China has been mastering the art of creating substitutes of Western solutions in order to feed the digital needs of the internet-hungry population.”
China’s projected market share becomes all the more impressive when you consider the region’s various levels of technological challenges. Malaysia-made iFlix and Netflix (via its deal with Chinese search engine Baidu and its streaming service, iQiy) have done well by adapting their offerings to locations with varied levels of internet connectivity.
In addition, the ability to download content straight to their devices via public Wi-Fi means viewers can consume content at a time when streaming might be too expensive or simply unavailable, such as on a low-cost flight.
“We need to deliver our video-streaming service so someone with a sub-one Mbps 3G mobile network can still enjoy [content] without a buffering experience,” said Azran Osman-Rani, CEO of iflix Malaysia, during Adobe’s Experience Makers podcast.
The Mobile Mandate
Yet despite those iffy connections, the high level of mobile penetration throughout the region makes such strategies all the more important. Ninety-two percent of Chinese users currently access the internet via their smartphones. That’s 599 million people, or almost double the population of the U.S. (See infographic at the end of the this article.)
“We’ve focused on providing as efficient encode as possible so we can decrease the bit rate we need to give you a brilliant picture still and get 25 hours of streaming on a 2-GB data plan. It’s really important for people consuming more and more content on their mobile devices,” said Greg Peters, chief product officer of Netflix APAC, in a July interview with U.S. broadcaster CNBC.
Will such innovation be sufficient in the long run? Probably not. Enter the prospect of a popular local platform making its own SVoD debut. Online publication TheStreet reported that Alibaba, China’s leading e-commerce player, is “building the Netflix of China.” Alibaba’s wildly successful Taobao platform reported 529 million monthly active users in the past quarter, a rise of 22 million from last quarter, TheStreet reported.
The uptick is mainly thanks to the content-focused Taobao app.
“What people don't see is that there are millions of people in China watching these videos, and the engagement is staggering,” Lead Edge Capital managing partner Mitchell Green told TheStreet.
Alibaba also has reportedly been using personalisation technology to provide more relevant content to its users, as well as working on a subscription model for online video service Youku Tudou.
When it comes to China, homegrown providers have proved to have a natural advantage for achieving scale and meeting local demand. So it stands to reason that “Made In China” SVOD services might very well dominate the region as well.
“Rapid smartphone subscription growth means that China will command 47% of the 2021 total SVoD subscribers–up from 38% in 2015. From the 82 million additions between 2016 and 2021, China will supply 34 million, Japan 9 million, and India 15 million,” the Asia Pacific SVOD Forecasts report stated.