In 2012, China relaxed its feature film import quota, upping the total number of foreign movies eligible for a 25% revenue-share slot to 34. In the meantime, online has been a pretty freewheeling space where American culture has been given a large window to be exploited in the country. In the past few months, however, there has been an increase in cracking down on online content. And today, Chinese media says a plan may be afoot to impose a quota system on the licensing of overseas programs by video websites. The idea being mulled over by the State Administration of Press, Publication, Radio, Film and Television would have implications for video giants like Sohu, Youku Tudou and Tencent who collectively stream about 400 American and British TV shows — with audiences rabid for the likes of Sherlock, The Vampire Diaries and others.
I’m cautioned that there has been talk for a long time about applying stricter censorship enforcement to online content, and China specialist Rob Cain tells me, “It would be no surprise to see it enacted.” He says the Communist party “wants to set the rules of morality and proper conduct in China — essentially to keep people behaving in ‘appropriate’ ways that support, or at least don’t threaten, the (party)’s rule or legitimacy — and foreign programs are generally perceived as a threat, often referred to as ‘cultural pollution.’ “
But, a problem arises for the government because this kind of move can also result in a backlash that weakens the party’s legitimacy. “No one wants to be told what they can see, hear, think or say. For many people, online viewing of foreign programs has become the primary source of entertainment, and taking that away will engender far more ‘inappropriate thought’ and anti-government feeling than any amount of foreign programming ever could,” Cain contends. In late March, Internet users were already said to be up in arms over talk of new censorship guidelines which could limit what Western series they can access.
Apart from the audiences, which might feel compelled to turn to piracy — something that is already notoriously rampant in China — a quota would also certainly be an issue for the big online providers. We constantly hear about the booming box office in China, but online takings are nothing to sneeze at. According to research cited by The South China Morning Post, revenue from online video was worth 12.8B yuan ($2.07B) in 2013 and is expected to double by 2017.
Sohu, specifically, has licensed such shows as House Of Cards, The Big Bang Theory, Saturday Night Live and The Ellen DeGeneres Show. U.S. TV series account for 1/5 of all of its viewership, making it a serious blow if roadblocks start to be erected. Much as it exists in the film industry, a potential workaround would be for Chinese producers to start co-producing foreign series which would ostensibly allow them to qualify outside the quota system. But co-production status has thus far been elusive in the film business.
Today’s news of a potential cap follows a move made by SAPPRFT in April when it ordered local video sites to halt streaming of some U.S. TV shows including Big Bang Theory, The Good Wife and NCIS. No reason was provided. DMG CEO Dan Mintz tells me, “Content in the China digital space is already feeling the grip of Chinese government control. Foreign content is always at the front lines of that conflict.”
The news also comes just a couple of weeks after e-commerce giant Alibaba pacted with Lionsgate to launch a subscription streaming service that will include series like The Royals, Nashville and Mad Men.