Chinese online giant Alibaba Group will launch a Netflix-style video streaming service in about two months, Reuters reported Sunday from Shanghai where the city’s film festival began this weekend. The streaming service will be called TBO, or Tmall Box Office and will offer in-house productions in addition to content from within China and imported from other countries, Alibaba’s head of digital entertainment Patrick Liu said.
Taking a look at the Chinese online market, Alibaba, Tencent and Baidu are the top Internet players. Tencent is said to have the most users while Alibaba has business-to-consumer, business-to-business, e-commerce and is considered the biggest gun. Baidu is a giant search engine so can tout the most visitors.
Companies are already aggressively making deals for content in China. Earlier this month Disney/Marvel partnered with China streaming giant Youku Tudou for local marketing of Marvel films and TV shows. Alibaba last year acquired a 16.5% stake in Youku Tudou, the second-largest video sharing site in the world behind YouTube. Tencent has a social network, games, e-commerce and multiple web portals so it competes in the market with Google, Facebook, Amazon and, of course, Alibaba.
Netflix also is reportedly exploring entry into China, and Alibaba’s new service will already be competing against Tencent, Baidu’s Sohu.com and Leshi Internet Information & Technology Corp Beijing.
China’s video-on-demand potential is staggering. North America’s overall market is nowhere near the size of China which has about 1.3 billion people, four times the size of the U.S. The most recent estimates put put the number of Cinema screens in China at 18,200 compared with 40,000 in North America, but the audience is larger. In terms of online users in China — it’s at least twice the size of the U.S. market. In any case the potential reach for entertainment via any platform is vastly larger in China.
And they are examining models that have been successful in the U.S., the leader in the production of entertainment content, to establish in their country. Anyone with a business/marketing mind can see where this is headed long-term.
“Our mission, the mission of all of Alibaba, is to redefine home entertainment,” said Liu. “Our goal is to become like HBO in the United States, to become like Netflix in the United States.”
Tencent previously linked up strategically with HBO to become the pay TV company’s only distributor in China.
About 90% of TBO’s content will be paid for, either by monthly subscription or on a pay-per-view basis, Liu said. The rest will be free.
Also, You On Demand has been in the video-on-demand market in China for about five years and they distributed via mobile/TV; they have deals with a number of U.S. studios as well as some hardware players in the Middle Kingdom (Huawei, Xiaomi, etc). Its chairman is Shane McMahon, formally of World Wrestling Entertainment.
China is rich with Internet companies, with portals Sohu, Sina, Netease (also a big gaming site). Other sites big in gaming are Shanda, Giant Interactive, Changyou and Perfect World. Social media sites have been flourishing in China as people connect across the largest nation in Asia. There is Tencent’s Weibo (kind of like Twitter), Sina’s Weibo, Tencent’s QZone and Pengyou, Renren and Kaixin001.
Then you have online video such as Qiyi (affiliated with Baidu), Tudou and Youku (mentioned above). There are also webchat services and mobile apps like Jiepang.
To fill these burgeoning streaming sites, Alibaba and the other companies will be looking for content.
However, there are hurdles as China’s State Administration for Radio, Film and Television (Sarft) that will limit foreign content on Chinese video websites. Several TV shows, including The Big Bang Theory, The Good Wife, NCIS and The Practice have already been banned.
What Bill Gates proclaimed in 1996 never seems so true as it is today: “Content is King.” As long as it’s the right kind of content.
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