101 Things About China – #2 – Online Video Sites

Following yesterday’s big announcement that Youku and Tudou are to merge, it seems an ideal time to discuss a growing segment of China’s media landscape – online video sites. With the merger seen as the first step in a larger move towards consolidation, the online video sites are set for some interesting times ahead, but their position will only be strengthened by the growing number of internet users, increased online advertising spend and the continued blocking of western video sites like YouTube.

513 Million Internet Users; Market Scale of Online Video Market Grew 99.9%

China is already home to well over 500 million internet users, and according to eMarketer.com this number is expected to increase to more than 700 million over the next four years. When you think the US only has a little over 300 million internet users, it’s quite easy to see how big this market is. It’s also impressive to note that the market scale of the online video market was RMB6.27 billion in 2011, representing a whopping 99.9% YoY growth according to iResearch, and with the Olympics and Euro 2012 tournament, this figure is expected to break the RMB10 billion mark in 2012.

Youku and Tudou Dominate Market

The number of netizens sharing content on the online video sites is expected to reach 500 million by 2013 according to iResearch and it’s no surprise that Youku (meaning “excellent” and “cool” in Mandarin) and Tudou (meaning “potato” – a play on couch potato) dominate this market. The merge will now mean the No. 1 and No. 2 video sites in China are controlled by the same company, although both sites will keep their familiar brands. This merge will also help to fend off the competition, as both Baidu and Tencent are yet to really make their move in the online video market despite dominating China’s online search and social network spaces, respectively. Of course, it’s not all rosy, and this merge between the market’s two biggest players is a clear indication of that. Youku has a market share of around 22% and Tudou has just under 14%; however, both have struggled recently, and both have reported relatively big losses. We should expect more consolidations in the near future as such companies look to cost-savings, greater advertising revenues and copyrighted content to boost revenues.

Local Content is a Must; YouTube Still Blocked

From a marketing standpoint, as YouTube and other non-Chinese video sites are blocked in China, posting multimedia content to these western sites is worthless if you’re hoping to target Chinese netizens from the mainland. While Youku and Tudou are the biggest of the YouTube-style sites in China, there are about 10 key players here that include PPLive, SOHU and Ku6. Given the increasing popularity of sharing content through other social media platforms like the Weibo and social networking sites, it’s also important to have your videos and other multimedia content present throughout the major online video sites in China. Not only is it essential for SEO purposes, it ensures the other Chinese social media platforms can play videos directly.

To highlight this point, here’s an actual example of a YouTube video that has been embedded into a website, as the Chinese internet users see it.

Uhmmmm….not exactly stirring content that makes me want to use your service or buy your product.

Overall…

Chinese video sites are an important part of the media landscape in China, and they will continue to grow in importance as more and more people move online and as online advertising spend continues to explode. If you are looking to communicate and engage with Chinese consumers, this is a vital medium that shouldn’t be ignored. With multimedia content far more likely to be shared among the 513 million internet users here in China, it’s really a no-brainer.

And, remember, when thinking about “Content is King,” you should be realizing that it’s actually “Local Content is King.” This is true for all content and is vitally important if you have hopes of competing in the China market.