China online video industry research: Who stole your screen?

Image Source @视觉中国

Photo source @ Visual China

Article / Node Finance and Economics, author\\ Walte

In 1957, 11 years after the computer appeared, Kirsch created the first digital image on the computer.

Earlier, in July and October 1948, the Journal of Bell Systems Technology published a paper entitled "A Mathematical Theory of Communication" by Claude Elwood Shannon, the father of information theory. This paper opens the research of modern information theory and provides a theoretical basis for video coding technology in the future.

With the development of video codec technology and the evolution of electronic devices, the ability of computers to process information has become more and more powerful. Information carriers have evolved from characters to text, images, video, sound, etc., and computers have moved from simple numerical processing. The evolution of the multimedia stage.

In 1992, Microsoft bundled WMP 1.0 with Windows 3.1, making Windows 3.1 the first generation of Windows-enabled multimedia systems.

In April 1995, a family humor video was uploaded to the Internet, the earliest online video recording that dates back.

In the early days, due to the limitation of the network speed, the length and clarity of the video were very low. Many applications are more to provide local video decoding, namely - player, online video is only part-time.

Savage growth: a Review of the Development of online Video Industry in China

With the development of informatization, video, as a relatively advanced information carrier, has begun to be more and more widely used in computer environments.

In the online video industry, China and the United States have little difference in starting time. The official appearance of China's online video website should be the emergence of LeTV, the previous Thunderbolt was more of a resource download, while Storm Player is a local player. In February 2005, YouTube, a representative video site in the United States, signed up for the launch.

The video website from scratch has become the choice of many people to start a business. In 2005, a large number of online video sites led by 56 Net, Tudou, Youku, etc. emerged in China, and users upload and share in a similar form to YouTube.

The other batch started from the local player, opened the road of on-demand, and represented a group of enterprises represented by storm video, PPS and fast broadcast.

In just three years, the domestic online video website suddenly like a night of spring breeze blowing. Appearance is always beautiful, for online video sites, the early competition point is mainly between traffic and broadband competition. Space cost and broadband cost are getting bigger and bigger with the growth of user size, but they have never found a suitable profit model, and advertising business alone is not enough to make ends meet.

In 2006, YouTube was heavily acquired by Google, allowing investors to see the possibility of exit. Therefore, some of these websites either seek listing and acquire land, otherwise they can only transform other businesses.

56 network was acquired by everyone in 2011, and then changed to Sohu; Youku potatoes have been registered with Nysdaq one year after the merger. After the merger, they won the thigh of Alibaba; PPS video business was acquired by Baidu, and then merged with iQiyi; PPTV was acquired by Suning in the name of extending the industrial chain; AcFun, the first domestic barrage video website, was included in the fast-handed. Of course, LeTV, storm, popular, etc. began to work on the hardware; popcorn network simply transformed social networking sites.

The entry of the giants has further enhanced the dimension of competition. Liu Hong, COO of LeTV, said of the successful listing of LeTV: "the amount of revenue depends not on the traffic of the website, but on the ability to cash out." There is no point in comparing traffic, and the huge amount of traffic that cannot be realized is also garbage flow.

This is a signal that the traffic bottomless competition in the online video industry begins to turn to the copyright dispute of content, and the UGC model with traffic as the core is tilted towards the copyright business with content as the core. In other words, the same loss of money, the good thing is, this way of competition accelerates the death of a small platform without a "backer", but also accelerates the integration of the industry.

At present, the domestic video website structure has been basically finalized. The three companies led by Tencent Video, iQiyi and Youku have taken up most of the market share, while the rest have been divided by platforms such as B Station and Sohu Video.

02 Relevant policies and regulations: A series of bans by the State Administration of Radio, Film and Television have stimulated the development of the online video industry to some extent.

In 2005, the most lively year in China's online video industry, in order to ensure the healthy and standardized development of the industry, the State Administration of Radio, Film and Television (SARFT) put forward the "Information Network Communication Audio-visual Program license". Only by applying for this certificate can we engage in audio-visual program related business.

The regulations on the Administration of Internet Audio-visual Program Service implemented in January 2008 also stipulate that the applicant shall have the status of legal person and shall be a wholly state-owned or state-controlled unit. As a result, enterprises have to buy licensed state-owned enterprises, or linked to the name of state-owned background enterprises.

According to the latest news released by the State Administration of Radio, Film and Television (SARFT), there are currently 588 organizations with the license to disseminate Audio-visual programs on the Information Network in China.

In the domestic online video industry, there are four certificates that must be clear. In addition to the information network to broadcast audiovisual program licenses, there are also network culture business licenses, radio and television program production and operation licenses, and the People's Republic of China telecommunications and information services business license (ie: ICP certificate).

After 2006, SARFT imposed a series of bans on television and online video. Most of these bans are aimed at satellite TV, but there are also restrictions and regulations on the film and television industry as a whole. Unlicensed films, TV dramas, cartoons and theoretical literature films proposed in 2009 are not allowed to be disseminated on the Internet. It has a great impact on online video content. To some extent, some restrictions on the broadcast of TV shows have stimulated people to get the content of movies and TV dramas through online video platforms. to a certain extent, some restrictions on the broadcast of TV dramas have stimulated people to obtain the content of movies and TV dramas through online video platforms.

According to the information released by the State Administration of Radio, Film and Television, compared with 2017, only the broadcast time of the variety puzzle program has shrunk, and the variety puzzle program is the smallest among all program types.

The introduction of the limited entertainment order has promoted the development of online variety.

03 Industry competition pattern: Tencent video, iQiyi, Youku accounted for 80% of the domestic market

At present, the domestic online video industry competition pattern presents obvious head effect. Iqiyi, Youku, Tencent video three enterprises, backed by the Batt Big three, in the industry has a clear competitive advantage, the three together separated more than 80% of the market.

The second echelon, with a mango TV, that stands out from the local station and a beep featuring interactive videos through ACG culture.

In terms of content production ability, Tencent and iqiyi are obviously in the lead, while Youku is slightly weaker. According to the statistical results of online integration in 2018, Tencent videos are 63 online, iqiyi 55, Youku 24, mango TV 22. Sohu video 6.

Although Tencent video, iqiyi, Youku accounts for most of the market, but profits are still far from expected. Although in recent years, online video sites in terms of revenue ratio, advertising revenue is gradually shrinking, but also shows that the industry is gradually exploring more sustainable possibilities than advertising as a way of realizing traffic.

There is always a sense of crisis.

Some people compare the domestic online video industry to the dark forest. Under the law of the dark forest, all the ingestors are burning money, and they are buying copyrights insanely, but no one dares to stop. Stopping may mean elimination. Such a dark forest game, declined the admission of small players. Everyone wants to know when this chase is an end.

After the domestic online video experienced the stage of germination and barbaric growth after 2005, today's online video industry is in the dark moments before dawn. The aborigines who joined the war not only have online videos, but also some foreign guests. ". All businesses are running wildly in the dark, and they are also watching in the dark.

1. "aborigines" of online videos

The team to Youku, iqiyi, Tencent video as the core force, and the current domestic online video industry is also the main force of these three. In addition, there are Sohu video, Letv video, 56 video and so on.

It is characterized by the development of UGC model and gradually expanded into a comprehensive online video website. According to information released by the State Administration of Radio, Film and Television (SARFT), in 2018, the cumulative UGC stock of 588 organizations licensed for audio-visual dissemination of online information reached 1.035 billion, while a total of 593 new online dramas were purchased and self-made.

2. "Neighbors" on the video industry chain

The storm video and popular network that used to be engaged in the player business, and later joined the online video war situation. However, they took some of these “near water towers” ​​and they started to use hardware equipment.

Professional film and television production company is engaged in the online video industry. If it is counted in China, Mango TV is one of them. The foreign country is mainly represented by Hulu. It is jointly registered by National Broadcasting Corporation and Fox. In 2011, Yahoo competed for US$2 billion. Purchase success. Today, Hulu is an important force in the US streaming media platform.

3, the new power of network audiovisual

In 2014, when the mobile Internet was in full swing, short video, as a more fragmented and lower-threshold form of content, pushed UGC's video content model to the second climax, led by Kuaishou and Douyin, two short video platforms. Volcanic video, followed by Oneness Group Tudou Network comprehensive transformation of short video platform, and Tencent's microvision has become an important promotion goal of Tencent video programs.

Two years later, China's online live broadcast of the first year of the year, live games, live show live, vegetarian live broadcast hundred flowers, 2018 vegetarian live broadcast platform pepper and six rooms merged, Huya TV successfully landed in the United States, Douyu went to the United States in April this year to submit a prospectus. The screen space of traditional online video is compressed again.

04 user analysis: increased willingness of users to pay, Internet television is popula

The trend of online video users mainly includes: the willingness to pay is greatly increased, and the boundary between television and online video applications is becoming more and more blurred.

According to statistics by the State Administration of Radio, Film and Television (SARFT) of 588 organizations that have obtained the license to disseminate Audio-visual programs on the Information Network, the number of online audio-visual paying users in China increased to 347 million in 2018. It is up 23.9 percent from the previous year. In 2018, the number of online video users in China was 725 million, with 47.9 percent of paying users. There are two main reasons for the improvement of users' willingness to pay: the increase in the overall number of online video users and the improvement in the quality of online video content.

In December 2018, the number of online video users in China reached 725 million, down from the first half of the year to 8.5 percent.

Another point that cannot be ignored is the copyright battle for online video, which makes more and more resources become the exclusive resources of a certain platform, which passively increases the payment rate of users.

In 2015, Tencent seized NBA's exclusive online broadcast and modification rights for five years from Sina Sports for $500m. This year, the phenomenon-class IP Marvel series was removed from the shelves because of the expiration of copyright with Disney, and the Caribbean Theft series was also removed from the shelves at the same time, which is not good news. After all, users who have bought members have not received any compensation.

According to statistics, the number of cable radio and television users in China in 2018 was 218 million, the number of interactive network television users was 154 million, and the number of Internet television users was 420 million, more than the sum of the first two.

Tencent Video and Guangdong Southeast New Media Development Co., Ltd. launched the cloud audio-visual aurora, kiwi fruit TV is a joint venture between iqiyi and Galaxy Internet Television Company, CIBN cool meow film and television is Youku and CIBN co-launched Youku TV version, and so on. Each major video platform through the form of cooperation with radio and television, capture the last screen of the home environment.

The emergence of Internet television has provided more space for online video platforms. Now, in home scenes, PC, mobile devices and TV screens are all occupied by online video platforms.

05 Content production and production: The content enters the stage of industrial production, but the quality is uneven

Video content in the form of UGC still needs an exit. As the competition for integrated online video sites begins to compete for copyright content, UGC, which has been "snubbed", begins to seek new exports, the emergence of short videos and live broadcast. This part of the demand has been resolved.

Whether it is Ali's entertainment or Tencent's pan-entertainment, the content ecology based on copyright operation is the key place for today's online video platform to compete.

The difference is that the traffic is monetized in two well-known modes, with different emphasis on the two giants.

· Ali's content ecology (Photo: Game Teahouse)

For Ali's ecology, the way of realization is to e-commerce as the core. Taking Youku and UC as the core, the traffic is accumulated through literature, games, music, network ensemble, drama and so on, and finally the transformation of cash realization is realized through the e-commerce mode.

Suning's follow-up and acquisition of PPTV is also based on the expansion of PPTV as a platform for its own content, and ultimately achieved the purpose of e-commerce diversion.

· Tencent's pan-entertainment ecosystem (Photo: Game Teahouse)

Since Tencent Reading and Shanda Literature merged into China Literature Group, the content ecology of China seems to have changed. The "largest online literary base in China", known as China's Marvel, is dedicated to content marketing based on IP operations and copyright operations. But in the end, it can not escape the strange circle of acquiring the copyright of others to compete with the same industry.

Tencent's closed loop is based on literature, film and television, animation, e-sports, games, and finally open up the islands around IP to form a complete ecosystem. Users are more likely to be immersed in such an ecology, but the short board is also very obvious. There is no e-commerce to take the next step of realizing the operation. The burden of raising a family can only rely on advertising revenue and membership income, and of course, game income. According to Tencent's latest financial report, game revenue accounted for half of Tencent's revenue.

Since 2018, a large number of boutique episodes have appeared on the market, causing heated discussions on major social platforms.

(Photo from the network entertainment observation)

Among them, the fine dramas include "Yanqi Raiders", such as Ruan Biography, and the phenomenal-level urban drama "Everything is quite good." Nowadays, the level of TV drama production in China has entered a mode of industrial production. However, the main problem lies in the choice of scripts and stories, as well as the self-cultivation of actors.

Some shows intend to start using some newcomers as protagonists, and invite some well-known and powerful actors to play supporting roles to help improve the overall level, which may be a necessary stage for the alternation of the old and the new. Chinese film and television needs a group of dedicated young actors to stand up.

The other is the outbreak of the variety show, from the first test of iQiyi's "China's hip-hop" to Tencent's two "creation camps" and "Idol trainees", etc. The level of the show is also rising. Tencent's two-creation camp, strong interactivity, really helped Tencent video to brush a wave of data, but also helped Tencent's products to make a lot of exposure.

06 Online video business possibilities: members and advertising are still big, 5G and AR will be opportunities

1) membership and advertising

The formation of the membership income structure depends mainly on copyright operations. Exclusive content gives the platform a membership fee, and even pays extra for viewing fees.

The value of advertising comes from traffic. Although the data shows that online video users are increasing year by year, the number of paid members is also increasing. This is a good thing for the platform, but not for advertisers. The privilege of membership-free advertising means that advertisers may not be able to buy the desired amount of exposure, and as the percentage of members increases, this situation will only get worse.

Therefore, the investigation of advertising has become an important index. The access of ecommerce will make the result of this index more clear. In fact, has worked with many video platforms this year. Once the data stream is opened, the backtracking of content realization will be more directly fed back to the content.

2) capture more screens

The development of streaming media technology and the United States, the application of streaming media technology in the United States has become very common, such as HP's product release and sales staff training are conducted using network video.

The battlefield of video streaming media is the competition for the screen.

From PC to mobile, online video has realized the occupation of PC monitors and mobile phone screens. If PC-side online video sites are better, then the attention of mobile consumers will be more than half of the short video. Tencent Video, iQiyi, Youku, and B stations have all launched their own TV applications, and Internet TV will become more popular in the future.

Not long ago, the old online education company Hu Jiang was interviewed because he did not have a network audiovisual license to engage in the production and dissemination of online audiovisual programs. As early as around 2014, BAT has already begun to lay out in the field of online education. The previous Netease cloud classroom, as well as a series of video courses carried out by knowledge payment, have opened up new possibilities for online video.

3) Technological innovation

With the advent of 5G technology, high-frequency and high-speed features make it possible to spread video content at higher resolutions and higher frame rates. Video content can now reach 8K or even higher. The future will be presented to people in an increasingly clear digital world.

The rapid advancement of AR technology has increased the form of video by one dimension. At the same time, strong interactivity also provides more possibilities for many content-based industries in the future.

The upgrade of these two technologies may bring a whole new reshuffle to the entire online video industry. The three traditional Chinese telecom operators that are currently known have begun to deploy in 4K video. At that time, perhaps the device and video codec will regain the right to speak back to the content, such as the storm and the thunder that catch up with a late night, all need a moment of such exhilaration.

07 Overseas streaming media market: I can't enter the Chinese market for a while.

At present, the foreign streaming media market has entered a more intense stage with the acquisition of Fox by Disney. Among these competitors, Disney and Neifei are the most powerful, and HBO, Hulu, and Amazon are also preparing for the battle. After Apple’s latest conference, it may announce its participation in the streaming media.

Compared with the domestic market, the competition in foreign markets is more based on its own resources, taking Disney's own high-quality movies and dramas as an example. Behind it is a traditional Hollywood film company whose main source of income is its members. income.

In contrast, the domestic head online video platform, Tencent video, iQiyi, Youku are somewhat less grounded, although there are attempts to make a homemade drama, more cost is in the purchase of copyright.

Today, Naifei's global layout has been launched, for example, based on the unique culture of South Korea, Japan and other countries, shooting shows and breaking into the streaming media market in these countries. Today's Chinese market, still walking in the dark forest, it is clear that in this lonely arena, to buy their copyright as the core competitiveness of the players, is not ready to open to the Netflix.

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