March 2014
Current Situation and Challenges
Ken-ichi Yamada
In China, Internet video sites have rapidly increased the number of users, especially young ones, over the past few years. Recently, many of the major Internet streaming site operators distribute a volume of U.S. and Korean TV dramas, claiming that they are through “legal distribution channel.” Meanwhile, since their key income source is advertising, they are all struggling to get out of the red. To improve the financial situation, the industry has three challenges to overcome.
The first challenge is how to respond to the growing demand for the video distribution for mobile phones. Over the past couple of years, mobile phones have grown fast as a platform for Internet use in China and may replace personal computers. Industry insiders point out that “only operators that moved fast on mobile will survive.”
The second challenge is “competitive” relationship with China’s conventional TV stations. For one thing, TV viewing time of domestic television may decrease because of the distribution of overseas content by streaming site operators. For another, streaming site operators are stepping up production of their own programs, and if this move turns out to be successful, the conflict between these operators and TV broadcasters will come to light.
The third challenge is a possible change in the government regulation policy. At the moment, broadcasting of overseas programs on domestic television is strictly regulated, and these programs are distributed by streaming site operators, regulation on which is relatively loose, but the authorities may impose heavier regulations on them.
At any rate, Internet streaming sites are growing more and more important as a video distribution platform in China, and Japan should pay more attention to the developments as it advocates the export of its cultural soft power, or “Cool Japan.”