China's big streaming shift: Paying instead of pirating

China's love of QR codes

Not so long ago, China was an oasis for pirated music in addition to also videos. CDs in addition to also DVDs were easily copied in addition to also sold for cheap at roadside markets. If you had a computer in addition to also an internet connection, top selling albums in addition to also Hollywood movies were widely available for free online.

in which’s changing. in addition to also as will be the case with many tech trends in China, in which’s changing fast.

fresh technologies in addition to also a long-running crackdown on pirated content mean members of the country’s growing, smartphone-wielding middle class are increasingly willing to pay to stream videos in addition to also music online.

“When you have to spend two-to-three hours digging up pirated content, users are willing to pay a [little] amount of money to get non-pirated content,” said Karen Chan, an analyst with research firm Jefferies.

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Workers in China earn far less on average than their U.S. counterparts. although for the better paid inhabitants of Chinese cities, streaming content will be pretty affordable.

Across major Chinese video platforms, the monthly fee will be about 20 yuan ($3); streaming music will be even cheaper, ranging coming from 8 to 15 yuan ($1-$2) per month. Compare in which which has a basic monthly Netflix (NFLX) subscription within the U.S. at $8, or a Spotify one at $10.

‘in which became truly easy to pay’

The rapid spread of digital payment platforms like Tencent’s WeChat Pay in addition to also Alibaba-affiliated Alipay has also played a role, according to Xue Yu, an analyst with research firm IDC.

The platforms created a market of young Chinese consumers comfortable with buying goods in addition to also services for a few yuan online, Xue said.

Amber Zhang, a 27-year-old office assistant in Beijing, told sy88pgw in which WeChat Pay was one of the key reasons she started out spending money on music in addition to also video subscriptions back in 2013.

“in which became truly easy to pay,” she said.

China pirated content tease graphic

Like many some other parts of China’s cloistered tech industry, domestic companies are reaping most of the profits coming from online content while foreign firms have faced difficulties.

The video market will be dominated by Tencent Video in addition to also iQiyi, a subsidiary of internet company Baidu (BIDU). The country’s top ecommerce company, Alibaba (BABA), will be also a big player with its video streaming platform Youku.

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Tencent (TCEHY) also carries a near stranglehold on the streaming music industry through its QQ Music, KuGou in addition to also Kuwo platforms.

“These services are Great enough today, in which’s very convenient, you can download an app on your phone, you can stream all the videos or audio in which you want,” said Kevin Chang, a 28-year-old engineer who lives in Beijing.

China’s big tech companies dominate

The competition for paying customers like Chang will be intense.

Tencent carries a virtual monopoly on the streaming of mainstream western music in China. in which struck a deal with Sony Music, Universal Music Group in addition to also Warner Music Group for the exclusive rights to stream their music in China. Under the deals, Tencent also gets to decide which songs rivals get to stream.

The expect will be in which by holding the keys to such a vast catalog, Tencent will get more users to sign up for subscriptions on its various music platforms. At the moment, in which has around 15 million subscribers. in which sounds like a big number, although in which’s only about 2% of the company’s total active user base.

China's multifaceted messaging app: WeChat

Video streaming has had more success — both Tencent Video in addition to also iQiyi report about 10% of their monthly active users pony up for subscriptions (about 40 million in addition to also 30 million users respectively).

Even the Chinese users who are watching videos or listening to music for free on established platforms, are no longer doing so illegally. They generate revenue for the tech companies by sitting through ads.

Although the ads bring in money, the margins coming from paying subscribers are much higher, according to Chan, the Jefferies analyst.

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Premium content will be the driving force for getting people to convert to subscriptions — if you can only watch your favorite TV show which has a VIP streaming account, for example, you are more likely to subscribe to such a service.

As a result, Chinese video platforms “have to compete quite fiercely” for content, IDC’s Xue said.

Some of the most coveted shows come coming from U.S. companies, which remain largely shut out coming from offering content directly to Chinese consumers within the face of heavy government censorship in addition to also regulation. Instead, they’re opting to go through the big local players.

iQiyi struck a deal with Netflix in April, giving its Chinese subscribers access to well-liked original series like “Black Mirror,” “Stranger Things” in addition to also “Mindhunter.” Tencent became the exclusive online partner for HBO in China back in 2014, giving its subscribers access to hits like “Game of Thrones” in addition to also “True Detective.”

Domestic players are also developing original series for the local market. Tencent Video has had a string of successes producing dramas in addition to also variety shows in house, as has iQiyi.

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in addition to also original series give Chinese streaming platforms an even stronger incentive to respect intellectual property laws because they can today make money coming from their own content by selling in which overseas.

Youkou produced “Day in addition to also Night,” a 32-episode detective series in which became a runaway success, garnering some 4 billion views since its debut in August.

in which became Youkou’s first Chinese internet series to be distributed overseas when Netflix snapped up the exclusive worldwide distribution rights for the show in November.

Serenitie Wang contributed to This particular report.

sy88pgw (Hong Kong) First published January 24, 2018: 10:08 PM ET

China's big streaming shift: Paying instead of pirating

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