China’s video streaming platforms

A glimpse into the universe of China’s video streaming platforms

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As of the end of 2020, China boasted about 989 million Internet users and an internet penetration rate of about 70.4%, way above the worldwide average of 59%. Chinese users mostly access the internet via their mobile device: Indeed, according to Statista, in 2020, about 98.6% of them surfed the web using their smartphones. Thus, it is not surprising that China’s online video market was worth 102.3 billion RMB in 2019 and will keep on growing up to 174.4 RMB in 2022, recording a 20% year-on-year increase. In 2019, China’s video streaming platforms earned 36.7 billion RMB from advertising and mobile paid content accounted for 74.4% of total revenues.

Nevertheless, advertising revenues experienced a substantial drop compared to the past and users’ fees currently account for 40% of Chinese streaming platforms’ revenues, marking a shift from an ad-driven market to a subscription-driven business model in which providing high-quality content is fundamental. Although live streaming and short video APPs respectively absorb 54% and 42% of nation’s internet users, about 19% of Chinese consumers still decide to spend time on traditional video streaming platforms. Thereby, China’s online video market is still plenty of opportunities for businesses willing to enhance their ties with their Chinese consumers.

Main sources of revenue for China’s video streaming platforms between 2015 and 2022 China’s video streaming platforms
Data source: iResearch, designed by Daxue Consulting, Main sources of revenue for China’s video streaming platforms between 2015 and 2022

Long video platforms’ death was greatly exaggerated

Even though nowadays brands prefer focusing their marketing efforts on short video APPs in their attempt to intercept Chinese Gen-Z consumers, it is not over yet for traditional video streaming platforms. Indeed, during 2020 Q3, China’s top 5 online video platforms altogether attracted about 291 million daily average users and more than 1.4 billion monthly average users. As advertising revenue gradually declines, streaming platforms endeavor to increase premium subscriptions through investing more in original productions, improving the overall quality of their content and adding fees for top quality videos.

For their part, businesses can still benefit from promoting their products and services on Chinese traditional video platforms. First of all, longer videos allow storytelling to establish a sounder emotional relationship with customers and communicate brand values. Indeed, while short video ads enhance brand awareness, long videos improve brand perception.

Secondly, traditional platforms are perfect for high-quality informational videos where users can find out more about the products. Moreover, long videos are becoming a synonym of high-quality content and as the online video streaming universe gets more users, quality content is essential to stand out.

In 2019, iQiyi, Tencent Video and Youku controlled about 79% of China’s online video market, followed by the Hunan-based entertainment platform Mango TV and the video-sharing APP Bilibili.

iQiyi

iQiyi is one of the largest video streaming platforms in the world, boasting around 480 million monthly users in 2020. According to its 2020 annual report, paying subscribers reached 100.7 million, recording a 15% rise compared to 2018, when the number of subscribers amounted to 87.4 million. iQiyi stands out for its employ of technologically sophisticated tools, such as artificial intelligence (AI) and big data analytics.

The amount of funds allocated to R&D has gradually increased between 2016 and 2020, jumping from accounting for about 7% to 9% of the company’s turnover. In order to further reinforce its monetization model, in 2019 iQiyi launched its first interactive video advertisement during the popular hip-hop talent show The Rap of China. In the advertisement, two famous contestants of the show, KeyNG and Fox, engaged in a rap battle rapping about the product and brand that they were promoting. The audience could choose to view one of the solo-raps. In 2021, iQiyi announced to be about to adopt intelligent production, which will allow the platform to cut costs and turn profit through the help of AI and 5G technology.

iQiyi interactive ad during The Rap of China 2019 China’s video streaming platforms
Source: Haokan Video, iQiyi interactive ad during The Rap of China 2019

Tencent Video

Launched in April 2011, Tencent Video is today one of China’s TOP 3 video streaming platforms in terms of daily and monthly active users. In 2019, the APP attracted about 500 monthly users and reached over 100 million paying subscribers. The drop in advertising revenues pushed Tencent Video to invest more on quality content. Indeed, in 2020, the number of TV series and movies released declined, but users spent a longer average amount of time on the platform, since more original and higher-quality content brought about an improvement of the APP’s user retention rate.

Gen-Z and Millennial women living in low-tier cities account for more than half of Tencent Video’s users. Maybe that is the reason why Tencent decided to target low-tier cities with a brand new streaming platform called Pianduoduo (not to be confused with e-commerce platform Pinduoduo). The company announced that such video platform would provide users with movies and TV series for free without any advertising. Moreover, users will earn “gold coins” convertible into RMB for time spent watching video content on Pianduoduo.

Youku

Owned by Alibaba, Youku has the label of “Chinese Youtube” and, along with Tencent Video and iQiyi, is one of the leading video streaming platforms in China. Between January and June 2021, the platform received on average 84.6 million visits with an average duration of 4:24 minutes per visit. In March, the platform recorded a retention rate of 45.1% among members and of 43.8% among non-members, quite a bit lower than those of Tencent Video. Youku users are usually focusing on news, videogames and electronics. Even if the number of its subscribers does not rise as fast as that of Tencent Video and iQiyi, Youku remains one of the most popular and widespread video streaming platforms in China and businesses should take it into account when planning their marketing strategy.

Bilibili

Bilibili was founded in 2009 as a community and video platform where sharing Japanese anime’s pictures and videos, drawing inspiration from Niconico, one of Japan’s largest video-sharing websites. In the span of 12 years, the company gradually developed, expanding its business into advertising, mobile gaming, e-commerce, live streaming, and launching a premium subscription plan which grant access to previews, special offers, and high-quality content.

Nowadays, Bilibili is one of the fastest-growing video streaming platforms in China: in 2021 Q1, its total net revenues recorded a 68% increase compared to the same period in 2020, reaching 3,901 million RMB. In the same period, the number of average daily active users hit 60.1 million and the amount of average monthly paying users jumped from 13.4 million in 2020 Q1 to 20.5 million, experiencing an astonishing 53% rise.

Once mobile game represented the main source of revenue for the Shanghai-based platform, but today value-added services (such as premium subscriptions and live broadcasting services) hold the lion’s share, accounting for 38.3% of its net turnover. Bilibili’s success is partly due to its ability to build up an engaged and connected community through restricting membership to passionate and kindred users, allowing members to share their impressions directly on the videos, and fostering user-generated content. Furthermore, since April 2019, users can easily purchase advertised products by entering Bilibili’s mini-programs.

Bilibili’s monthly active users and paying subscribers from 2020 Q2 to 2021 Q1 China’s video streaming platforms
Data source: Bilibili’s quarterly results, designed by Daxue Consulting, Bilibili’s monthly active users and paying subscribers from 2020 Q2 to 2021 Q1

Takeaways: China’s video streaming platforms may yet bear valuable fruit

  • Although nowadays live streaming and short video APPs attract the lion share of national internet users, companies can still rely on traditional video streaming platforms in order to establish sounder emotional relations with Chinese consumers and improve brand perception.
  • iQiyi is one of the largest video streaming platforms in the world and it stands out for its technologically sophisticated tools, such as artificial intelligence (AI) and big data analytics.
  • As advertising revenues declined, Tencent Video decided to reduce the amount of movies and TV series released, investing on more original and higher-quality content. Moreover, in order to better meet the needs of Chinese consumers living in low-tier cities, Tencent launched a brand new streaming platform called Pianduoduo, where users can enjoy available movies and TV series for free, without any ad.
  • Youku is one of the pioneer and a major player in China’s online video market. Even if it does not perform as well as iQiyi and Tencent Video, the platform hangs in there and it still boasts millions of monthly visitors.
  • Bilibili is one of the fastest-growing and best-performing video streaming platforms in China. In the span of 12 years, the company gradually developed, expanding its business into advertising, mobile gaming, e-commerce, live streaming, and launching a premium subscription plan. It’s engaged and connected community is the platform’s major strength.

Learn about China’s industry of at-home entertainment in our stay-at-home economy report

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