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America has only one Netflix, China has a dozen!

Earlier this month it was reported YouTube introduced the original content service YouTube Red. YouTube Red features a number of YouTube celebrities and is available to paid subscribers only.

Original content produced by video streaming sites first caught the attention of the public in 2013 when Netflix debuted its successful original television series “House of Cards”, which analysts say has contributed to as much as a 16.7% year-on-year quarterly increase in Netflix subscriptions. Last October the Netflix original film “Beasts of No Nation” stunned the market again achieving three million views in two weeks.

2015 is a hot year for web-based original content in China. Jianbing Man, or Pancake Man, produced by Sohu Video contributed USD 29 million to the quarterly revenue statement for Sohu Video. Web television series “The Lost Tomb” by iQiyi gained 24 million views within two minutes and was viewed 100 million times over 22 hours. “The Lost Tomb” has seen iQiyi’s total paid members boosted to five million with a year-on-year growth rate of almost eight hundred percent.

According to People’s Daily, a total number of 273 web series had been released at the end of August in China, with a total viewing figure for over 11 billion.

So why is original programming by video streaming websites trending in China? AllChinaTech shed lights on the phenomenon.

I. Tech giants are taking over the market

Primary player groups as of November 1st, 2015

China’s tech giant Tencent launched a project in March to sponsor over 100 Professional Generated Content (PGC) projects in 2015. Two production companies Tencent Pictures and Penguin Pictures were founded in September, aimed at producing original web series and animations. “Goodbye, Mr. Loser,” the first movie introduced by Penguin Pictures achieved almost RMB 1.4 billion (USD 222 million) at the box office after being released in October.

E-commerce giant Alibaba acquired China’s top online video streaming platform Youku Tudou for over USD 4.5 billion in October. The two companies then co-launched an RMB one billion (USD 167 million) project to sponsor film industry practitioners throughout the world under 45 years old.

Tencent and Alibaba are just two companies among many that are actively investing in the content production sector. Sufficient capital in the sector lures in talent, provisions creators with better resources and leads to an explosion of content.

II. Switch from one single product to an entire product line
The content generation sector of China is now capable of producing animation, movies, mobile games and other spin-off entertainment products to coincide with film and television franchises, creating synergy effects and drawing in greater returns.

“The Journey of Flower,” a Chinese fairy tale romance, was a hit this summer. The spin-off mobile game introduced alongside the television series reached RMB 200 million(USD 32 million) in monthly revenue after only two months.

“We now aim at making products that can lead to other products, including movies, games, books and merchandise,” Wang Qi, CEO of Vasoon Animation, a leading animation production company said publically. “We let our partner production teams participate at the early stage so that when we launch the movie, the games can be out at exactly the same time.”

The previously singular product of a web series is now switching to an entire product line centered on core intellectual property (IP) able to capture more consumers from different sectors while increasing loyalty from existing followers.

III. Boost upon a long-term accumulation of popular contents

Boxed television series are adapted from online literature

A good number of popular Chinese web series today are adapted from established online literature. Online literature is a special genre in Chinese literature that refers to literature first published online primarily by amateurs.

Online literature became popular in China in the late 1990s and has remained popular till the present. According to People’s Daily, the market for Chinese online literature is now RMB seven billion (USD 1.1 billion).

Similar to the case with Fifty-Shades of Grey, much of the adapted literature produced this year already had an established fan base prior to production. The original book series of “The Lost Tomb” sold over 12 million copies in China. Its author is one of the most established cyber novelists in the country. The popularity of the web series largely derives from the original fan base.

A long-term accumulation of established stories like this has contributed to an explosion of the sector this year.

IV. More experienced and eminent production team
Talent is always essential to quality content. House of Cards may not have been the success it was were it not for Kevin Spacey.

The first season of “Let’s Talk,” an original entertainment debate show on iQiyi, achieved 260 million views. Its producer and anchor Ma Dong used to be an established producer and director at China Central Television. His sensibility and experience in program production was recognizably essential to the success of Let’s Talk.

“Surprise” is another phenomenal web series in China with over two billion views online. UniMedia, the production team behind the popular web series, consists of many former employees from Tudou, all of whom are familiar with online video sites and consumer needs.

UniMedia will release a Surprise movie in mid-December. Photo from

It’s become a trend for talent to leave traditional production teams to join online production platforms and this undoubtedly adds to a betterment in the quality of original contents on video streaming sites.

V. Viewers now are more likely to pay for good contents with convenient payment method and higher income

Alipay now has 270 million active users and WeChat Wallet has 200 million registered users. Ever convenient payment methods have lowered payment barriers in China and work as a complement to China’s less prevalent credit card system.

According to China’s National Bureau of Statistics today’s Chinese people have more disposable income. The yearly average disposable income for Chinese people reached RMB 20,000 (USD 3175) in 2014, an 8% increase from the previous year.

As Chinese consumers have more disposable income, they are more willing to pay for worthwhile content.

“We tested launching premium content to paid subscribers only. The fast increase in paid membership proved people were willing to pay for high-quality content,” Gong Yu, CEO of iQiyi said.

VI. Emergence of subcultures

“The post-1990s generation are more used to paying for content online,” Zhou Wei, Managing Partner at Kleiner Perkins Caufield & Byers (KPCB) said at a conference in October. The younger generations face less basal survival pressure and thus have become a target for much of the original content.

The emerging subculture groups among China’s younger generations display high consumption habits. According to iResearch, 35.5% of China’s comic fans are willing to pay or pre-pay for video games instead of downloading pirated versions.

Animation-focused video website AcFun raised USD 50 million from Youku Tudou in August. Its long-time rival Bilibili claimed to have a valuation of USD 72 million after raising USD 1.92 million in August. Increased investment in the niche market also indicates the consumption potential for the target group, and more chances for original content in the sector.

(Featured image from Netflix)

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