BEIJING, May 24 /PRNewswire-Asia/ -- Last week in Beijing, China's leading video website Tudou ( http://www.tudou.com ) announced the launch of its "Orange Box" made-for-Internet original content production plan and "Warehouse No. 6," an independent filmmakers' incubation program. On the surface, the announcement appeared to be yet another entertainment initiative. But, a deeper examination finds Tudou's move a calculated and strategic attempt to expand its content offerings based on the television model.
This May has been a busy and noisy month for the Internet video market in China. State-owned television broadcaster CCTV officially announced plans to merge its online operations, the long-time CCTV.com, into the newly launched "China Network Television" official site CNTV.cn by May 31, 2010. In the meantime, major video websites Tudou, Youku, and Ku6 and portals Sina, Sohu, and Tencent all announced signing the 2010 FIFA World Cup online broadcasting licensing deals with CCTV in the same week. Additionally, China search engine giant Baidu officially launched its Hulu clone Qiyi.com, hosting only copyrighted movies, TV dramas and variety shows. Needless to say, everyone is jumping to capitalize on the growth of the online video industry in China as they see the trends of consumer media behavior changing and advertising dollars are shifting toward Internet video. Online video pure play, portals, search engines and TV players are re-organizing themselves around the video entertainment market paradigm change.
According to China iResearch, annual online video category total advertising revenue in China has grown almost 70% from RMB800 million in 2008 to RMB1.3 billion (or US$200 million) in 2009. Online video ad market growth is projected to range between 60% to 80% annually in the next three years.
While capturing the lion's share of the user base and advertising dollar increases, Tudou's recent announcement kicking off its made-for-Internet original web productions is aimed at broadening its content offering and deepening long-term competitive strength. Like YouTube and major video vertical players, Tudou boasts huge traffic and a massive 200 million monthly unique audience reach. While monetizing the traffic by advertising has quickly become a proven business model, it may not be enough. A 20-year Chinese TV veteran and a media expert commented, as TV in China is relatively regulated, Tudou's paving its ways to create a made-for-Internet content ecosystem signals Internet video sites' ambition to create a new alternative model outside of network television companies' business and operational systems, with a new audience watching new media.
Starting in 2010, a number of online video websites in China announced different kinds of content initiatives via relatively simple approaches such as partnerships or funding. Tudou is choosing a more sophisticated and resource-consuming route, building its own production pipelines managing four key pillars: production, distribution, broadcasting and monetization. "We want to get our own hands deep into the content business and minimize the dependencies that stem from involving too many third parties," said Gary Wang, Tudou Founder & CEO. Along with the plan to launch two Tudou-branded drama series in the fall season, Tudou is also aggressively recruiting young independent filmmakers to join the wagon for more web-based production demands down the road.
Gary Wang said, "At the core, it's about Tudou's audience and about the Chinese young talent pool." In the past five years, Tudou, the earliest video sharing site in China, has witnessed the amazing growth of young Chinese filmmaking talents and enabled the commercial developments for a number of them. Pi San, an animator featured in the annual 2010 Tudou Video Festival Financial Forum, successfully signed a multi-million RMB contract with China Central Television (CCTV) to produce a 104-episode animation series. The Best Animation winning video "The Adventures of Li Xianji" by Yang Li, living in Beijing, was recognized by renowned movie producer Chen Guofu and will be adapted into a 90-minute cinema release from its 20-minute original. "Mr. Lei" by a 24-year old young director Ke Deng, a webisode series co-funded by the China Film Group and Tudou was well received and also secured ad sponsorships from Dongfeng Peugeot, Hewlett-Packard and Motorola.