Rumors that China’s State Administration of Radio, Film and Television (SARFT) and Ministry of Information Industry (MII) were planning to introduce new regulations governing online video were met with apprehension late last year.
Shortly after a video of a well-known news anchor’s wife accusing him of cheating on her became an internet sensation, Beijing said it would restrict the posting of online videos to state-owned and state-controlled sites. Coincidence maybe, but the announcement suggested that the government was serious about controlling what its citizens can watch online.
Although the regulations are less draconian than feared, some industry experts saw the rules as confirmation that there are few good investment opportunities left in online video in China.
“An even bigger problem than the [new regulations] is that the market is so saturated, and several dominant players have already emerged,” said Elias Glenn, an analyst at Pacific Epoch.
Those dominant players – Youku.com, Tudou.com and 56.com – have all received significant infusions of cash from venture capital partners, and are not likely to feel much of an impact from the new rules. Smaller sites still searching for investment will suffer most.
“The bigger players have long-standing relationships with SARFT and MII, and have largely been operating under these ‘new’ rules for quite some time now,” said Adam Schokora, social media, digital, and interactive strategy manager at Edelman China. “Smaller players will likely get absorbed or exit the market.”
At the heart of the new rules is the requirement that all providers of online audio and video content apply for an “Online Audio-Visual Broadcasting License,” which requires that a company be majority state-owned and possess censoring systems and specific legal resources.
The impact of the rules hinges on how they are implemented. Glenn doesn’t think Beijing wants to seize control of the industry, just “get things under control and set up some type of regulatory framework.”
Although uncertainty over implementation could scare away investors from online video websites, Schokora sees it as a temporary setback.
“It won’t take long for the opportunity to outweigh any perceived risks,” he said. The real challenge is finding new winners in an already crowded market.
You must log in to post a comment.
Yes, I would like to receive emails from China Economic Review. (You can unsubscribe anytime)
Copyright © 2018 SinoMedia Group Limited All rights reserved