Chinese video sites forced to emulate Netflix ahead of major clampdown on imported TV shows

China’s regulator for film, TV, and print media last month issued a notice saying that the country’s booming video streaming sites need to get licenses to stream overseas TV series. The clampdown, which could see dozens of popular foreign TV series axed from China’s video streaming sites, takes effect on April 1, 2015.

A scene from Netflix’s Orange Is the New Black (GIF source: Tumblr).

Speaking onstage at a convention yesterday, a top executive of China’s top video site, Youku, confirmed that the new quota system is happening – and revealed that it could change the way these sites approach overseas content. Victor Koo, chairman for Youku Tudou, says, “The quota isn’t a major issue for us.” He added, as quoted by Bloomberg, that the company can increase its Chinese-language offerings to make up for any shortfall. A number of dramas and comedies from South Korea, the US, and the UK are among the most watched items on numerous video-streaming sites in China.

But Youku is not entirely relenting to this latest clampdown. Koo explained that the site can get around the quota on imported TV series by creating its own foreign-language content. “Next year we see ourselves working with US and European partners” in developing non-Chinese content, Koo said.

In the US, Netflix has achieved a great deal of critical acclaim for self-produced series such as House of Cards and Orange Is the New Black. Amazon Studios is now doing the same with the recent Transparent.

See: The Big Bang Theory and 3 other US TV shows banned from China’s video sites

Youku declined to comment further on the situation in an email with Tech in Asia about how many overseas TV series might be culled come April, or how much Youku is planning on spending on creating its own overseas content.

Securing the broadcast rights to major TV series is an important part of the fierce battle for online viewers in China. The top sites include Youku, Tencent Video, Baidu’s iQiyi and PPS, Sohu Video, and PPTV. China’s state broadcaster, CCTV, shows few foreign TV series – none of which are broadcast in a timely manner.

However, the push to be more like Netflix comes with a huge challenge for these Chinese sites – that few viewers want to pay. Most TV series streamed online come for free, backed up by minimal advertising. The top video companies are trying to get viewers to pay for newer movies, but they’re making slow progress. Youku has 500 million monthly unique visitors, but on average makes only RMB 8 (US$1.30) in revenue from each viewer.

(Source: Bloomberg)