China generated over US$10 billion subscription revenue from SVOD (subscription video-on-demand) services in 2022, making it only the second country – after the United States – to reach that threshold, reflecting the size and prosperity of China’s SVOD market, Ampere Analysis noted in its latest report.
Although none of the big US-owned global SVOD platforms, including Netflix, Prime Video and Disney+, is allowed to launch directly in China, the country’s SVOD market has grown in its own way, with domestic services from Internet companies, broadcasters and telcos competing against each other with their own unique content and business models.
For a long time, China’s SVOD market had been dominated by iQIYI, Tencent Video and Youku, collectively known as the “Big Three,” with each owned by one of the largest Internet giants in China respectively: Baidu (with its core business in search), Tencent (the largest social media network provider and game producer) and Alibaba (the largest e-commerce platform). All three platforms provide content across genres and appeal to audiences across age and gender. However, both iQIYI and Youku fell into financial difficulties resulting from high content costs and low prices in the competitive market. Their price increases – made in order to increase ARPU and continue content investment – led to customer churn and subscription decline.
The stumble of the big three has allowed new players to grow. Mango TV, launched by popular regional broadcaster Hunan TV, is the exclusive home of many of Hunan TV’s original programmes, especially Romance, Drama and Reality shows popular particularly among the female audience. Bilibili, meanwhile, carrying mostly Animation and user-generated content, enjoys the largest customer base among Generation Z and the young demographics in China. Both services started with a niche content type and audience group but are now developing into mainstream services challenging the dominance of the big three general entertainment platforms.
In addition, China has a number of smaller streaming services which jointly comprise the third tier of its SVOD market. Yangshipin, also called CCTV.com, is the BVOD/SVOD hybrid platform launched by China's public service broadcaster CCTV. Containing many of CCTV and regional broadcasters’ originals and classic titles, it is also the home of many top-notch sports events, including the 2022 Winter Olympics and 2022 FIFA Football World Cup. However, Yangshipin has yet to figure out its business model and how to balance revenue output and its public service role. Migu Video, launched by telco China Mobile, carries mostly sports content but is also yet to figure out a viable way to generate a return on its vast sports rights expenditure and maintain its audience outside of sports seasons. Other smaller players, including PPTV, Sohu Video, Sina Video, iFeng and LeTV, also exist in this third grouping, although most of their customers generally watch their free ad-funded tiers.
“China’s SVOD market has now evolved to a new stage where the big three services are focusing more on increasing ARPU and generating a return on their investment in content. The emerging services of the second tier are growing rapidly to challenge the status of the big three, while smaller nascent services continue to explore their role in the market. It is this range of SVOD platforms and diversity of service types that has helped China secure its place as the second largest SVOD market in the world,” concluded Orina Zhao, Senior Analyst at Ampere Analysis.