In 2016 Q3, China’s online video advertising market grew 7.0% quarter on quarter or 43.0% year on year, shows the Quarterly Monitoring Report on China’s Online Video Advertising Market 2016 Q3 published by Analysys.
I. Marketing channels were enriched, content values were increased, and content market emerged as the major area
The mobile Internet is getting increasingly mature, which has brought a host of problems like rich marketing channels and overload of content information. In this context, video platforms have shifted from stressing the occupation of users’ time to capturing the attention of users and stressing content values.
Diverse and customary forms of content presentation continuously upgrade the audience’s acceptance of brand advertisements. For example, the original posts inserted in the teleplay The Mystic Nine, the “refrigerator psychology” in the program Go Fridge, and the acrostic poem advertisement in the teleplay Zhuxian Qing Yun Zhi fuse the advertisements and contents in depth, which has reduced the visual fatigue and boredom of advertisements, penetrated the brand tonalities among users through content presentation and realized in-depth contact and influence of advertisements with users. In the context of multiple-screen integration, video platforms now use content as the weapon to assure long-term contact with users and finally penetrate into many life scenarios of target audiences.
Marketing values of contents derived from live videos have also been explored and reflected to a big extent. In-depth interaction is the unique advantage of live videos, and user attributes of live platforms are even more homogenous, which constitutes a unique channel advantage for precise marketing and scenario-based content marketing and turns live platforms into natural platforms guiding streams. Scenario content marketing based on interaction also influences the target audience in an invisible form, and the unique emotional communication of live platforms also helps enhance the effect of brand advertisements.
II. The online video payment market kept growing, which will be a new drive for the online video industry
In 2016 Q3, major online video platforms all accelerated the pace to attack the paid content business and continuously enriched content resources paying users are entitled to watch. The platforms expanded their new user bases with original copyrighted contents such as Startling by Each Step, The Mystic Nine, W – Two Worlds and Remembering Lichuan as well as contents prepared by the websites. At the same time, high-cost online films, online teleplays, documentaries and other long-tail contents provide richer content choices for paying members and satisfy their personalized demands.
In the opinion of Analysys, positive growth of the online video payment service strengthens the ability of online video platforms to turn contents into cash, and also enhances their influence in the entire content distribution channel. For example, The Mystic Nine broadcast by iQiyi, The Sky City broadcast by Mango TV and Tencent Video, and the Zhuxian Qing Yun Zhi have all adopted the “collaborative broadcast of platform and TV station, and members of video platform can watch in advance every week”, which has again innovated the rule of content broadcast between traditional TV media and online video media.
Besides, the video payment mode will also drive a new round of development of the Internet teleplay market. At present, China’s OTT video industry remains at the stage of continuous compliance, and the content cooperation between Internet TV manufacturers and online video vendors will create bigger values for hardware sales and also propel the expansion of terminal sales and user base of hardware. At the same time, the Internet TV will emerge as an important entrance to the future sitting room economy, and users will also migrate their habit of payment for contents they have developed at the PC end and mobile end to the new channel, thereby creating a bigger growth space for the Internet TV market.
III. The live video area mushroomed, industry regulators took vigorous actions and the market will embrace a reshuffle
In 2016 Q3, the live market kept growing bigger and bigger, as industry giants continuously probed into the area and investors continuously watched the market. At present, there are more than 200 live platforms that compete against one another. Analysys’ monitoring data in September show that Inke.cn did the best at the mobile end and ranked the first with 15,322,500 active users per month, closely followed by YY Live, Douyutv.com, Huya.com and Panda.tv. Major integrated video vendors all rushed to attack the live area. In July 2016, iQiyi.com announced iQiyi Show Live, which delivers a broad range of live entertainment experience to users with the proprietary user base and rich entertainment resources of the platform. In August, Douyutv.com received round C financing in an amount of RMB1.5 billion led by Tencent. In September, Huajiao.com received round A financing in an amount of RMB300 million, and Quanmin.tv received round A financing in an amount of RMB500 million. A series of capital injections triggered a violent turbulence in the live industry.
In September 2016, the State Administration of Press, Publication, Radio, Film and Television distributed the Notice on Several Issues Relating to Strengthening the Administration of Live Services of Online Audio & Video Programs, and asked online video & audio live institutions to obtain the License for Communication of Audio & Video Programs over Information Network. In the opinion of Analysys, the strengthening industry supervision and high operating cost enhance the access threshold of the live area to some extent, and on the other side, they will heat and intensify the competition in the live area and expedite the reshuffle of the live market in future.
IV. Video vendors built the VR ecosystem to access the market, and the shortage of contents came as the barrier
At present, major audio websites ran faster to build an ecosystem in the VR area. In July 2016, Youku Tudou introduced VR contents from Digital Domain, which became the exclusive supplier of all online VR contents of the platform. In August, Sohu declared to launch the VR partner platform in order to forge a channel for production and distribution of VR contents. Besides Tv.sohu.com first introduced the VR panorama live when producing the Olympic talk show – Ming’s Olympic Talk Show and introduced foreign VR contents. In September, Letv.com made a breakthrough in the VR technology and invented the video interaction technology. In 2016, different capital investors all attacked the VR market, and the integration of terminal hardware, online video, game, live and other areas into VR will promote the growth of the overall VR ecosystem, and the major leading video websites share many things in common as to the VR strategy: 1. They produce VR videos themselves or with partners based on respective resources; 2. VR + live will become a major battlefield for video websites; 3. The platforms provide strong support for content providers and hardware suppliers.
In the analysis of Analysys, resource attributes of market-leading video websites will be of great significance when they develop the VR business. Besides, the VR market now also faces urgent challenges, such as lack of professionals, no uniform content standard and urgent need to improve the watch experience. How to solve these problems will be a key factor in differential strategies of video vendors.
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