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Analysys: The market size of China's online video advertising reached RMB 6.69 billion in 2016Q1. Online video businesses created diverse commercial ways.
According to the data in the Quarterly Monitoring Report on China's online video advertising market in 2016Q1 released by Analysys Industry Database, the market size of China's online video advertising reached RMB 6.69 billion in the first quarter of 2016, with a year-on-year growth of 62.8%, and with a comparative decline on moving base of 6.7%.
  • 26 Aug, 2016
  • Media
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Analysys:
According to the data in the Quarterly Monitoring Report on China's online video advertising market in 2016Q1 released by Analysys Industry Database, the market size of China's online video advertising reached RMB 6.69 billion in the first quarter of 2016, with a year-on-year growth of 62.8%, and with a comparative decline on moving base of 6.7%.
 
Based on the market size of online video advertising, in the first quarter of 2016, the market size of China's mobile video advertising reached RMB 3.49 billion, accounting for 50.8% in the overall video advertising market, with a growth of 0.7% over the previous quarter, and with a growth of 15% over the first quarter of 2015.
 
According to the data in the Quarterly Monitoring Report on China's Video Advertising Market in 2016Q1 released by Analysys Industry Database, for the revenue shares of China's online video advertising market in the first quarter of 2016, Youku Tudou accounted for 21.8%; Tencent Video accounted for 20.9%; iQIYI accounted for 20.6%. They three ranked the top three on the market.
 
The prosperity and development of China's online video market and the strong driving force of mobile terminals had a positive impact on the overall development of online video advertising market. In spite of the traditional low season of advertising in the first quarter of 2016 and the traditional media's attraction of users in the Spring Festival season, the market size of China's online video advertising still reached RMB 6.69 billion, with a year-on-year growth of 62.8%. Analysys believes that, in the first quarter of 2016, the development of China's online video market showed the following characteristics:
1.    The trend of users' acceptance of paid services became increasing prevalent. Video sites integrated membership services on the basis of IP.
In 2015, the monthly paid members of The Lost Tomb exceeded five million, bringing about the activation and outbreak of paid members in the video industry. The market players started to list payment of members as a viable source of income. Analysys believes that, after nearly six months of exploration, the user-pays model matured. The monetization ability of more and more quality contents was enhanced. In the first quarter of 2016, the copyrighted imported TV play Descendants of the Sun launched VIP exclusive outcomes. Meanwhile, iQIYI Mall introduced the same preferential treatment of Descendants of the Sun for the VIP members, and for the first time integrated the entertainment and life services on the basis of IP, thereby creating a new model of services for video IP members in collaboration with e-suppliers. According to the 2015 annual report of LeTV, its user-pays business reached RMB 2.71 billion, with a year-on-year growth of 71.9%. The paid income accounted for 20.8% of main income. Compared to the past, the user-pays business was no longer limited to the online self-produced plays like The Lost Tomb and Go Princess Go, and gradually extended to the preview of copyrighted plays, VIP exclusive outcomes, and other forms of paid viewing. The user-pays form was introduced in a more extensive range.
2.    The video industry actively prepares for the new VR life in collaboration with VR.
Currently, the market-leading video sites have introduced VR video pages and VR video applications suitable for VR devices. iQIYI has owned more than 300 strategic partners specializing in videos, games and hardware in China. Youku Tudou has signed an agreement with 80% of China's leading VR content production teams and has more than 50 overseas strategic partners. In addition, in the first quarter, Mango TV's "I'm a Singer" and "Super Girls" tried the VR technology. iQIYI and Cgangs jointly promoted the commercialization of the Chinese VR industry. While participating in the production of VR contents, the video websites become a platform connecting the VR hardware manufacturers, VR content producers, advertisers, etc. In addition to supply of IP resources to VR content producers, co-productions with them, and supply of contents to hardware manufacturers, the video websites are responsible for follow-up marketing, promotion, and other support of sales and operations, thereby creating a VR-centered ecological chain.
3.    The rapid development of UGC and PGC helped the platforms of short videos and live videos become the incubator of "online popularity effect".
In the first quarter of 2016, Papi Jiang, an "online celebrity", earned RMB 12 million after running the video we media for six months. The valuation of the first round of investment was more than RMB 100 million. The first advertisement was auctioned at the price of RMB 22 million. The public were attracted by the short videos and live videos which are mainly based on the models of UGC and PGC and are a new "outlet" of the industry. According to the data of Analysys.cn, in the first quarter, the active users of Kuaishou application that had the most active users compared with other short video applications reached 32,463,900, with a net increase of 4,492,100 over the previous quarter, and with a year-on-year growth of 89.6% over the first quarter of 2015. The leading short video platforms have entered a rapid development period. Weibo, Momo and other social platforms introduced the function of live broadcast to enhance content resources and user interaction. Analysys believes that, with the increase in the number of users and the period of their use as well as the decentralization, the short videos characterized by fragments and multiple senses, as well as the live videos that attach great emphasis on user-anchor interactions and full integration of social networking and videos, will give birth to a great number of online celebrities, thereby working as a powerful incubator of "online popularity effect".
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