The average Chinese user spends four hours a week watching online video content, such as movies, TV, and live sports—double the time spent by US users. A new McKinsey research shows there will be more than 700 million people in China watching online video content in four years.
The research suggests that online video profits will indeed materialize, but only players with the deepest pockets will survive to enjoy them. Successful online video sites will need capital on three fronts:
- To expand their bandwidth
- To attract experienced online advertising salespeople, who are in short supply. The industry experts interviewed estimated that only about a third of the 2,000 Internet salespeople in China had enough experience.
- To buy the content that will win the biggest audiences and the most advertising.
Advertisers McKinsey surveyed said that online video advertising revenue would probably double in 2011, to 6 billion renminbi, and reach more than 13 billion renminbi by 2013—well over 16% of total online ad spending.
The business model of China’s online video sites is diversified. Branded channels for advertisers, ad-free service for paid subscriptions, partnering into e-commerce and online gaming, and creating their own shows.