Chinese Online Video Sites Closer to Breaking-even
Gong Yu, CEO of iQiyi, expected online video ad rates to go up by 30% in the first half of 2013. At the same time, video copyright prices decreased by an average of one third in 2012 year-on-year, according to the same report.
The Youku-Tudou merger that happened in last year stopped the competition in video content between the two biggest players. Other players also formed a so-called union to strengthen bargaining power. The prices of most popular TV drama decreased by two thirds, from about 1.5 million yuan to 500 thousand yuan, said Mr. Gong.
Industry people estimate that one or two online video services can break even in this year.
Mobile Helps?
Video sites happened to release metrics on mobile end one after another recently. One of the intentions must be to draw the attention of advertisers. A handful of services, including Youku, iQiyi and PPTV, started selling mobile ad placements tailored to iPad and iPhone last year. Youku CEO, Victor Koo, announced to roll out separate media kit for the mobile in early 2013.
20% of Youku’s traffic is from mobile devices. Earlier this month, the company claimed that the daily views from mobile devices reached 100 million, and the activated registered users there also surpassed 100 million.
The mobile viewership as a percentage on iQiyi jumped from 4% at the beginning of 2012 to 33% now. Gong Yu, its CEO, considers advertising the major monetization approach for the mobile. He estimates the mobile video sector could pocket one billion yuan of advertisers’ budget in 2013.
One third of PPTV users were on mobile in mid-2012 when less than 10% of advertising revenue was from there. The company estimated about half of the viewers would get on mobile by the end of last year. As disclosed, PPTV users spent over 100 minutes on PC, 80 minutes on iPad and 10 – 60 minutes on mobiles phones.
LeTV saw a peak of 30% of traffic from mobile platforms and announced 50 million installations of its mobile apps.
However, there’s no data showing that the mobile viewership increased the total time spent on those video services. It’s possible that users started using mobile devices to watch the same videos they’d otherwise watch through PCs. If it is the case, it’s hard to estimate how much the mobile would benefit their total revenues. More and more people got to agree that mobile wasn’t a totally new territory.
Some people believe the ad spending on TV or PC will eventually move to mobile devices proportionately, and the shift will be more smoothly than the moving of print ads to online text-based media.
Anyway, it is well-recognized that most mobile ad budget is on pads, very little on mobile phones. Few advertisers would like to place video ads on Android phones.