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.

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Tracey Xiang

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com