The complicated relationship between tech markets and streaming regulations in China

Editor’s note: This was written by Kayla Matthews, a freelance writer focusing on technology and online media. You can find more of her work on VentureBeat, MakeUseOf, Motherboard and Gear Diary. 

The digital content market in China has exploded. In an effort to gain control over the unregulated medium, Chinese authorities are now requiring various platforms to acquire licenses. The licenses relate to video and audio broadcasts and are more in line with the country’s traditional regulations for media.

What are the new regulations?

Most importantly, the Chinese State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) now requires social media providers to obtain a special license in order to broadcast video or audio. This new regulation will affect a variety of social providers in the country, including WeChat, Weibo, and more. The regulation also requires social media networks to have traditional broadcast licenses for any and all distributed content, not just official media.

In recent years, due to the nature of streaming content, a swath of filmmakers, producers and creators have published material unhindered. That means content has been beyond the purview of Chinese authorities, thanks to websites, mobile portals, set-top boxes and even social media networks. In other words, there’s a great deal of unregulated and content available for consumption and it’s not difficult to access.

In 2014, Chinese regulators did crack down on this behavior by requiring set-top and streaming devices to provide content only from licensed and exclusive distributors.

The new regulation will see films, TV shows, social media and similar platforms exposed to the same level of censorship as everything else in the country. Media content cannot legally be published on these channels without the appropriate public license.

What does this mean for the Chinese tech market?

While things may get a bit rocky for streaming providers and social media companies, the Chinese tech market as a whole probably won’t be affected much.

There’s such a huge demand for streaming content that companies will do what it takes to find a way to continue providing it to their customers. Furthermore, sites that feature unlicensed and content from the West are fairly well-known and seemingly tolerated. A good example of this is Bilibili.

The regulations will hinder content production from Chinese companies slightly, and providers looking to enter the country’s market, but not existing platforms or the platforms themselves.

That said, some of the difficulties in dealing with the regulations and licenses may encourage providers to skip moving into the Chinese market. This isn’t necessarily a consequence of the new laws — it’s more like a byproduct.

What platforms will be affected?

It’s primarily video streaming services that will be affected, but only for companies who operate solely in China or who are looking to get into the space. That’s not to say growth will be hindered — we can definitely expect to see more streaming and social services rising to the surface.

Other platforms include social media, chat and IM services, television providers and anything streaming-related. The latter would include any websites or web portals that provide streaming content of any kind.

When many think of the term “streaming,” names like Netflix, Hulu and HBO Now immediately come to mind. However, streaming across the rest of the internet has continued to evolve as well. There are entire web portals dedicated to providing content outside the confines of conventional software or applications.

Platforms with user-generated content will also suffer, but it’s difficult to say how regulations will impact them directly. It’s likely the smaller players will fold under the pressure, while tried-and-true providers will stick it out.

Live-streaming and user-based services may also take a hit, but the censorship here is not without merit. Several high-profile cases of live-streamed sex caused quite a ruckus in the country. One Beijing couple even streamed themselves trying to stow away in a local IKEA overnight. Spoiler alert: they were caught and promptly punished.

What will the impact be?

In the grand scheme of things, the regulations will have little impact, if any, on the big names in the space. Existing providers will simply need to tone down some of the content they offer, but this won’t stem the flow completely. In addition, Western-based providers will likely continue to be tolerated.

As you’ll notice, a lot of this is up in the air and open to interpretation. It really depends on what the Chinese regulators decide to enforce and crack down on over the coming months.

Any negative impact or consequences will be felt by smaller players and those looking to enter or get into the Chinese streaming market.

How will this affect the rest of the world?

One of the largest and most renowned streaming providers, Netflix, does not currently offer service in China. And with the new regulations in place, it doesn’t look like they’ll enter that market anytime soon. But for the company, it’s not just a matter of regulation — they would face stiff competition from other providers in the region. Namely, those supported and funded by the government.

The actions of a single provider hardly speak for the entire market, but it should provide some indication as to what many will do in the future. Fewer companies will seek to provide streaming content in China, unwilling to deal with the strict regulations and the competition.

That’s not to say the market growth will halt. There will be a shift in what providers are accepted and what kind of content is offered. User-generated content, for example, may slowly be phased out. The same is true of unregulated content, at least when it comes to providers who want to stay on the government’s good side.

The views expressed here do not necessarily represent TechNode’s editorial position.