CHINA
While many might have seen the WTO ruling that China must end its monopoly import system for foreign entertainment products as good news, CMM-I's recent report concludes that the ruling will not help Hollywood in China.
The report, entitled The WTO Ruling on Importing Entertainment Products into China - What Does It Mean for You? says that the US entertainment industry must assess what it failed to accomplish in what it describes as an 'adversarial' dispute.
In its assessment of the August 12 2009 WTO ruling that China must end its monopoly import system for foreign entertainment products, CMM-I say the action will fail to open significantly greater opportunities for global entertainment companies.
Published by CMM-Intelligence and written by some of China's most experienced media analysts, the report cites ample opportunities and precedent for China to circumvent the ruling and major market barriers that remain unaddressed. The report concludes that not only will the WTO ruling fail to deliver on its expected results, it may also backfire on the industry.
"In the wake of the ruling the media industries must assess what they have failed to accomplish in their nearly three year-long effort with the WTO," the report states. "An even more troubling prospect exists: will China seek to build barriers even as they comply with the letter of the ruling, thus negating its value - or worse?"
The report takes to task the Bush Administration's United States Trade Representative for filing the original action in 2007, and Washington-based lobbyists for continuing a confrontational approach that has yet to yield significant results.
"The most significant effect of this action will be to solidify the adversarial nature of China's relationship with the US entertainment business," said report co-author David Wolf, a sixteen-year veteran of the Chinese media industry. "The day is coming when Hollywood and its media allies will have to decide whether to change their approach or abandon China altogether."
Examining the ruling in the context of China's regulatory and policy environment as well as market conditions on the ground, the paper examines the issues that stand in the way of a meaningful ruling, and explores the implications for leaders of the film, music, and publishing industries. The paper concludes with strategic recommendations for the leaders of entertainment companies worldwide.
CMM-Intelligence has also recently looked into the growth of online video sites in China, outlining the challenges, as well as the opportunities afforded by this rising medium.
The report, entitled China's Online Video Sites - Competitive Landscape, Regulation, Monetization, and the Changing Habits of China's Consumers, takes a unique look at one of China's most dynamic media sectors. CMM-I found that online video ranks as the fifth most popular online diversion for China's internet population and is China's fastest growing entertainment medium.
According to statistics published by the China National Network Information Center (CNNIC), the government affiliated organization that administers China's Internet, more than 65 percent of China's 338 million Internet users spent a portion of their time watching videos online as of July 2009.
The estimated 222 million, and increasingly growing, number of Chinese who are watching these videos have a vast choice of online sources for their viewing pleasure. The State Administration for Radio, Film and TV (SARFT), the primary regulator for online video, estimated that Internet users could stream online video from more than 1,000 websites in China by fall 2009 (but only some 400 sites were licensed).
The report says there is some debate as to how fast the online video audience will continue to grow, given that enjoying online video requires a capable computer, a high-speed connection and, equally important, considerable free time. Nonetheless, the current annual growth rate of 21 percent, while probably not sustainable in the long term, should decline slowly, suggesting something in the order of 300 million users around the end of 2011.
The report reviews the broader challenges and opportunities faced by all companies in the online video sector, and in so doing defines the factors necessary for success, thus facilitating better analysis of each enterprise.
Inspired by the example of YouTube, Chinese entrepreneurs and broadcasters have created hundreds of online video sites, all vying for the attention of a young, educated, increasingly prosperous, and massive audience.
Facing even greater opportunities - and more daunting challenges - than their overseas counterparts, are China's online video sites set to displace the state-controlled television establishment and become the vector for China's global soft power, or are they set to be crushed under the wheels of the nation's rigid media policies?
One international broadcaster to make a foray into China's online space is Discovery Networks Asia-Pacific which mid-2009 teamed with China's largest global Chinese search engine to launch Chinese website discovery. baidu.com - the first website of its kind to be launched in China.
Baidu is the fastest growing Chinese online platform and has already captured a 73.2 percent market share for search requests. In 2008, approximately 246 million users in China utilized search engines, with the total number of requests for web page searches exceeding 150 billion. In 2009 it is estimated that the number of search engine users in China will exceed 300 million.
Ren Xuyang, Baidu's vice president of marketing and business development, said, "Baidu's mission is to help people obtain information and find what they need in the easiest and quickest way, while Discovery is a leading provider of high-quality factual content. By combining the strengths and resources of both Baidu and Discovery, we can integrate content from a traditional medium such as television with dynamic platforms such as new media, to satisfy the needs and demands of online users while continuing to explore newer and better ways for knowledge distribution."
HONG KONG
Still reeling from the global recession, ad spend for 2009 dipped earlier in the year, rising in the second half as the property market started to recover, leading to double-digit growth in the last quarter. While data from adman Go shows overall ad spend rose by 5.86 percent to HK$26.11 billion on year, actual spend was lower than the previous year as marketers are buying more for less. The Association of Accredited Advertising Agencies (HK4As) said recently although ad spend has increased, the industry saw heavy discounts of up to 15 percent on media rates.
According to admanGo, the bulk of advertising dollars spent last year still went to TV, with 35.43 percent or HK$9.25 billion of total ad spend going into the medium, an increase of 7.03 percent from 2008. Ad expenditure increased across media outlets with the exception of print media. Digital went up 7.03 percent, benefiting from budget cuts and an ongoing trend among marketers to shift focus to targeted online advertising.
"Last year was a slow year. A lot of brands suspended their branding campaigns to focus more on promotion," said Melanie Lo, managing director of Mindshare. She expects branding campaigns to make a strong comeback as the economy continues to shake off the effects of the financial turmoil. "The property market and finance sector are expected to be more active, so there will be growth in TV and newspaper," Lo adds. "Digital media can expect over 20 percent growth this year, as more and more brands use this medium to build relationships and interact with their target consumers," Lo said. "We expect around 32 to 35 percent of the ad budget will be allocated to TV in 2010."
Data from CSM Media Research showed primetime TV viewing maintained levels seen in previous two years, with terrestrial TV capturing 80 percent of 2.28 million households.
FREE-TO-AIR
TVB continued to maintain a majority audience share in the terrestrial TV market and remained top-of-mind among media buyers for its high penetration rate. "TVB-Jade still enjoys a large viewership, consisting mostly of mature audiences, so it's a 'can't miss' for clients who want to launch a TVC," said Lo, adding that the network is "enjoying a great advantage in launching any new programs as it has almost all the popular TV celebrities."
Indeed, TVB-produced shows continued to monopolize CSM Media Research's Top 10 rated TV programs. Topping the list is the network's costume drama Beyond The Realm of Conscience ([TEXT NOT REPRODUCIBLE IN ASCII]), which peaked at 50 points (TVR) with 3.18 million viewers during its final episode. The Realm of Conscience, loosely based on the highly successful Korean drama Jewel In The Palace (which aired on TVB in 2005), became the network's highest-rated series in years, leaving last year's chart-topper Moonlight Resonance in the dust. Seven other TVB dramas made the Top 10, including the well-received period drama Rosy Business ([TEXT NOT REPRODUCIBLE IN ASCII]).TVB anniversary shows round up the Top 10 list.
In June, TVB launched what it claims to be the first TV food programme with interactive functions in Hong Kong. Bundle packages including product placement sponsorship, TVCs and expandable banner ads on TV screen. Those watching the new infotainment program, Eating Right, can use their remote controls on TVB set-top boxes or iDTV that carry TVB interactive logo to retrieve information such as episode synopses, restaurant descriptions, recipes and health tips on-screen.
The network planned to make new advertising spaces available on the screen, allowing product placement sponsors to present extra in-depth information to TV audiences.
TVB had hoped its launch free-to-air 24-hour news channel iNews would provide a new stimulus for digital terrestrial television (DTT) adoption, but without a much-needed boost from a major event such as the Beijing Olympics in 2008, penetration of DTT grew at a slower pace in the first half of 2009. DTT household penetration (including PC-based receivers) grew marginally from 32.3 percent in December 2008 to 33.6 percent in March 2009. However, penetration has since increased to 40.2 percent in June 2009.
Responding to the growing demand for media convergence during a sales presentation to advertisers and media agencies in November, Stephen Chan, general manager of TVB said, "2010 will be a promising year for advertisers. It will be a year where TVB will cross media platforms, extending our TV programs into films, mobile, online and magazines with shows such as My Name is Bond on J2 Channel."
He added, "Our TV program production will also be cross-regional, with new productions with partners in Taiwan, Malaysia and Singapore. It will be a year for cross-generation with the launch of a new 13-week young talent challenge show Sweet 16."
TVB continues to beef up its online portal, offering "top-up TV" capabilities and live feed of its news programs. Earlier this year TVB.com rolled out a mobile application in partnership with Nokia to stream exclusive content such as program synopsis, outtakes, still shots and an instant electronic programming guide.
ATV's flagging fortunes remain little changed despite the US$129 million worth of convertible bonds invested by Taiwanese billionaire Tsai Eng-meng into Alnery, which holds a 47.58 percent stake in ATV. In May 2009 ATV called off it's 14-year-old annual advertising awards for the first time, citing a lack of interest from advertisers.
The Six O'Clock News, Delicious Canton ([TEXT NOT REPRODUCIBLE IN ASCII]) and Taiwan Delicacies ([TEXT NOT REPRODUCIBLE IN ASCII]), its most popular programs in 2009, lagged far behind TVB's top ten in terms of viewership. "ATV has been quite lost in direction with the frequent changes in senior management," said Mindshare's Lo. "Its focusing on imported drama series during prime time; its ratings are not as stable [as TVB's]," she added.
With Hu now firmly on board, ATV will have to get its house in order as recent applications for free-to-air (FTA) broadcasting licenses by subscription TV operators indicate Hong Kong's FTA duopoly may soon come to an end. Recent moves by PCCW, i-Cable Communications and City Telecom could spell trouble for cash-strapped ATV, which heavily relies on imported programming. Each of the new players have invested heavily in building their own news, entertainment, business and current affairs programming.
City Telecom said in early 2010: "We believe the current duopoly free TV limits innovation, and Hong Kong is falling behind other more liberalized markets around the world."
PAY TV
PCCW's nowTV and i-Cable remain major players in the subscription TV arena, reaching over 70 percent of the pay TV market. Share of viewing by subscription channels grew 38 percent in the first half of 2009 in 1.64 million homes.
"The share of viewing by subscription TV channels, and the potential reach of the medium versus traditional media options, are growing at an even faster rate than household penetration. This audience for subscription TV is more affluent, more receptive and more likely to respond to advertising messages. The more sophisticated the audience becomes, the more sophistication they expect," according to a report by the Cable & Satellite Broadcasting Association of Asia (CASBAA).
According to Synovate's PAX survey, which covers 10 million affluent Asians, regional TV has the ability to reach 5.9 million more high-value individuals than regional print.
It has been a good year for i-Cable Communications. Despite revenue losses in the first half of 2009, iCable's subscribers totalled 947,000 in June, up 3.27 percent on year. Viewership surpassed TVB-Jade by one percentage point at 43 percent. i-Cable beat incumbent Now TV (owned by PCCW) to the Premier League rights for the next three seasons.
As technology, viewer demand for more choice increase, so does the ongoing demand for subscription and multi-platform TV solutions. Subscription TV is evolving into a world of advanced interactive services and applications. The increasing prominence of digital provides new revenue opportunities for TV advertising - interactive, video-on-demand. And while ROI remains top-of-mind among media buyers, the TVC still reigns supreme among brands looking for that extra visibility and emotional punch.
"Entry cost for TV is still high compared to other media; you have production cost and airtime cost," said Mindshare's Lo. "However, given its high penetration, the CPM (cost per thousand) is still cost efficient." AG
CHINA
FREE-TO-AIR
ANHUI TV
A No. 355 South Tongcheng Road Hefei, Anhui, 230066, China
BAODING TV
No. 1721 Baoding Building, Dong Fang Zhong Street Baoding, Hebei 071051, China
BEIJING TV
Chao Yang District, No. 98 Jian Guo Lu Jia, Beijing TV 1st Fir, Beijing 100022, China
BENGBU TV
Bengbu Anhui, Sheng Li East Road, Bengbu TV, 233000, China
CHANGCHUN TV
No. 149 Baichao Road, Room 805, Changchun, China
CHANGSHA TV
No. 237 Laodong West Road Changsha, Hunan 410015, China
CHENGDU TV
No. 2 Gao Peng Avenue Chengdu, Sichuan 610041, China
CHINA CENTRAL TV (CCTV)
No. 11 Fuxing Road, Beijing 100859, China
CHINA DEVELOPMENT AND RESEARCH FOUNDATION - CHINA EDUCATION TV
F4, Tunlien Tower No. 8, East Avenue, Deshengmen Beijing, 100009, China
CHONGQING TV
F6, #126 Yuzhou Road, Hi-tech District, Chongqing 400041, China
FOSHAN TV
Foshan City Xin Cheng District, Yu He Road, Foshan TV Station Building, 10th Floor Centre for Business, China
FUJIAN BROADCASTING CORP
No. 2 Gutian Road, Fuzhou, Fujian 350001, China
FUZHOU TV
No. 1 Yuanyang Road Fuzhou, Fujian 350014, China
GANSU TV
No. 561 Zhang Sutan, High Tech Development District Lanzhou, Gansu 730010, China
GUANGDONG TV
No. 331 East Huanshi Road Guangzhou, Guangdong 510066, >China
GUANGXI TV
No. 73 Minzu Avenue Nanning, Guangxi 530022, China
GUANGZHOU TV
No 233 Huan Shi Zhong Road Guangzhou, Guangdong 510010
GUIYANG TV
Broadcast Mansion No. 15 Zunyi Road Guiyang, Guizhou 550002, China
GUIZHOU TV
No. 1 Shenqi Road, Guiyang Guizhou 550002, China
HAIKOU TV
No. 15 Zhongsha Road Haikou, Hainan 570206, China
HAINAN TV
No. 61 Nansha Road, Haikou, Hainan 570206, China
HANGZHOU TV
No. 139 Huancheng North Road Hangzhou, Zhejiang 310004, China
HARBIN TV
No. 1 Huashan Road, Xiangfang District Harbin, Heilongjiang 150036, China
HEBEI TV
No. 100 South Jianhua Avenue Shijiangzhuang, Hebei 050031, China
HEFEI TV
No. 381 Jinzhai Road, Hefei, Anhui 230061, China
HEILONGJIANG TV
No. 333 Hanjiang Road, Nangang District, Heilongjiang 150090, China
HENAN TV
No. 18 Zhenghua Road Zhengzhou, Henan 450008
HOHHOT TV
No. 159 West Gongyuan Road Hohhot, Inner Mongolia 010035, China
HUBEI TV
No. 1 Zijin Village, Wuchang District Wuhan, Hubei 430071, China
HUIZHOU TV
Eling South, Huizhou City No. 29, Guangdong 516008, China
HUNAN TV
Changsha City, Hunan Golden Eagle Film and Television Culture International Convention and Exhibition Centre, North 4F, China
INNER MONGOLIA TV (NEI MENG TV)
No. 71 Xinhua Avenue Hohhot, Inner Mongolia 010058, China
JIANGSU TV
No. 4 East Beijing Road, Nanjing, Jiangsu, China
JIANGXI TV
No. 207 Hongduzhong Avenue Nanchang, Jiangxi 330046, China
JILIN TV
1027 Xinmin Avenue
Changchun, Jilin 130021, China
JINAN TV
No 32 Jinshiyi Road, Jinan Shandong 250014, China
JIUJIANG TV
No. 84 Cha Hong Street, Jiu Jiang, Jiangxi 332000, China
KUNMING TV
No. 198 Danxia Road, Kunming, News Centre 650118, China
LANGFANG TV
Yong Feng Street Langfang Hebei 065000, China
LANZHOU TV
No. 92 Qinyang Road Lanzhou 730030, China
LHASA TV
Chengguan District, No. 22 Jiangsu East Road Lhasa Tibet 850000, China
LIAONING TV
No. 79 Wenhua Road, Heping District Shenyang, Liaoning 110004, China
MEIZHOU TV
Meizhou City, Cultural Park Plaza Guangdong, China
NANCHANG TV
Nanchang, Hong Gu Tan New District, Lu Ying Road 1, Chen Wei Radio and Television Centre 7th Floor, Jiangxi, China
NANJING TV
No. 358 Baxia Road, Guandian Building Nanjing, Jiangsu 210001, China
NANNING TV
Ge Cun Road, Nanning, Guangxi Zhuangzu Autonomous Region, 25 Broadcasting Center Building 530022, China
NINGXIA TV
66 Beijing Road, Yinchuan, Ningxia 750001, China
QINGHAI TV
No. 6 Kunlun Road, Xining City Area West, Qinghai 810001, China
SHAANXI TV
No. 336 Chang'an South Road, Xi'an, Shaanxi Provincial Radio and Television Centre 710061, China
SHANDONG TV
No 81 Jingshi Road, Jinan, Shandong Province 250062, China
SHENYANG TV
No. 296 Qingnan RoadHeping District, Shenyang, Liaoning 110004, China
SHENZHEN TV
Shenzhen Futian, District of Shenzhen PengCheng 1 RoadRadio Film and Television Building, 518026, China
SHENZHEN BAOAN TV
No. 21 Shenzhen Baoan Metro, Hing Wah Road 97, Baoan, Guangdong 518101, China
SHIJIAZHUANG TV
No. 302 Tiyu Street. Shijiazhuang, Hebei 050021, China
SHISHI TV
1105 BaQi Street, Shishi, Shishi City Radio and TV Tower 362700, China
SICHUAN BROADCASTING GROUP
No. 95, Dongcheng Genshang Road Chengdu, Sichuan 610015, China
TAIHU MINGZHU TV
4th Jiangsu Wuxi Hubin Road Wuxi, Jiangsu 214061, China
TAIYUAN TV
No. 2 Yifen Street Taiyuan, Shanxi 030024, China
TIANJIN TV
143 Weijing Road, Heping District, Tianjin 300070, China
TIBET TV
No 149 Beijing Mid. Road Lhasa, Tibet 850000, China
URUMQI TV
No. 28 Xinmin Road, Radio and Television Centre, Urumqi, Xinjiang 830002, China
WUHAN TV
Wuhan 677 Jianshe Avenue, Hankou, Wuhan Radio and Television Centre 430022, China
XI'AN TV
Yanta District, Xi'an, Shaanxi Province, 60 West Qujiang Chi Road, Xi'an Broadcasting Centre E0217, 710065, China
XINING TV
No. 43 Nanguan Sreet, Xining Qinghai 810000, China
XINJIANG TV
No. 84 Tuanjie Road, Television Station Centre 8th Floor Section B, Urumqi, Xinjiang 830044, China
XINYU TV
49, Xianlaizhong Road Xinyu City, Jiangxi, China
YINCHUAN TV
No. 5 Zhongshan North Road, Yinchuan, Ningxia 750004, China
YUNNAN TV
No. 182 Renmin West Road, Kunming Yunnan 650031
ZHEJIANG TV
No. 111 Moganshan Road Hangzhou, Zhejiang 310005, China
ZHEIMGZHOU TV
No. 67 Huaihe Road ZhengzhouHenan 450052, China
ZHENHAI TV
No. 36 Ningbo City Hai Qu South Street, 315200, China
ZHONGSHAN TV
No. 1 Cheng Gui Street, Zhongshan Building Zhongshan, Guangdong 528403, China
CHINA UNICOM (TELECOMS)
No. 21 Financial Street, Xicheng District, Beijing 100140, China
SHANGHAI INTERACTIVE
487 Luochuan Rd(E), Shanghai, China
MOBILE TELCOS
CHINA MOBILE COMMUNICATIONS CORPORATION
Beijing Xicheng District Finance Avenue 29th China Mobile Communication GroupBeijing 100032, China
HUAWEI TECHNOLOGIES
Bantian, Longang District Shenzhen 518129, China
MULTIPLE SYSTEM OPERATORS
SHANGHAI MEDIA GROUP
No. 651 Nanjing East Road Shanghai 200041, China
GOVERNMENT BODIES/REGULATORY AGENCIES
STATE ADMINISTRATION OF RADIO, FILM AND TELEVISION (SAR FT)
2 Fuxingmenwai Street, Beijing 100866, China
HONG KONG
FREE-TO-AIR
ASIA TELEVISION LIMITED (ATV)
25-37 Dai Shaing Street Taipo Industrial Estate, Hong Kong
RADIO TELEVISION HONG KONG (HK)
30 Broadcast Drive, Kowloon, Hong Kong
TELEVISION BROADCAST LIMITED (TVB)
77 Chun Choi Street, Tseung Kwan O Industrial Estate, Tseung Kwan O, Hong Kong
CABLE TV
HONG KONG CABLE TELEVISION LIMITED
4-11/F Cable TV Tower 9 Hoi Shing Road Tsuen Wan, Hong Kong
PAN REGIONAL
YES TELEVISION (HONG KONG) LIMITED
21/F, 8 Wyndham Street, Central, Hong Kong
BROADBAND/INTERNET PROVIDERS
HONG KONG BROADBAND NETWORK (HKBN)
10/F 1016- 1018 Parkin Commercial Building, Dundull Street, Mongkok, Kowloon
VIDEONLINE COMMUNICATION (ASIA) LIMITED
Unit 201-203, Philips Electronics Building No. 5, Science Park East Avenue Hong Kong Science Park, Shatin, N.T.
IP-TV PROVIDERS
NOW TV
39/F PCCW Tower, Taikoo Place 979 King's Road, Quarry Bay, Hong Kong
SATELLITE TV
TVB PAY VISION LIMITED
8/F Main Block, TVB City, 77 Chun Choi Street Tseung Kwan O Industrial Estate, Kowloon, Hong Kong
MOBILE TELCOS
HUTCHISON TELECOMMUNICATIONS HONG KONG HOLDINGS LIMITED
Hutchison Telecom Tower 99 Cheung Fai Road, Tsing Yi New Territories, Hong Kong
PCCW LIMITED
39/F PCCW Tower, Taikoo Place 979 King's Road, Quarry Bay, Hong Kong
SMARTONE TELECOMMUNICATIONS HOLDINGS LIMITED
31/F, Millennium City 2, 378 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong
GOVERNMENT BODIES/REGULATORY AGENCIES
TELECOMMUNICATION AUTHORITY (OFTA)
29/F Wu Chung House, 213 Queen's Road East, Wan Chai, Hong Kong
TELEVISION AND ENTERTAINMENT LICENSING AUTHORITY (TELA)
39/F Revenue Tower 5 Gloucester Road Wan Chai, Hong Kong
COMMERCE AND ECONOMIC DEVELOPMENT BUREAU
Commerce, Industry and Technology Bureau. 1/F, 2/F Murray Building Garden Road, Central, Hong Kong
HONG KONG BROADCASTING AUTHORITY (BA)
39/F Revenue Tower, 5 Gloucester Road Wanchai, Hong Kong
STATSBOX
CHINA
POPULATION 1.33 billion
HOUSEHOLDS 412 million
TV PENETRATION BY POPULATION 97.23 percent
CABLE TV HOUSEHOLDS 173.98 million
CABLE DIGITAL TV HOUSEHOLDS 61.99 million
PAY DTV HOUSEHOLDS 4.52 million
EXPORTS OF CHINESE PROGRAMS RMB3 billion (US$438.60 million)
INTERNET BROADBAND USERS 298 million (2008)
MOBILE PHONE USERS 796 million
3G PHONE USERS 420,000
Source: CIA World Factbook, CMMInternational
HONG KONG
POPULATION 7.05 million
HOUSEHOLDS 2.92 million
TV HOUSEHOLDS 3.1 million
PAY TV PENETRATION 99 percent
MULTICHANNEL HOMES
72 percent
INTERNET USERS 69 percent
Source: CASBAA, SNL Kagan, CSM, Internet world Statistics (as of September 2009)
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