With its huge broadband andmobile phone subscriber base, not to mention its ability to leapfrog entireepochs in the evolution of consumer technology,
There have been some TVratings hits, such as Hunan Satellite TV's SuperGirl singing contest, but on the whole, younger audiences have turned enmasse to the internet and mobile phones for entertainment. The online gamesindustry is worth $650m a year and
Therefore it's no surprisethat after being locked out of
In June this year, News Corpsold half its stake in satellite broadcaster Phoenix TV to China Mobile andestablished a strategic partnership with the cell phone giant to explorewireless media business opportunities. More recently, Viacom's MTV Networks announceda content and advertising alliance with
But of course most of themovie content that is being downloaded in
The regulatory environmentis also slowing down the roll-out of new media platforms.
"China has just set up newrules for copyright over new media platforms - so we can license within thisnew framework at the same time as doing separate deals for DVD - although thatmeans cannibalising rights from traditional media," says Chan. "This is greatfrom a sales point-of-view but the DVD distributors are not so happy."
Despite their protests,
There are also a number ofwide-band VoD sites emerging which are buying films from both local and foreigncompanies for streaming and download-to-rent. Shanghai-based BBVod (
Another interesting trend isthe emergence of companies that are forming distribution networks amonginternet cafes, along the same lines as cinema chains. Chinese authorities haveissued licenses to several of these companies that are now acquiring movies fordownload through the chains. One of the most prominent, Netmovie (
The company, which attractedan initial investment of $4m from venture capital firm IDG last year, sellspre-paid cards to internet cafe users, who can watch a movie for as little astwo yuan. Netmovie takes 70% of revenues while the cafes take the rest. Themodel is a smart one for
In this market, which hasless piracy and a more open regulatory environment, IPTV is fast becoming themedium for movie-on-demand services. Dominant fixed-line and broadband operatorPCCW has moved into the content business with its hugely successful NOWBroadband TV service which is the world's largest IPTV service with 654,000customers. It streams 118 channels on an "a la carte" basis to set-top boxes,including exclusive channels such as HBO and Star Movies, and recently added aVoD component NOW Select.
However, PCCW doesn't have astandalone business model for its on-demand content. Rather it charges anadditional flat monthly fee for access to the on-demand material on channelssuch as Star Chinese Movies and Mei Ah's movie channel. For example, customerswho are subscribing to Star Chinese Movies can pay an additional $2 (HK$15) amonth for access to around 100 movies on-demand, some of which are classics andsome current.
"We have to be carefulbecause we're streaming content and don't want to upset the content providersby building a new library that basically cannibalises their channels," explainsPCCW head of strategic market development Paul Berriman, who describes theservice as 'subscription-on-demand'. "Also this is our second time in thepay-TV business and during the first time, which was entirely on-demand, itbecame clear that telcos are not that good at acquiring, managing andprogramming fresh content. But the channels can give us pretty much everythingwe need."
There have been horrorstories of web-sites offering a movie online with no more security than a signwarning users not to download if they live outside
Meanwhile, film sales companiesin the region are grappling with the same issues surrounding windows and thevalue and definition of rights that the rest of the global industry isconcerned with. Most are used to a licensing environment in which VoD and PPVare bundled with pay-TV rights but believe that the internet download-streamingwindow will encroach on the space currently occupied by DVD. In keeping withthis theory, definitions for internet rights - such as "download-to-rent" and "download-to-keep"- seem to mirror the existing definitions of video rental and sell-through.
Celestial Pictures' GordonCheung, who licensed video rights to the Shaw Brothers library worldwide, sayshe deliberately excluded VoD from these deals. "Our distributors were paying bigadvances so we didn't want to hurt their business," says Cheung. Now thesevideo deals are in place, Celestial is licensing the library to services suchas Singapore-based VoD provider Anytime and US-based online distributor JamanWorld Cinema, but the films will be made available after their release on DVD.
With the emergence of IPTVservices, internet rights are also being broadly divided into "closed" systems,that are delivered to set-top boxes, and "open" systems, accessible to anyonewith a broadband connection and a PC.
Anytime - which is licensedto operate in 14 Asia Pacific territories and has output deals with four
"We want to be the iTunes of
But for local salescompanies trying to navigate the new licensing environment, there are no easyanswers. Many sellers say they're trying to hold back internet rights wheneverpossible because they're not sure of their future value. "But it's difficult toexclude them if you're doing a mega deal with a
When it comes to their ownbackyard, local film sales companies have also recognised that the Chinesegovernment at least has the intention to build an efficient and secure digitalnetwork across multiple platforms to speed growth of its contents industries.
But if the government getsit wrong, China will continue to be a black hole as far as entertainmentlicensing and legitimate revenue is concerned - albeit one that the rest of theworld is eagerly peering into.