Macau | Chinese online streaming services will grow “phenomenally” in the next 5 years – CASBAA

Macau (MNA) – The content streaming services market will grow “phenomenally” in China in the next five years, according to China-Hong Kong Technology, Media and Telecommunications (TMT) head of PwC in China and Hong Kong, Wilson Chow.

Speaking at the Cable and Satellite Broadcasting Association of Asia (CASBAA) Conference 2017 held at Studio City, Mr. Chow said that PwC studies revealed that worldwide revenues from Internet video providers or Over the Top (OTT) services went from “only” US$6 billion (MOP48.22 billion) in 2012 to around US$18 billion in 2016.

For the expert, the growth was generated mainly due to global players such as Netflix expanding aggressively worldwide, as well as consumer demographics and behaviour shifts. 

PwC studies also predicted the market will grow at a compound annual rate of 11.6 per cent to reach US$35 billion by 2021.

OTT describes the media distribution practice that allows a streaming content provider to sell audio, video, and other media services directly to the consumer over the Internet via streaming media as a standalone product, bypassing telecommunications, cable or broadcast television service providers.

According to Mr. Chow, digital home video consumption has grown steadily in China to reach around RMB2.5 billion in 2016 while physical home video consumption decreased steadily to around RMB1 billion in the same year.

“People switch to OTT because they don’t have the time to sit in front of the TV or go to the cinema to watch a movie. With OTT they can watch movies on their phones or computer at any time,” Mr. Chow added.

Demographic reasons also explained the switch, with Mr. Chow stating PwC identified that in the next five years consumers between 13 to 35-years-old will represent the largest portion of spending in the entertainment and media market.

“It’s an age group with disposable income that is familiar with new technologies from an early age. However, they are spoiled by operators providing free content, so they are only willing to spend in content that particularly interests them,” he added.

PwC data also stated content subscribing services iQiyi and Tencent Video currently were the most popular in the Chinese market, each occupying a 40 per cent share of the market, followed only by Youku with 21.1 per cent.

Mr. Chow divided the market into two services, Subscription Video on Demand, which allows users to consume as much content as they desire at a flat rate per month – e.g. Netflix – and Transactional Video on Demand, through which consumers purchase content on a pay-per-view basis.

According to PwC, by 2021, TVOD services would represent 24 per cent of Internet video revenue with SVOD services representing 76 per cent.

Despite the predicted growth, Mr. Chow still considers changing regulations in the Chinese market could hinder the growth of Internet subscription services while foreign services will have to face several entry barriers that would maintain the market control to local services.