Chinese Government Restrictions on TV Push People, Studios to Streaming Video Sites

6:39 AM PST 1/18/2012 by Georg Szalai

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Colleen E. Hayes/The CW

"Gossip Girl," "Mad Men" and "Cars 2" are among the licensed content available on big sites whose advertising revenue soared in the third quarter.

NEW YORK - Government restrictions on TV content are driving young Chinese consumers, but also content owners and advertisers to online streaming video sites, the Wall Street Journal reported.

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Once seen as a place for pirated content, many of China's major video sites have cracked down on piracy and are now offering original programming along with movies and TV shows licensed from U.S. entertainment companies, such as Gossip Girl and Mad Men.

Driven by higher traffic, advertising revenue for video sites operated by Youku, Tudou, Baidu, Sohu.com and others rose to 1.48 billion yuan ($235 million) in the third quarter, 48 percent higher than in the second quarter, the Journal said citing data from research firm Analysys International.

Some sites in China are even starting to offer premium content and charging users for each viewing or for a monthly subscription. "People are getting used to paying for content," said Gary Wang, CEO of Tudou.

The company gets 300 million visitors a month and has paid millions of dollars for exclusive rights to some Hollywood films, he said. For example, in October the company began offering Walt Disney's Cars 2 for 20 yuan, or about $3, per view.

"It's a real business, a growing business, and it's only going in one direction," Dede Nickerson, head of production and strategic development for the China unit of Sony Corp.'s Sony Pictures, told the Journal.

Advertisers such as General Motors are also reacting by buying banner ads or ads before shows. The car giant even teamed with Youku last year to produce Miss Puff, an animated online video series about a tech-savvy single woman in Beijing. Her suitor drives GM's Chevrolet Cruze.

The Journal said that observers cite Chinese media restrictions, which censor content and limit the number of channels and the amount of foreign programming, as benefiting video sites. China last year also began limiting the number of entertainment shows that satellite broadcasters can offer during primetime.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai