Filmart 2012: Monetizing Asian Internet Growth Proves Elusive

Chinese online consumers are so used to getting content for free, trying to train them into the habit of paying is the challenge.

HONG KONG - Show me the money was the theme at the New Media: New Prospects for Online Distribution of Entertainment Content event which kicked off the seminar program at Hong Kong Filmart on Monday morning.

How to monetize the huge and growing Internet video audience is the $6 billion question for the global entertainment industry, which the six speakers from across the Asian industry addressed.

The panel session began with an overview of the state of play for global online video distribution from Xinyu Huang, senior vp for greater China at Internet data research outfit comScore.

“Looking back to 1986, the U.S. accounted for 66 percent of the global Internet population, now the U.S. represents only 13 percent,” said Xinyu, pointing out that Asia Pacific now makes up 41 percent of that.

“The Internet infrastructure in Asia skipped a generation and went straight to broadband, with much of that being mobile,” added Xinyu.

Chinese viewers watch more than 19 billion videos online a month, while Japan, with a much smaller population, views 14 billion plus. Japanese viewers actually have the highest per capita rate in Asia, watching an average of 234 videos each a month.

“In India the rate of Internet video penetration is still only 4.25 percent; this represents a huge potential for growth,” pointed out Huang.

In China, the two main sources of online-generated income are ringtone downloads and paid TV content, which is expected to be a billion dollar market this year, according to Zhu Hui Lung, vp of film operations and corporate development at Chinese Internet giant Youku, which announced a merger with rival Tudou this month.

“Disney looks at online digital distribution as a huge opportunity and we'd love to get a piece of the billion dollar market that my colleague at Youku just mentioned,” said Amit Malhotra, vp of Disney media distribution in Asia-Pacific.

Pierre Cheung, vp for greater China at BBC Worldwide, talked about how the U.K. broadcaster focused on building individual program brands in China.

“The Top Gear [car show] brand is now well known in China, with both a local version and the original U.K. program showing online there,” said Cheung.

Both post-theatrical and simultaneous VOD distribution of movies online is the way to boost revenues for Hollywood studios, according to Youku’s Zhu, while acknowledging the major problem that online piracy still represents in China.

“Chinese online consumers are so used to getting content for free, trying to train them into the habit of paying is the challenge,” said Geng Xiao Hua, operation vp at online video site QIYI.

Questioned about whether deals with online distribution platforms was a way to circumvent the annual quota on theatrical releases of Western films in China, the representatives of both QIYI and Youku refused to comment.