Will China Piracy Ruling Boost U.S. TV? (Analysis)

Issue 2 REP Weekend Update Walking Dead Split - H 2014
Dana Edelson/NBC; Gene Page/AMC

Issue 2 REP Weekend Update Walking Dead Split - H 2014

The National Copyright Administration of China's quick decision against search engine Baidu suggests a big change in regulation enforcement.

This story first appeared in the Jan. 17 issue of The Hollywood Reporter magazine.

The potential of China's online video market -- nearly 600 million viewers strong -- long has been dampened by the country's rampant piracy.

But thanks to a recent high- profile court ruling against two of the country's biggest copyright violators, insiders say Chinese regulators finally are cracking down, opening the door for licensing U.S. TV programming in the process.

PHOTOS: 10 Most Pirated Movies of All Time

On Jan. 1, the National Copyright Administration of China labeled Baidu -- China's largest search engine -- and Shenzhen-based platform QVOD the country's top violators of copyrighted video in 2013. The move followed a two-month investigation into whether the companies were streaming unlicensed content, including pirated episodes of American shows. The inquiry was spurred by a joint infringement suit from leading online video providers including Youku Tudou, Sohu Video, Tencent Video and LeTV, with the support of the Motion Picture Association Asia Pacific.

The plaintiffs didn't get the $50 million in damages they sought, but Baidu and QVOD were fined the maximum penalty for copyright violation. Although that's only $41,225 each, the symbolism -- and swiftness -- of the ruling suggests a sea change in regulation.

"Long term, it will help drive higher licensing fees," says Adam Roseman, CEO of Beijing-based FansTang, which connects Hollywood talent with Chinese consumers.

STORY: Chinese Film, Internet Video Companies Sue Search Giant Baidu in Anti-Piracy Push

The crackdown already might be bearing fruit for content creators. Days after the ruling, Sohu Video, which boasts an estimated 389 million users, announced that it had licensed NBC's Saturday Night Live for an undisclosed sum.

"The most notorious pirates have been stopped," Sohu CEO Charles Zhang tells THR. "This is a huge victory."