This article will discuss about the upside and downside of entering the Chinese Market for OTT/VOD platforms. Challenges ahead, and what to do to avoid and solve those challenges altogether.
Nowadays, lots of OTT/VOD platforms are trying to enter the Chinese market. It is all because China has a huge potential for online video consumption.
According to Statista, the revenue in the OTT Video market in China is projected to reach US$69.88 billion in 2023, and the number of users is expected to amount to 763.3 million by 2027.
Table of Contents
Challenges in Entering China Market
Aside from the above upside, we also need to take into account the challenges that OTT/VOD platforms might face once they decided to enter the Chinese market, such as:
Competitive Domestic OTT/VOD market
A competitive domestic OTT/VOD market dominates the online video landscape in China. The three largest platforms are iQiyi, Tencent Video, and Youku, which together account for about 79 percent of the market share. These platforms have advantages in terms of funding, promotion, distribution, and user base. They also produce and acquire a lot of original and exclusive content that caters to the preferences and tastes of Chinese audiences.
Complex Internet Infrastructure
China has a complex and fragmented internet infrastructure that affects the quality and speed of online video delivery. You need to partner with local CDN providers to ensure smooth and fast streaming of your content. However, CDN providers in China are often unreliable, expensive, or limited in capacity and coverage.
Strict Regulation and Censorship
China has a strict regulation and censorship system that controls the content and distribution of online video. Foreign OTT/VOD platforms need to obtain a license from the National Radio and Television Administration (NRTA) to operate in China, which is very difficult and costly. They also need to comply with the content review and approval process of the NRTA, which can reject, cut, or modify any content that it deems inappropriate or harmful to China’s national interests, social stability, or cultural values.
Demand for “Western” Content
China also has a strong demand for foreign video content, especially from Hollywood and other countries. Wealth and business development is also promised if an OTT/VOD platform successfully entered the lucrative Chinese market. Below are a few key points to note, which is:
- As previously stated, China has a huge and growing market for OTT/VOD platforms, with a projected revenue of US$69.88 billion in 2023 and a user base of 763.3 million by 2027.
- China has a strong demand for foreign video content, especially from Hollywood and other countries, which can attract more viewers and subscribers to your platform. With this differentiating factor, it would be easier for your platform to attract subscribers as well (given that you’ve done a proper market research already).
- China has a diversified and fragmented internet infrastructure, which can create opportunities for your platform to deliver high-quality and fast video streaming by partnering with trusted and quality China CDN or China-Edge CDN providers (Depends on whether you had the resource to acquire ICP License or not).
Therefore, you need to weigh the benefits and risks of expanding into China carefully. You need to find ways to satisfy both Chinese authorities and audiences without alienating your global fans or compromising your brand identity. You also need to find reliable and efficient partners who can help you overcome the technical and regulatory challenges of entering the Chinese market.
Expanding into the Chinese market can be a daunting task for any OTT/VOD platform. In addition to the challenges mentioned earlier, there are also cultural and linguistic barriers that can pose obstacles to a successful market entry.
Here are some additional strategies that OTT/VOD platforms can consider when expanding into the Chinese market:
Co-producing original content with Chinese partners
One way to overcome cultural barriers and attract Chinese audiences is to create content that caters to their tastes and preferences. By partnering with local production companies or media outlets, OTT/VOD platforms can create and distribute content that resonates with Chinese viewers. For example, Netflix has partnered with iQiyi to distribute some of its original content in China. This can also help platforms to navigate the complex content review and approval process of the NRTA.
Leveraging social media and influencer marketing
Social media platforms such as WeChat and Weibo are popular among Chinese audiences and can be effective channels for promoting OTT/VOD platforms and their content. By partnering with Chinese influencers or key opinion leaders (KOLs), platforms can reach a wider audience and build brand awareness in China.
Offering localized payment options
Chinese audiences prefer to use local payment methods such as Alipay and WeChat Pay, rather than international credit cards. By offering these payment options, OTT/VOD platforms can make it easier for Chinese viewers to subscribe to their services and access their content.
Building relationships with local CDN providers
As mentioned earlier, the quality and speed of video delivery in China can be affected by the complex and fragmented internet infrastructure. The easiest way to enter the China market, is by partnering with trusted and quality China CDN or China-Edge CDN providers. This way OTT/VOD platforms can ensure smooth and fast streaming of their content in China.
Establishing a local presence
To build trust and credibility with Chinese audiences and authorities, OTT/VOD platforms can consider establishing a local office or presence in China. This can also help platforms to better understand the local market and audience, and tailor their content and marketing strategies accordingly.
Expanding into the Chinese market can be challenging, but also rewarding for OTT/VOD platforms.
The first step and the simplest way to enter the market without an ICP license is by partnering with local CDN providers, or China RIM CDNs, and save your resources at hand.
Then, by adopting the right strategies and partnerships, OTT/VOD platforms can tap into the huge potential of the Chinese market and attract millions of viewers and subscribers.
Claudio, is the Customer Success of Mlytics that specializes in assisting businesses expand to and enter the Chinese market. He serves as a bridge, connecting your global business to your Chinese audience. Aiding businesses in establishing a robust digital presence with minimal latency inside China.