China's video sites shift to making own shows

BEIJING - In China, running a video-streaming site is no easy task. Companies have to cater to censors' ever-changing demands while battling with the rising cost of purchasing the rights to Hollywood blockbusters and South Korean soap operas. Despite reporting massive traffic, China's online-video market has yielded few profitable companies.

These sites, which rely on traffic-driven advertising revenue, have come up with a new strategy. Letv.com, iQiyi, Tencent and Youku Tudou are all investing heavily in in-house production, much like how US video streaming giants Netflix and Hulu are challenging traditional content producers by churning out their own popular shows.

The application process for government approval is also shorter and less complicated for locally produced programs, according to analysts.

Economic sense

Ma Dong, the chief operating officer of iQiyi, an online video provider backed by Chinese search engine operator Baidu, said the company plans to double the number of TV dramas it produces to 30 this year. It will also purchase more local shows, as the quality of some productions has reached such a level that they can compete with imports, despite costing a lot less.

"Content acquisition costs have soared over the past two years, driven largely by Korean dramas," Ma said. "We have to respond to changing market demands quickly enough and adapt our strategies."

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