Video-streaming sites fight rampant piracy

On-demand, pay-per-view video streaming is taking off in China with expanding use of smartphones and tablets and the ease of payment. Some companies say the mobile Internet will beat the pirates. When media studies student Liu Zhiqi settles down to watch a movie or TV drama at the home of the San Francisco family she lodges with, she misses the convenience of downloading content for free as in China. For Liu, an on-demand streaming service such as Netflix isn’t worth the US$7.99 a month subscription. “As a Chinese, I am not used to paying to watch TV,” says Liu, 20, from Jiangmen City in southern China’s Guangdong Province. “Instead, I watch free websites.” Liu’s attitude encapsulates the dilemma that has faced China’s video-on-demand industry: How to persuade people to pay to watch in a country where piracy is still rampant and licensed content such as American TV dramas is free online due to deals between Hollywood and site operators. Some companies believe the answer lies in expansion of the mobile Internet, making it convenient for people to watch and pay and getting movies out before the pirates do. Revenue from nascent pay services has grown rapidly and one Hollywood studio says it is very optimistic about the prospects for making money here. In China, pirated DVDs in stores and on the street were traditionally the fastest way to get access to a film, and cheaper than going to the theater. A few years ago, piracy also dominated online. Today, China’s major video-streaming sites have deals with Hollywood studios and others and are filled with licensed content but get most of their revenue from advertising. To protect their investments, a group of video sites announced in November they had teamed up with the Motion Picture Association of America to sue other Chinese sites they accuse of copyright violations. Charles Zhang, CEO of Sohu.com and its video unit, says it will buy “many more” Hollywood movies this year and charge users to watch them on a pay-per-view or monthly subscription basis following the “huge victory” of Chinese authorities naming top search engine Baidu and software company QVOD as the biggest video-copyright violators last year. The December 30 announcement showed the government was cracking down on online piracy, he says. Whereas TV dramas have several episodes that allows more time for advertising, for movies “the only viable business model is by charging,” says Zhang.