China’s Internet giants are looking to Hollywood as they seek greater visibility in the country’s entertainment sector.
Entertainment and video officials from Tencent Holdings Ltd. and Baidu Inc. recently held meetings with Hollywood producers on content acquisition and cooperation. Jack Ma, China’s richest man and the founder of Alibaba Group Holding Ltd., was also in talks with Los Angeles’s top film studios last month.
According to Pang Yiming, an analyst with domestic Internet consultancy Analysys International, such business moves indicate a larger trend among China’s digital leaders.
“Over the past two years, the digital entertainment sector has been in the spotlight at Baidu, Alibaba and Tencent,” Pang said in an interview with China Daily. “Their investment is headed in two directions: one is online video platforms, the other is studios.”
The former of the two appears to be the more lucrative option for the time being. Pang says that “an increasing number of Chinese have gotten into the habit of paying for what they watch online.” iResearch Consulting Group also reports that the market for online video platforms rose to almost 7 billion yuan ($1.13 billion) in the third quarter of the year, an 83.2 percent year-on-year increase. If Chinese Internet companies can produce their own entertainment content, the new opportunities for advertising and product placement will also be considerable.
However, analysts also note that in terms of content production, traditional film and television studios have the advantage, as they “have more experience in production and creation and they operate theaters.”
Alibaba has been spending the past year growing its digital entertainment sector, and has already spent at least $3 billion to establish itself within the industry. Tencent already has its own online video platform, Tencent Video, and Baidu acquired a majority stake in the domestic online video platform iQiyi back in 2012.
All of these companies have “natural advantages” in branching out into the online video sector, analysts say. But their top priority for the Chinese market should be to provide “unique content” to consumers.
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