China’s TV programming market now second only to the US | Media Analysis | Business
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Research from IHS Markit has found that China has overtaken the UK in the TV programming industry, becoming the second-largest market in the world after the US.

ihs chineseTV 20AugThe study found that TV programming expenditures in China, including online platforms, hit 73 billion yuan (US$10.9 billion) in 2017, followed by the UK at (US$10.0 billion), while the US led the global market, spending (US$58.3 billion). This split between 43 billion yuan (US$6.4 billion) spent by Chinese TV broadcasters on programming in 2017, compared with 30 billion yuan (US$4.5 billion) spent by online platform companies.

The growth in China’s TV programming spending was largely due to what the analyst said was ‘aggressive’ content investment by online companies Baidu, Alibaba and Tencent who have upped their spending on content origination and acquisition for their respective video platforms iQiyi, Youku Tudou and Tencent Video.

Original programming made up just under half of all of all Chinese programming in 2017, followed by acquired programming at 46%, and sports programming at 5%. IHS Markit expects this split to remain relatively consistent over the next five years and that despite the increased focus on original programming, acquired content in China will remain an integral part of broadcasters’ content strategy, as many companies still rely heavily on it. The large and growing consumer appetite for global sporting events, particularly online, is also expected to boost spending on sports programming.

Looking at underling trends in monetisation for the territory, IHS Markit also discovered that broadcaster advertising revenue growth in China has plateaued since 2014, reaching 83 billion yuan (US$12.3 billion) in 2017, but online revenue is on the rise, driven by greater video advertising and subscription income.

The analyst said that for China, like in most other markets, as digital entertainment viewership gained traction, advertisers were gradually moving more of their budgets to digital platforms. It also expected online companies to overtake TV broadcaster spending in 2018, if the content creation spree persists.

“Broadcasters and online platform companies are increasingly creating their own content, not only to lure paying subscribers, but also for merchandising, mobile game development and other new revenue streams,” observed IHS Markit senior research analyst Kia Ling Teoh.

“In addition, distribution of linear TV and online platform content can generate lucrative returns, in both domestic and foreign markets. While online platform companies are increasing China’s TV programming expenditure, they should be concerned by user retention and sustainability of content costs. In order to retain existing subscribers and attract new ones, online platform companies are investing heavily to create and acquire exclusive content. Unlike Netflix, these companies still rely substantially on advertising and sponsorship. If the cost of content continues to surge, such aggressive investment will become unsustainable.”