According to the key statistics on online video released by iResearch, the revenue of China’s online video in Q1 2012 reached 1.78 billion yuan, 78.5 % increase from prior year period and 3.8 % decrease over Q4 2011.
Online video advertising revenue grows rapidly in Q1.
China's online video advertising revenue reached 1.19 billion yuan in Q1 2012, a YoY growth rate of 81.1% and 2.5% decline over Q4 2011. This indicates that advertising revenue maintains high growth rate in 2012 and is the main income source for online videos. As Q1 is the low season, the revenue of online video advertising declines slightly compared with Q4 2011. iResearch estimates that, with major international events such as European Cup and Olympic Games in Q2 and Q3 2012, the revenues of the entire online video industry will grow greatly.
Cooperation and alliance among enterprises gradually lowered licensing fees on videos.
The surge of licensing fees on online videos in China in 2011 became a great restriction for online video industry to generate profits. The raised fees make it more difficult for enterprises to enter this industry and broaden the gap between enterprises with strong financial support and other enterprises. As a result, small and medium-sized video companies are forced to transform their operations under the pressure of huge amount of licensing fees.
After the fierce competition in 2011, enterprises choose win-win cooperation and advantages complementation to reduce the cost of online video copyright licensing, and enlarge profit margins for online video enterprises. The most typical example is the copyright alliance formed by tv.qq, tv.sohu and iQiYi. After this alliance is accomplished, the related fees have reduced by nearly a half. iResearch believes that the corporation among video enterprises will be more and more frequent and publicized in the future. Enterprises will also improve their decisive power and bargaining power during the cooperation with copyright proprietors. Therefore, the cost of online video licensing in the future can be further reduced.
Comprehensive video websites increased their market share in advertising revenue steadily.
Advertising revenue of comprehensive video websites in Q3 2011 jumped to over 70% of the total. In 2012, comprehensive video sites continue the momentum by flying to 73.1 % in Q1. The cooperation between Youku and Tudou in 2012 leads the trends of win-win cooperation in the video industry. After the merger, the media value of comprehensive websites will rise greatly. Video websites can gain more profits in the future by raising unit price for ads. iResearch predicts that the advertising revenue of comprehensive video websites will grow steadily. As for portal websites and network TV stations, as only a few enterprises are involved, their market shares in advertising revenue will gradually become stable.
The value of online video advertising gets recognized and that of portal video sites becomes apparent.
According to the latest statistics from iAdTracker, a database monitoring online advertising, iResearch finds that online video advertisers continue to increase in 2012. There are totally 1020 advertisers for comprehensive video websites, among which, the number of advertisers using video software clients rose to 542 in Q1, while advertisers for portal video websites substantially rise to 363. Online video advertising value now is being more and more recognized by advertisers. With constraints on television media by China’s TV Commercials Ban set on January 1, 2012, advertisers will choose online video media as a major target.
Advertisers on portal video sites have increased continuously since 2011. As the value of video advertising industry keeps growing, portal websites, with their abundant brand advertisers will increase the proportion of online video advertising when making advertising media plans. Advertisers on portal video sites will also continue to grow. Besides, the portal video sites are the favorite of the brand advertisers for their large number and wide coverage, beneficial for good advertising effect. High-quality user experience also meets brand advertisers’ requirement to improve their brand image, thus the value of brand advertising on portal video sites becomes more and more apparent.