In 2012, China online video experienced sound development and its total revenue maintained rapid growth. Though the stark economy climate influenced the growth of video advertising revenue, the value of video sector is gradually appreciated because of intensifying industrial consolidation and enlarging user base. The copyright cost decreased due to the close cooperation between video enterprises, and both the ratio of bandwidth and content cost in the total revenue continuously decreased. Therefore, the video enterprises are close to profit point because of cost reduction and revenue increase.
Revenue of video sector attained 9.25 billion Yuan in 2012, up 47.6% YoY.
According to Q4 2012 China Online Video Report released by iResearch, revenue of video sector attained 9.25 billion Yuan in 2012, with year on year growth of 47.6%. iResearch analyzed that online video revenue was mainly composed by advertising revenue and the copyright sales revenue whose growth potential is limited. However, along with the increase of self-produced videos, the copyright sales of self-produced videos may replace the re-sales of the copyrighted videos. Videos re-sales are mainly conducted in cooperation and sharing modes, thus it still has the potential to grow in long term.
Advertising revenue accounted for 72.6% and copyright sales revenue fell back to 12.8%.
Seen from the structure of revenue, advertising revenue took the dominant position, with the share increasing over the previous years. This is mainly attributed to that video enterprises achieved a more favorable position and many events were held. Comparing with 2011, both number of advertisers and unit price of advertisement have experienced substantial raise, which propped up the sound development of video advertising.
In 2012, the video industrial consolidation got more intensive, the copyright alliance established and contacts between video enterprises on video copyright issues was closer. As the video contents are increasingly distinctive, the video enterprises could rationally invest in different video contents in accordance with the needs of various viewers to avoid the fierce competition. As a result, the share of copyright re-sales revenue decreased.
As video value-added services are primarily concentrated in few corporations with low payment rate, the share of value-added services is relatively small. However, the growth potential of video value-added services is obvious because video contents are gradually differentiated and copyright market is gradually in order. Here other businesses mainly refer to jointly operated game, whose share decreased to 11.7%. And the share may continue to decline due to position of online video sector is rising and source of revenue is diversified.
Forecast of online video development in 2013
Over the top TV is on the way of booming development.
Data released since the end of 2012 by video enterprises show that mobile devices have become a new platform for viewers. In 2013, mobile terminal will become the major battlefield for video enterprises competition. There coexist opportunities and challenges as the video enterprises confront the change of business models (mainly refers to mobile Internet advertising) and the traffic may shift from PC terminal to mobile terminal.
At the beginning of 2012, some online video operators cooperated actively with over the top TV (OTT TV) operators who have business license. And then different kinds of Set Top Box (STB) were launched, which pushed OTT TV business to a new high by the end of 2012. Along with the accelerated integration process of the three networks, the audiences tend to shift back to television.
Diversified development with the self-produced videos, news and UGC.
News, information and User Generate Content (UGC) will become a new breakthrough to increase the page views and advertising value in 2013 under the general trend of mobilization. This changes the current situation that copyright content based programs including films and teleplays, variety shows etc. take the dominant place.
This cooperation of TV channels and the video websites is in further development process since they cooperated in 2011 and the video websites with self-produced videos broadcast these videos on TV channels in 2012. That is the video websites enriched video contents through mature TV programs at first, and then launched the cooperation process. It is estimated that in the second half of 2012, video contents in video websites will be more popular in TV channels.
In 2013, video enterprises will further conduct self-produce video strategy. That is for the purpose to strengthen its core content competence and to lead the cooperation of video websites and TV channels as a new way of expanding channels.
The video enterprises encountered the problem of content homogeneity at the very beginning but now the situation is improved. The video enterprises started to choose programs based on their own needs, which will get fully developed in 2013.
Video enterprises expected the profit point.
The merger of Youku and Tudou and the establishment of video alliance strengthened the bargaining power of video enterprises on copyright and improved cost reduction ability significantly. In addition, the number of online video viewers reached 450 million, being the top Internet service. As a result, the advertising value of online video has attracted more attention from brand advertisers and the price of video advertisement has grown year by year. Meanwhile, the advertising sales of key enterprises have been improved gradually and its profitability has been strengthened. Therefore it is estimated that the outlook of online video enterprises is brighter in 2013.