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BIZCHINA / IT Industry |
Vexing videoBy ()
Updated: 2007-03-28 16:58 Although none has lured a generous buyer as YouTube did, China's online video websites now find themselves facing the same problem vexing their United States peer unauthorized and inappropriate content. According to Beijing-based China Business Post, the State Administration for Radio, Film and TV (SARFT) has stepped up supervision of the nation's online video websites after receiving a growing number complaints about unlicensed use of TV programs and the display of pornographic material and violent content on the sites. Details of the campaign have not been revealed, but industry insiders say it sends a strong message to online video providers that there is more to worry about than just website traffic. China's online video sector has been one of the most active in the nation's fledgling Internet industry in the past year. Inspired by YouTube's rapid rise to fame, local Internet entrepreneurs have set up more than 150 video websites. According to iResearch, a local Internet consultancy, China's online video market generated 500 million yuan in 2006 and will grow almost seven-fold to 3.4 billion yuan in 2010. The promising prospect has attracted a host of venture capital investors, who are eager to repeat YouTube's story in a country with 137 million Internet users. According to Zero2ipo, a Beijing-based researcher focusing on China's venture capital industry, the nation's online video websites secured $100 million from venture capitalists in 2006, or 10 percent of the total venture investment into IT during the period. And the enthusiasm doesn't appear to have cooled in 2007. A group of US venture capital firms, including Disney's investment arm, invested $23.5 million on March 1 in UUSee.com, a Chinese site for Internet video. The Beijing-based company has attracted other investors such as Draper Fisher Jurvetson, Highland Capital Partners and Sequoia. Although online video websites are scrambling to put up more content to attract users, few of them have received licenses from SARFT to offer such services. Industry insiders say the government department has issued only about 10 licenses to video websites, most them to State-run TV and radio stations. It has also been reported that some websites provide pornographic and violent content to boost traffic. At the same time, local TV stations have also become a source for quality content, but most of that has been obtained without permission. PPLive.com, a Wuhan-based online video website, reportedly provided an online live broadcast of the CCTV Spring Festival Soiree, one of the nation's most-watched television programs, staged on the eve of the festival without the station's permission. PPLive claimed to have more than 60 million registered users at the end of last September. The company has secured more than $10 million from Softbank China Venture Capital and BlueRun Ventures for further development. Such practices have not only brought complaints from TV stations, but also attracted the attention of the regulator. According to the Xinhua News Agency, SARFT banned the "China International Chinese Television Station" (www.ccztv.com) in March, as the website provided online video services without having the license required. It was also reported that SARFT blacklisted seven other online TV stations last December for the same reason. "The campaign could be good news for rule-abiding websites," says Buddy Ye, CEO of Wangyou.com. "Some video websites have regarded porn and violence as their paradigm to attract users." A cross between YouTube and MySpace, Ye's site has attracted more than eight million users by allowing them to upload self-made video clips and maintain blogs. The company received its first major venture capital injection from Silicon Valley-based heavyweight Charles River Ventures last March. Although Wangyou also has not secured a license for online video services from SARFT, Ye says his site has a rigid self-inspection system. Wangyou now has 15 people checking every file uploaded by users before those video clips are put online. "Our investors are fully aware that we don't have the license," says Ye. "But as most players in the sector don't have one, the regulatory risk is still acceptable." Although details of campaign haven't been released, analysts say online video service providers will have to spend more money to get legal content, as well as better manage user-generated content. "But to do so, the cost of running such services will be pushed even higher," says Fu Xinghua, an analyst with Beijing-based IT consultancy Analysys International, "For those online video websites scrambling to turn a profit, it could be the last straw." (For more biz stories, please visit Industry Updates)
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