An Idiot’s Guide to watching movies online in China

A few weeks ago 三联生活周刊 ran this story which details the state of the online video sharing and movie download industry in China. The article outlines how racy content and pirated movies can be found everywhere and most website are giving up trying to make their users pay for content.
While Beijing has been cracking down on pirated DVD’s sold on the street, little has been done to stop the explosive growth of pirated video sharing via bittorrent or video sharing websites. Software like Xunlei, a a bittorrent download manager, has over 100 million users, clouding the future for copyright protection in China.

Translated from Chinese, original can be found here, for more information look to Danwei’s post on this subject: Internet video in China: who are the players?. Another comparison of Chinese video sites can be found here on China Web2.0 Review.

Idiot’s Guide to watching movies online in China

By Zou Jianyu, Zhuanji, and Lie Yin

“How do you actually watch movies on the internet?” The person in charge for copyright protection at a website answered: “go to a Peer To Peer (P2P) webpage and look! 90% of all websites have them”

2006 was the year of frenzied investment in internet movie downloading and online viewing, it is said that within one year more than 200 new online movie websites were established. The equivalent of over 200 movie theaters being built without geographic restrictions, able to provide content over the internet at any time.

popular video content on 6rooms.com, including sex tapes and other racy content

In 2006, domestic Internet service providers China Telecom and China Wangtong both made upgrades. The data shows over that for households with internet access over 90% are using ADSL, also Beijing Wangtong starting January 1st of 2007 upgraded its 150 RMB monthly flat rate plan from 512 kb/s service to 1mbs without charge.

You’ve found a movie, now how do you pay?

If you enter the words “Casino Royale + download” on Baidu or Google, you will be able to find 310,000 and 550,000 respectively. If you again enter the same terms but change “download” to “watch online” you again find 100,000 results on Baidu and 1,000,000 results on google. Clicking on the first 50 pages, the links provided contain all the newest and latest content, people everyone have realized this notable increase in video sharing websites.

Domestically, the strongest movie broadcasting websites are: Zhejiang Telecom’s “Jiuzhou Theatre,” Guangdong Telecom’s “21CN,” furthermore companies with relation to Heilongjiang Netcom were said to have profits exceeding 100 million RMB. To watch movies on “Jiuzhou Theatre” the monthly fee is 15rmb, which for Zhejiang Telecom broadband Internet customers can be paid together with their telephone fees. For non-Zhejiang residents you can use Tecnet Inc. QQ Dollars, or send two text messages a month via a cell phone and you can become a member. However according to a “Jiuzhou Theatre” serviceperson, cell phone users using Beijing Mobile are currently unable to use this method of paymen,t and there have been other problems with Telecom and Mobile providers outside of Zhejiang. Yet business in Zhejiang alone has been very profitable.

sex seems to be the selling point for most of China’s video websites

In 2006 Sina.net bought the copyrights for the movie “The Banquet” and provided online viewing for a fee. Yet afterwards, this test was not successful for even though the copyright fees were no more than 1,000,000 RMB, after server and broadband fees Sina was unable to break even. To watch “The Banquet” viewers could use SMS texting to pay the fees, but the fee policy’s of mobile providers have continually restricted this type of business, another far more complicated method is to use online banking,

On the backgrounds of these Telecom websites, you are unable to find links to view the official copy of “Casino Royale”

On many more nameless websites you are able to find viewing links, yet on the whole most of them require users cell phone number for registration. Additionally, the payment and pricing is not only complicated but also all over the place in terms of methods, compared with Jiuzhou’s clearly marked prices, most users don’t venture to other websites.

Downloading is unimpeded

In reality, the majority of people download the movie onto their computer; this method is completely free of any of the obstructions on fee-based websites.

On January 5th of this year, Google announced its investment in Chinese domestic download software company Xunlei. Xunlei has stated that up until August 31st of last year, there were already over 110 million users of the software on millions of computers. In the results for “Casino Royale” and “download” a number of the results list links to Xunlei’s downloading software. The advantage of using their software is that the speeds are much faster and when your connection is stopped, the files you were downloading don’t disappear. For this story the reporter downloaded a copy of Xunlei and after installation there was a special message that stated if you want to use this as your primary downloading software you must agree to delete all other downloading clients on your computer.

downloading with Xunlei

On the Internet, downloading “Casino Royale” is divided into two parts, for the first part there were over 192 files requiring 50 minutes to download. Once downloaded and opened, the “optimal size” is about the same as three business cards, but the full screen mode isn’t that bad either. When the movie starts there is text that reads: “The film and subtitles from this movie are from the Internet, it can only be used for the personal study of film production and educational exchange, Copyrights all belong to the movie company. Any group or individual may not use this movie for public broadcast or for of financial profit, the individual or group will be responsible for bearing all consequences if these rules are violated, please self-consciously delete this file within 24 hours of downloading.” Simply stated, this movie isn’t MGM or Columbia’s official copyrighted copy, and Xunlei cannot be blamed for any problems with the subtitles, picture or sound quality.

When downloading on Xunlei, a small window pops up displaying all kinds of top ten movie lists, entertainment information and some advertisements. 007 Casino Royale was number three on the “Hot Movies” list. Facing hundreds of other websites that for users are difficult to use, Xunlei, which provides download instructions and tools which is why google has invested in Xunlei, as Internet video companies all hope that in this small window links and rankings take up most of the space. Google’s search business has stepped further into the entertainment market.

Many industry insiders think that in 2007 over 90% of china’s 200 video sharing websites will close because they are unable to make any money and obtain venture capital. In 2006, the only company that was recognized as notable force was Youtube.com. Still not listed on the stock market, it was bought out by google for 1.65 Billion dollars.

Youtube conforms to the Web 2.0 concept, users upload the content themselves and it is considered a “video sharing website.” The earliest video sharing website in China was Tudou Network, afterwards Youku and 6 rooms were established, which were all able to obtain venture capital.

Youku network was able to obtain 300000 in US capital, still in its beta, from June of last year after sex video’s of actress zhangyu and saddamns execution appeared on their website, in December they announced that they obtained another 1200000 USD capital.

Different that many other video websites, Youku is very simple, a pure exchange between netizens. Thus they have a staff of no more than 50 personnel of which more than half engage in storage and transfer service, with a sales office that is still under construction. The biggest costs are buying new servers and bandwidth.

Because of few barriers, the competition among Internet video website is extremely fierce. This video mosaic technology can easily enable videos to be shared among numerous different websites. So when a no-named website sees Casino Royale on Neteases or QQ’s servers, then the data is obviously theirs. Without a crink in this system, QQ’s website has put out a huge video channel, which according to sources has close to 100 video website partners, no matter which server the movie is coming from, QQ’s website has all the information and links for direct viewing.

QQ Design is slick, and has access to millions of users via its chat program

What kind of risk is this for other companies? Youku founder Gu Yongqiang said that they are also working to improve the browsing speed of their website, for when a user starts viewing a video the waiting time must be short and stable. Behind data speeds, there are also problems of sufficient capital and broadband servers.

Watching “Casino Royale” On Tudou

Video sharing websites don’t limit at all the types of content that users can upload. Even though Youku is a “short video” website where programming can be no longer than 15 minutes, movies like “Casino Royale” can be split up into multiple sections and be uploaded. It seems as if just about anything can be seen on these websites, including big moneymaking movies. Video sharing websites are clearly the future platform for competition among the internet video market.

Recently, China blog host strong-arm Sina, put out a new video blog, becoming Tudou Networks, Youku and 6 rooms new competitor. Sina has a strong advantage in that it has been able to capture China’s blog market and overcome former powerhouse China.net by having popular blogs that received allot of attention. While Sina’s success is uncertain, they don’t face the same barriers of buying expensive servers and bandwidth like Youku had to due to Sina’s resources.

Watch legal copies, watch ads

In 2006 a website called Quacor.com set itself up as only having legal copies of movies yet are still free to view, this company is run by a advertisement agency under CCTV. Quacor.com bought the popular television series “Three Gorges Good People ” and “River-town summer days.” On January of this year Quacor.com officially started hosting “Three Gorges Good People” using a “free viewing + advertisement” sales model, during the movie viewers can see Chengdu Tobacco Company advertisements.

Except for companies with a telecom background and Tecnet, which uses its QQ dollars method, almost all of the other internet companies are going to give up the pay-for-content viewing in favor of using advertising sales as a primary source of revenue, just like watching TV at home. But with the attack on pirated movies and the establishment of pay-for viewing and advertisements, business has become extraordinary difficult. Should we be on the lookout for pirate-movie companies to establish a complete movie database and information website?

There is good news, and this progress has by no means been completely halted. Many companies holding copyrights have slowly been shifting towards the internet, putting movies that otherwise would have sat in warehouses on the internet. Seeing that internet video profits are still meager, Chinese film copyright fees have plenty of room to be negotiated, consequently internet companies have hoarded copyrights waiting for the opportune moment to put online. Only then, will China have a real internet multimedia environment, unlike today’s current bout of websites filled with pirated videos, sex scandals, and prostitution photographs.