Netflix and other on-demand streaming service are finding an enormous barrier to entry in the Chinese market simply because their product is already widely dispersed free of charge. Liu Zhiqi, who is a media studies student in San Francisco, says downloading content is not worth a $7.99 a month subscription. "As a Chinese, I am not used to paying to watch TV," Liu said. "Instead, I watch free websites."
This attitude is the dilemma China's video-on-demand industry is facing across the country. Due to deals between Hollywood and site operators as well as widespread piracy of licensed content such as American TV dramas the Chinese public has grown accustom to watching this type of media free online.
Some video-on-demand enterprises think the answer to subscription based media lies in expansion of the mobile Internet. This would make it convenient for people to pay for and watch movies on their mobile devices before the pirates copy them.
Pirate DVDs, sold on the street and blatantly in stores were traditionally the fastest way to get access to a film in China. They are also much cheaper than going to a theater. Up until a few years ago, piracy also dominated the online video market and it was not just some freelance computer geeks out to make a quick profit.
Today, major legitimate video streaming sites, such as Sohu.com, have deals with Hollywood studios and others to stream movies and shows. In November, a group of these video sites announced that they have collaborated with the Motion Picture Association of America to sue sites they accuse of copyright violations.
Charles Zhang, CEO of Sohu.com said his company would buy "many more" Hollywood movies this year in the wake of a "huge victory" by Chinese authorities in cracking down on online piracy last year. On December 30th, top search engine Baidu and software company, QVOD, were named by government investigators as the biggest video-copyright violators last year.
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