Why the Chinese Government is Launching Its Own Hulu and YouTube

A couple of weeks ago, one of China’s biggest BitTorrent websites Btchina.net was shut down by the government on the grounds that it contained lewd and copyright-infringed content. The online community is shocked by the move, which some say mark the winter of China’s internet boom.

Previous campaigns have been waged against similar media sharing sites. Several years ago, the government’s compulsory certification process for video sharing sites drove many small operations out of business. What’s significant about the most recent round of busts is the timing of the crackdown.

Next Monday, the world will witness the launch of China’s very first state-run online television station called CNTV. The owner of this new online entity is CCTV, China’s state television station. CNTV will not only stream all the live programs from CCTV, but also open CCTV’s archives, including nearly 400,000 hours of video, to the public. The latest information indicates that all these services are free of charge.

One apparent model for CCTV’s online venture is Hulu, a commercial-supported online video distribution site jointly owned by FOX, NBC and ABC. It allows viewers to stream TV shows, music videos and movies from the big three as well as other networks free of charge. The Hulu-like section of CNTV, called Bugu (cuckoo), already exists in private beta form.

But the creators of CNTV won’t be satisfied if the site is simply a pipeline for CCTV’s content. Instead, they want it to enter a much bigger and dramatically expanding market of user-generated content sites like Youtube and Vimeo. That is why CNTV also plans to release another site called Xiyou (grapefruit).

In these new ventures, CNTV will have considerable advantages over the competition: It won’t have trouble soliciting online ads since CCTV will share its huge pool of advertisers with these new sites; it won’t be short of content since the sites will be streaming content from CCTV; and garnering an audience will be easy since CCTV will promote the sites in its daily broadcasting.

However, despite all the presumed advantages that CNTV has, its relationship with CCTV may drag it down from the beginning.

The very reason for launching this new online affiliate is to attract young people. But this generation is so accustomed to accessing content through the Internet that they may resist CNTV’s attempt to bring features of traditional TV to the web.

It is important to note that young people seek entertainment on the Internet not just because it is easier to access, but also because the programs circulating on the internet, often produced by non-traditional media outlets, are simply better. This means that younger audiences may not be interested in CCTV content. (Two possible exceptions are sports program and movies. However, based on the current version of CNTV’s Bugu, as accessed through the iPhone and the Android, it seems these two valuable parts will not be available through the service.)

CNTV’s user-generated content site, Xiyou, may feature some of the strictly online content that younger viewers prefer, but it is unclear how much. While the existing user-generated content sites like Youku, Tudou and 6CN do nominally censor copyrighted or lewd material, the illicit material that escapes the censors is the main driver of the sites’ success. Another source of traffic for existing sites is video about social disobedience. Xiyou, the forthcoming state-owned user-generated content site, will likely avoid these types of content, which are, ironically, the ingredients for success.

Nevertheless, the good news is many of CNTV’s potential competitors are already out of business because this latest round of closedown for various reasons. At least, that is a gambit.

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