• Monday, October 05, 2015

TV ad revenue in China cannibalized by internet growth

Staff Reporter 2013-10-22 12:14 (GMT+8)
Hunan Broadcasting System's Who Now appication. (Internet photo)

Hunan Broadcasting System's Who Now appication. (Internet photo)

Traditional television stations are in decline in China as their business model is crumbling with the rise of internet television and mobile internet which allows audiences to access content through their cell phones and tablet computers, hurting the advertising revenue of many TV networks.

"It is undeniable that TV networks are on the decline. Although Hunan TV's viewership ratings have topped the ratings across the country, our advertising revenue is decreasing," an employee of the network told the China Entrepreneur, a Beijing-based national economic newspaper.

Only 30% of Beijing residents now bother turning on their television set to watch TV, according to data compiled by the State Administration of Radio Film and Television, the national broadcast regulator. The advertising revenue of Baidu, China's leading internet search provider, on the other hand, is expected to surpass that of state broadcaster China Central Television (CCTV) by the end of this year.

A Jiangsu-based television network started transforming its operations last year and has since developed several applications specifically for mobile internet users. The latest attempt by television stations to embrace the internet is QR code. In a Q&A program on CCTV, the audience could interact with the show by using the barcode scanner on their smartphones. This approach has also been implemented by local networks eager to adopt internet technology to build their audience, though many have found the move to be too expensive.

CCTV producer Liu Zhengju tried to integrate barcodes into his programs for viewers to scan and ended up spending 2 million yuan (US$328,000) in the attempt. He said the highest number of barcode-scanning users online at the same time was 450,000, equivalent to the number of users of a massively multiplayer online game. But the rising number of users has driven up bandwidth costs as well. Liu is now seeking financial support and favorable government policies.

The problems encountered by CCTV, the country's biggest network, are being experienced by many networks all over the country which lack the finances and status of the state broadcaster.

Who`s who »
Jiang Jianqing (姜建清)

Jiang Jianqing is the chairman of Industrial and Commercial Bank of China (ICBC). His research interests include theoretical and practical bank innovation, and corporation theory of industrial and ...