Tencent-HBO deal can feed big appetite for content in China

Updated: 2014-11-26 12:07

By Jack Freifelder in New York(China Daily USA)

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A content deal between Chinese Internet giant Tencent Holdings Ltd and Time Warner Inc's HBO is a move that could shake up the Internet video streaming market in China, according to an entertainment industry analyst.

Content providers in China are "really scrambling for quality programming", said Robert Cain, founder of Pacific Bridge Pictures and a long-time consultant for Chinese media.

"Tencent is aggressively looking for content that will satisfy their viewers, just like their competitors as well," Cain told China Daily. "There's not much programming that's available in China, and certainly nothing at the level of quality that HBO produces."

"For HBO, this is a way of monetizing a market that has been very enthusiastic about HBO programming," he said. "They've already been consuming it for years - just not paying for it. So what this deal with Tencent does is bringing a revenue model to that - taking what has been pirated and legitimizing it."

Cain said some of the big hits among Chinese viewers in recent years have included other successful HBO programs like Sex and the City and The Sopranos.

On Tuesday, HBO and Tencent announced a deal to distribute HBO's TV dramas and movies throughout China via Tencent's online video portal, Tencent Video.

The move makes Tencent the exclusive online video platform for HBO programming in China, including shows like Boardwalk Empire, Game of Thrones and True Detective.

Martin Lau, president of Tencent, said the deal would allow both parties to take advantage of Tencent's massive online user base to create an official distribution channel in a growing online video consumption market.

"This partnership enables us to distribute some of the most ground-breaking programming in the world through our robust technology platform, to the benefit of Chinese Internet users," Lau said in a statement.

Charles Schreger, HBO's president of programming sales, said teaming up with Tencent ensures that Chinese fans will soon be able to enjoy HBO's programming at a "high level of quality".

Online distribution through Tencent Video will start "in the very near future", the companies said. A timeline for release and the financial terms of the deal were not announced.

Tencent, which operates in online games, social networks, video streaming, mobile apps and online shopping, has millions of users in China. As of October 2014, Tencent, founded in 1998, is also one of the five largest Internet companies in the world, a group that includes Amazon, Google, eBay and Alibaba.

In September, China's top broadcasting regulator said it must approve all foreign TV shows before they can be posted on video sites. Streaming sites must pull unapproved shows by early next year. Content from the HBO-Tencent deal will also be subject to review.

In May, China's State Administration of Press, Publication, Radio, Film and Television required the country's streaming services to drop popular US shows like The Big Bang Theory, The Good Wife, NCIS and The Practice.

Cain said it's in the best interest of both sides to push for swift movement on distribution of HBO's shows via Tencent's channels.

"With each new show that airs on HBO, there's a network of viewers who will be able to watch them without any economic benefits going to Tencent or HBO," Cain said. "It's really very much in their interest to implement this as soon as possible."

Tencent's partnership with HBO also follows its recent distribution partnership with Warner Music Group (WMG), a former holding of Time Warner.

Cain said one "very encouraging trend" in recent years has been a "shift" where people are viewing more Hollywood content on paid or advertiser-supported platforms.

"We've had these services, Netflix, Hulu, Amazon, etc, and they're reaching a level of maturity in the US but in China it's a newer development," he said. "It's a challenge for the Chinese online platforms to make a profit, but they're working on that."


(China Daily USA 11/26/2014 page2)