Short video is becoming more and more boisterous.
Putting short video as a “key strategy”, Toutiao made big news again just after their acquisition of Flipagram, a mobile short video creation community in the North America.
We found the original “Video” section of Toutiao has become “365yg”, and the PC-ends also jump directly to www.365yg.com. This is widely interpreted as Toutiao’s roundabout way to success.
Business data shows that in last August, Beijing Shanxing (Shining Star) Technology Co., Ltd. wholly acquired Yuncheng Sunshine Culture Media Co., Ltd. (the main operator of 365yg), which owned the “Permit for Audio-Video Programs Transmitted through Information Network” (AVSP) issued by State Administration of Press, Publication, Radio, Film and Television of the PRC (SARFT), valid from Jan 2015 to Jan 2018. Moreover, Shining Star Technology is a wholly owned subsidiary of Toutiao, whose corporate representative is ZHANG Lidong, the partner and SVP of Toutiao and the representative of Beijing Bytedance Technology (the main operating body of Toutiao).
A few days ago, the short video platform Pear Video, operated by the Beijing Weiran Technology Co., Ltd., encountered a big “hit” and caught the public media’s attention. In the absence of qualifications about Internet news and information service or Internet audio-video program services, Pear Video released plenty of exclusive information about current politic affairs through many original programs after editing by themselves, collecting user’s uploading contents and so on. That’s why it was ordered to rectify by Beijing Municipal Office of Cyberspace Affairs, Beijing Municipal Public Security Bureau, Beijing Municipal Integrated Law Enforcement on Cultural Market jointly.
Pear Video was originally an entrepreneur project of QIU Bing, the former CEO of “the Paper”. Then many key staffs including the chief news editor LI Xin and the chief character editor LU Yan joined into Pear Video. It was reported to receive 500 million Yuan and value for at least 20 billion, and CMC Holdings accounted for 70% of the shares. During the Spring Festival, Pear Video published the video of “a car rollover accident at Tian’anmen Square”. In the video about the hot topic “Tiger’s bite in Ningbo”, it also made an interview with the younger brother of the litigant.
With Acquisition of licenses, platforms zigzags to pursue success bearing higher policy costs
In 2016, although short video’s thunder was stolen by the live broadcast, the entrepreneurship path of former went the same as that of the latter throughout the year. Along with the tightening internet video regulation of SARFT and the requirement of “state-owned background”, the license application became more difficult and many platforms had no other ways but to “acquire”.
At present, the mainstream live platforms all have obtained “Internet Culture Operation License” from the Ministry of Culture of PRC. Although the operating companies behind have variety of backgrounds, most of them are private-owned. In the context of tightening supervision, the access to get the Permit depends on the company’s background and resources. A lot of companies without licenses can only pay for a licensed company through M&A to meet the policy requirements. It is understood that news, entertainment programs, sports and e-commerce were under the jurisdiction of SARFT.
Previously when the policy loosed, a group of private companies applied and obtained the licenses from SARFT. Now such a license may cost more than tens of millions through M&A. With the influx of venture capital into the video field, the price of that license will be further pushed up.
An industry practitioner told us since the policy became tightened, a license to broadcast Internet Audio-Video Program Service would cost for 30 million Yuan. Someone else also said the current purchasing price of that license is around 20 million -3000 million.
Under the recent panic of live broadcast, platforms like Douyu TV, Panda TV, Zhanqi TV and Dragon Ball have been included on the investigation list for being suspected to provide the internet cultural products of with obscenity, violence, incitement to law-breaking or harm to the social public morals.
Moreover, many platforms began to make their own programs to make original contents to get around the ban, which have expanded to the social hot issues and news critics of the traditional TV Media. To the regulatory authorities, the short videos about news are particularly easy to make some influence, which may cause problems under unfavorable control.
In September 2016, the State Press and Publication Administration of Radio and Television (referred to as “SARFT”) issued “the Notice on Strengthening the Management of Internet Audio-Video Live Broadcast Programs and Services”, requiring the license applicants to be solely state-owned or state-owned holdings with a registered capital of more than 10 million Yuan.
On December 20 last year, the SARFT published “the Notice on Strengthening the Management of Internet Audio-Video Live Broadcast Programs through social platforms of Weibo, Wechat, etc.”, requiring platforms to obtain the “Permit for Audio-Video Programs Transmitted through Information Network” (AVSP) and other relevant qualifications, and strictly operate within the business scope marked on the Permit.
Furthermore, in May 2016, according to many media reports, SARFT suggested the video sites to sign for a state-owned capital buy-in letter of intent.“The state-owned capital should account for 1% to 10% of the shares of video websites according to the market valuation, take places in the company’s management board, and own the votes on content production, investment, cooperation, review, and content in-charge executive appointments. “However, thus hasn’t been confirmed yet.
Not long ago, news from Xinhua Agency attracted us that in this January, the “national team”–China Internet Investment Fund for 100 billion Yuan was established in Beijing. The first 30 billion Yuan has already been completely raised up, and the Internet video service is one of the investment directions.
Accordingly this fund was set up and approved by the State Council, started by the Office of the Central Leading Group for Cyberspace Affairs and the Ministry of Finance. The investors include the industrial capital such as China Mobile, China Telecom, China Unicom and CITIC Guoan, and the financial capital represented by ICBC and China Post Life Insurance.
For the current rapidly up-growing entertainment and cultural content creating industry, it seems necessary for the state-owned funds to supervise through holding shares or accessing to the management boards. However, after all the significance is still weaker than that in the finance, nuclear power, agriculture and other basically strategic industries, and undoubtedly the best choice is to do equity investment through marketized funds. Short video start-ups have very strong we-media attribute with too scattered teams and instability, the supervision and regulatory department will focus more on the contents in the next two years as well.
Short Videos’ competition: content entrepreneurship welcomes prosperity
Under the background of “lackluster” live content and more “fragmented” user time, short video has become the most valued “traffic tool.”
On Toutiao, short video has overcome the graphics and charts to become the most important content form for 1 billion daily clicks. ZHAO Tian, an SVP of Toutiao, believed the short video is not just a shorter video, but the mix of graphics and words of next generation. Users can pay in fragmented time and all the scenes, which helps the frequency of consumption.
The newly frustrated Pear Video does quite well on editing. On the basis of a super original video creating team, Pear worked hard on we-media attraction and the operation mode looked like the editing department of some traditional media. For example, UGC users need to send in topics and are able to win the royalties within 48 hours only after review and video shooting.
In September 2016, Inke officially launched the short video function. As the same, the social networking platform Momo was grafting the live broadcast and short video business, and published their first live product “Momo Live” in Sep.2015, which applied professional singers and hired the top Chinese music producer Kubert Leung as the chief content officer. In Aug.2016, Momo officially online a short video sharing function “Moment” to further expand the user group. Financial statements showed that the company’s live broadcast income has exceeded that of the member subscription or mobile marketing.
In early 2016, a group of short video APPs appeared on the market. Last Feb GIF Kuaishou APP accessed 300 million users to create a new world in the virtual field; In March, Papi “bombastically” announced to receive a financing of 12 million Yuan; In July, Yitiao completed B+ round financing for 100 million and acquired 20 million users; In September, Weibo announced to invest 100 million dollars for small creative internet icon videos, and officially transformed from a Twitter-alike platform to a YouTube-alike UGC Icon-making one; In September, Toutiao’s founder ZHANG Yiming promised to get 1 billion Yuan in the future for the short video creators; In November, Yixia, the parent company of Miaopai accomplished E round financing of 500 million dollars, and planed to put 1 billion Yuan into the short video field; In December, Ergeng TV held the second anniversary of establishment and announced to have precipitated 18 million fans. On January 19, 2017, Ergeng TV announced to get the B round financing of 150 million Yuan, while the last round just finished in March 2016.
At present, the comprehensive start-up platforms such as Toutiao, Miaopai, Meipai, GIF Kuaishou, Weibo, Pear Video and the user terminals of major news tried to create short videos, but the leading platforms significantly presented the Matthew Effect; Some “elegant” platforms also attract certain user groups, such as Wandoujia’s entrepreneurship short video project “Eyepetizer”, which is to provide services to PGC teams who care about lifestyles; We-Media: Yitiao, Ergeng TV, Rishiji, Papi, JK Video, Xingzuo (Constellation) Buqiuren, etc., most of which are successful we-media entrepreneurs with remarkable achievements and chased by the investors.
How about music short videos?
In our view, it is indeed a good business to draw the user traffic, especially the creative music short video within 10 seconds to 3 minutes. On the overseas market, creative music short videos has made countless worldwide popular “internet icons”, but in China the hit songs are extremely fragmented, with nearly no successful stories in recent years. Youku’s Divine Comedy “Little Apple” a few years ago keeps repeatedly mentioned.
Generally speaking, the policy cost of doing music short video is clearly much lower than that of the news short video platform. The former has greater chances to create popular stars with bigger challenges as well. In addition to the needs of real creative video making talents, the problems still lie in the nonstandard copyrights.
If a music company currently have pretty large domestic market share chooses to establish a joint venture for creative music short videos, just like VEVO of Google, Universal and Sony, it would definitely be able to find a place on the market fighting for users’ attention.
Copyright © 2015 China Music Business News