The Netflix and Hulu of China want users to pay to watch episodes early
Users are mad about Tencent Video's and iQiyi’s extra fees on top of subscriptions, but analysts say it’s the future
How would you feel if Netflix allowed anyone to pay an extra fee to see a show’s upcoming episodes ahead of schedule? That’s the latest money-making idea from China’s largest video platforms.
Tencent Video and Baidu’s iQiyi, two of China’s biggest video streaming platforms, decided to allow users to pay an extra fee on top of their subscription to get advanced access to episodes of Qing Yu Nian (Joy of Life), a popular fantasy drama released late last month.
Monthly subscriptions for Tencent Video cost 15 yuan (US$2.14) and iQiyi charges 19 yuan (US$2.71). Under the new policy, users could pay 50 yuan (US$7.14) to always stay six episodes head in Qing Yu Nian. Alternatively, watching a single episode in advance costs 3 yuan (US$0.43).
The new policy hasn’t gone over very well. It triggered an intense backlash online, resulting in the platforms scrapping the 50 yuan plan but leaving the 3 yuan one in place.
On Weibo, hashtags related to the two platforms’ pricing policies repeatedly ended up on trending searches, where many people were found complaining about the platforms being greedy. A question on Q&A site Zhihu about the issue also drew more than 8 million views, and the top post that calls for people to boycott the policy attracted more than 32,000 upvotes.
The policy also drew criticism from People’s Daily. The state-owned news outlet said the platforms “have bad table manners” and “drain the pond to fish and burn the woods to hunt,” which are Chinese idioms used to describe someone focused on quick profits as opposed to long-term interests. People’s Daily also said the sites “look down upon on users’ rights.”
In response, a Tencent Video executive reportedly said at an industry conference that the company was trying to “explore innovation in payment models” and “cater to users’ deep-level demands.” The executive added that the company was “not considerate enough in terms of informing users and consumer psychology.”
The companies’ response so far hasn’t dampened criticism. Even without the 50 yuan (US$7.14) plan, many netizens complain that the platforms still want to charge on top of standard subscription fees.
But some experts don’t think the new pricing rules are unreasonable.
Zhu Wei, a professor at the China University of Political Science and Law, argued in an article that charging outside subscriptions are value-added services and don’t violate the law. But Zhu added that the platforms are at fault for not properly informing users about the policy in advance.
Wilson Chow, the head of technology, media and telecommunications at PwC, said that competition is still fierce among China’s three dominating video streaming platforms -- Tencent Video, iQiyi and Alibaba’s Youku. Exploring additional revenue models is a result of the high costs of producing original content and licensing content from both domestic and foreign companies.
(Abacus is a unit of the South China Morning Post, which is owned by Alibaba.)
iQiyi, for instance, reported content costs of 6.2 billion yuan (US$870.5 million) in the third quarter this year, according to its latest financial results. It was 3% more than what the company spent last year.
“Using advanced access to improve monetization, I think it’s understandable given that users still have normal access to the content with their existing consumption,” Chow said.
Such plans have proven effective before. In August, Tencent tried charging 30 yuan (US$4.28) for advanced access to the final six episodes of the hit drama Cheng Qing Ling (The Untamed). Despite public anger, more than 2 million users reportedly paid for early access. That’s an additional US$8.56 million for Tencent.
“It's a trend in the future -- based on personal preference, people will pay more if they want to better enjoy something,” Chow said.