For close to a decade now, the “boats” have gone out to sea. But how do we know if we have arrived?

We analyse Chinese platforms’ expansion, market trends, and revenue diversification, shedding light on the rise of Pan-Asian content, global fandoms, and talent recognition in CDramas, while uncovering Youku’s content distribution strategies for new markets.

Despite playing catch-up with the market leaders iQIYI and WeTV, Youku has made significant strides internationally, with six titles ranking among the top ten in international fan popularity on V-Pulse.

This achievement underscores the growing appeal of Pan-Asian content, mirrored by Netflix’s targeted strategies in the Asia-Pacific region.

Key to Youku’s success are its adept content distribution strategies, blending global and regional platforms for effective market penetration.

Through our analysis of international and regional data, we unveil Youku’s nuanced comprehension of diverse audience preferences and cultural subtleties, all while endeavoring to answer the question: after a decade of “going out to sea”, is the shore finally in the horizon?

Key points:

1. Strategic Distribution: Youku strategically distributes CDrama content globally, utilising both global and regional platforms to access new markets.
2. Content Appeal: Chinese platforms leverage the resurgence of Pan-Asian content and implement strategic localisations to enhance international appeal.
3. Market Breakthroughs: Analysis of CDrama performance uncovers pivotal milestones and trends in Chinese content’s global acceptance.
4. Revenue Diversification: Chinese platforms diversify revenue streams, leveraging global partnerships and audience engagement for enhanced monetisation.
5. Global Fandom: Chinese media cultivates global fandoms, driving engagement and transcending traditional boundaries.
6. Talent Recognition: The popularity of Chinese drama actors significantly contributes to international audience attraction and retention.

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Build, or borrow a boat? How do CDramas fare in international seas?

“Borrowing a boat to go out to sea” (借船出海) is a distinctively Chinese strategy to overcome technological or media gaps: by exploiting existing channels to reach previously untapped audiences.

Domestic media coverage often compare international appeal of Chinese content platforms with global leaders like Netflix and Douyin (TikTok) in praise or criticism of their potential.

However, we consider:

• Business Model Distinctions: Unlike Netflix’s subscriber-driven model and TikTok’s focus on short-form overseas UGC, iQIYI, Tencent Video (WeTV), and Youku operate through a diverse revenue model that includes advertising, subscriptions, and content distribution.
• Revenue Sources: Specifically, iQIYI and WeTV exemplify this model with their revenues sourced from advertising, subscription, and content distribution, highlighting their differentiated approach from pure play platforms like Netflix.
• Financial & Revenue Breakdown: Focusing on iQIYI, the only publicly listed entity among these, provides insight into their financial strategies over the past seven years. iQIYI’s revenue composition reveals a significant reliance on membership services (50-60%), followed by advertising (18-25%), and content distribution (about 9%).
• Market Penetration: Youku’s content platform entered the international market earlier than Tencent and iQIYI, though its growth pace did not match its contemporaries.
• Content vs. Platform Reach: Content reach and platform reach can diverge significantly, with distinct markets reflecting the unique position and strategy of each platform.

Global Streaming and the Asia Pacific Focus

In this backdrop, we examine Netflix’s strategic manoeuvres in response to international market trends.

Here are the strategic adaptations and the emerging challenges faced by Chinese content platforms iQIYI, WeTV, and Youku, as they strive for global recognition:

• Strategic Growth: Netflix is dominant in the US and Canada with growing traction in Asia Pacific and LATAM, highlighting emerging market opportunities versus saturation in established ones.
• Asia Pacific Focus: Despite slowing growth, the region represents a significant expansion frontier, with a 2023 content investment plan of $2.9 billion, representing a 15% hike from previous years.
• Adaptive Pricing: In response to price sensitivities, Netflix has strategically adjusted subscription fees, reducing plans by 46% in some markets.

Leveraging Global Streams: Youku’s Strategic Journey

We preface the above to examine Youku’s journey: It is an underdog both domestically and internationally, the platform needs localized content and strategic market expansion to compete. iQIYI and WeTV leverage ad-supported freemium and premium tiers and engaging in strategic local co-productions. These initiatives drive traffic, creates value, and therefore platform revenue.

However, Youku’s international content distribution is strategically placed. Despite facing competition domestically from Tencent and iQIYI, our analysis has found that Youku’s content has resonated with viewers in Southeast Asia, highlighting its effective global positioning.

The Impact Of Strategic Partnerships:

• Domestic & International Positioning: Youku is playing catch-up to Tencent and iQIYI in China; but the international appeal of Youku’s content — not the platform — showcasing a keen focus on content quality and relevance.
• Netflix and Viki as Strategic Partners: These platforms are pivotal in extending the reach of Youku’s content, aligning with the global appetite for Korean and Chinese dramas.
• Content Reach vs. Platform Reach: Consequently, media engagement and fan interactions highlight Youku’s content as the most internationally-focused among Chinese content producers and platforms.

While both platform viewership numbers and traditional TV broadcast metrics are not often publicly accessible, Netflix publishes their Weekly Top 10 on Tudum. We utilize this data to examine breakthroughs for Chinese language content internationally:

Evolution of CDramas on Netflix

• CDramas initially appeared only in Weekly Top 10 charts in Chinese-speaking regions like Hong Kong and Taiwan after Netflix’s acquisition of Chinese-language content in 2017 through partnerships with iQIYI and Youku.
• However, a significant breakthrough occurred in key Southeast Asian countries in 2022, with CDramas entering Netflix’s charts. Notable titles include “Who Rules The World” (且试天下), “Love Between Fairy And the Devil” (苍兰诀), and “First Love” (初次爱你).
• The momentum continued in 2023, with six CDrama titles in the Top 10, including two from Youku: “Hidden Love” (偷偷藏不住) and “Till The End of The Moon” (长月烬明). Both titles also secured spots in the international Top 10 on V-Pulse.

Youku’s Strategic Approach

Youku’s strategic embrace of international platforms like Netflix and Viki, along with selective partnerships in Thailand with Monomax and True ID, demonstrates its global focus and targeted content distribution approach.

• Diversification and Adaptation： Youku’s diversification strategy, in response to the maturing traditional streaming sectors, involves exploring new revenue streams and mitigating risks associated with relying on a single model.
• Proactive Industry Initiatives: This distribution diversification, mirrored in iQIYI’s collaborations for theatrical distributions in Malaysia and Singapore, highlights the proactive steps Chinese platforms are taking to broaden their influence in evolving international landscape.

Fanfare and Fandom: The dynamics between CDramas and Talent popularity

CDrama series distinguishes themselves with their enduring impact and longevity in the digital landscape.

Throughout the episodic release, the extended lifecycle allows for prolonged audience engagement and comprehensive evaluation of their value, particularly within the realm of social media.

The popularity of talents starring in CDrama series transcends individual releases, indicating the importance of talent recognition and management in sustaining audience interest and engagement.

Spotlight on Rising Talent:

In 2023, Bai Lu emerged as a true rising star as she is featured in three highly successful series.

Her trajectory mirrors that of established figures like Xiao Zhan and Zhao Lusi, who have not only garnered global fan love through their hit dramas but also gained recognition from brands seeking to appeal to international markets.

• Indicators of Arrival:
  • As we navigate the seas of global cultural dissemination, a significant indicator of success lies in the adoption of Chinese pop culture within local markets.
  • Here, fans transcend mere consumption, actively engaging as “prosumers” by creating content that amplifies the popularity of Chinese contemporary culture online.
• Case Studies in Indonesia and Thailand:
  • This phenomenon is exemplified in markets like Indonesia and Thailand, where the popularity of stars like Zhao Lusi extends beyond the broadcast period of their hit series.
  • Secondary surges in popularity are attributed to fan-generated content, such as a one-hour commentary on YouTube in Indonesia and a cover of Zhao Lusi’s song by a local Thai pop group.
• Toward Mainstream Appeal:
  • The proliferation of organic user-generated content in mainstream pop culture signals our proximity to widespread recognition.
  • While we may not yet rival the mainstream appeal of Korean pop culture, the horizon holds the promise of reaching new shores and expanding our influence.

Charting Our Course in the Global Content Landscape

V-Pulse began with the urgent mission of mapping the global content landscape, quantitatively and qualitatively, to illuminate key insights and challenges shaping our path forward.

In 2024, we encourage the industry to consider:

• Actionable Strategies: Balancing partnerships and investments is crucial.The choice between borrowing existing channels or building our own infrastructure — or both — will determine our long-term success.
• Anticipating Trends: Staying ahead of the curve is critical. Embracing and celebrating user-generated content, exploring new formats, and expanding into niche markets offer avenues for continued innovation.
• Measuring Progress: How do we gauge our success? While metrics like audience reach and revenue growth offer guidance, our true impact lies in the lasting resonance of our content worldwide.
• Ongoing research and analysis are vital to inform our strategy. By staying attuned to evolving trends, we can adapt and thrive in an ever-changing landscape.
• As we conclude this chapter, let us embark on the next phase of our journey with determination and resilience. Together, we can navigate the currents of change and emerge stronger than ever before!

For more information on this report, contact v-pulse.contact@v-pulse.com