A new and different form of competition is engulfing online video companies. Instead of bidding against each other for one episode of a TV drama, Internet sites are now collaborating with third-party program makers as a way of attracting audiences and, consequently, advertisers.
PPS Network TV, a major interactive TV provider, has joined hands with Kunhong Media, a Shanghai-based entertainment producer, to make a micro movie in a new approach to its marketing strategy.
The 20-minute film, titled The Most Familiar Stranger, stars popular local singer Xue Zhiqian, who also composed and sang the theme song that has been downloaded more than 1 million times a day since its debut on Jan 8.
The script was developed by Kunhong, an entertainment marketing firm, and the movie was directed by Zhao Xiao'ou, a winner of the Golden Rooster Award, one of China's most prestigious film awards.
The idea is to highlight the song by creating a television experience around it and thereby bring the program into Karaoke facilities nationwide, according to Jiang Xianfu, executive vice-president of PPS.
"We'd like to integrate resources by combining micro movies, MTV and the KTV platform, creating a unique marketing strategy for our company," Jiang said.
In this way the movie is effectively extended from online portals to offline arenas, Jiang said, so that when people get attracted to the song, they will want to watch the movie.
While major video sites have been hit by copyright issues and are struggling to make a profit, PPS has seen increasing earnings since 2009, largely fueled by soaring advertising revenue and steadily growing fee-income including value-added services, Xu Weifeng, president of PPS said last year.
The days when online sites duplicate the shows of TV stations are long gone. In a similar move, Sohu Video, an arm of the online video business of Web portal Sohu Inc, announced a strategic partnership with media giant Star Group Ltd in December, becoming the company's exclusive new media partner.
Sohu Video will invest more than 100 million yuan ($16 million) to obtain the exclusive online broadcasting rights of China's most popular music talent show, The Voice of China, in 2013, said Deng Ye, president of Sohu Video.
Total online visits to the show exceeded 1.5 billion in 2012, according to statistics from CSM Media Research.
The cooperation not only allows Sohu to publicize the show on its online stream, but allows it to participate in the design of the show and bring in online interaction from audiences, Deng said.
"The partnership goes beyond copyright buyouts. Leveraged on the resources and experience of Star Group, we will infuse fresh ideas into the program by adding new elements into the gameplay," she said, without elaborating on the details.
Tian Ming, head of Star Group, said the company believed the Internet firm could create more innovative ideas, leveraged on its experience in running interactive shows.
According to CSM, The Voice of China - the Chinese adaptation of the original Dutch music TV shows - topped nationwide ratings during its debut on Zhejiang Satellite TV in July, attracting 2.77 percent of the country's television audience.
Even re-runs of the show through the website attracted ratings higher than the premiere of any other music show this year, according to audience statistics.
"The future of online video companies lies in close collaboration with third-party program makers," Tao Chuang, chief executive officer of PPTV, said on the China Network Audio-Visual Industry Forum in December.
In PPTVs 2013 strategy the company said it will focus on the interaction between stars and their fans through two customized programs, Asia Entertainment and Sports Features.
PPTV has rich experience in running similar programs that provide live interaction between viewers and hosts. In 2011, cooperation between PPTV and Hunan Satellite TV, which co-launched a reality show featuring the everyday life of contestants competing in a talent show called Happy Voice Girl, yielded sizable earnings for PPTV.
During the 72 days of the show, contestants lived in a castle and their lives, training and rehearsals were broadcast on PPTV, a time span too long for typical TV shows. The site also established interactive rounds so contestants could have more opportunities to communicate with fans.
"The profit margin will remain low if online video media solely relies on advertising because the soaring cost of purchasing content will erode much of the profit gained. That's why we need to produce something really unique that makes viewers willing to spend money," Tao said.