Charles Zhang, the Internet entrepreneur behind China's Netflix-style online video site Sohu.com, thinks television broadcasters should get out of the TV business.
Instead of trying to compete with online video companies like Sohu, Youku and Baidu in China, Zhang said, broadcasters should quit their jobs and start making content. “Move to the content side; jump to the right side of history,” Zhang told the industry audience at his keynote Tuesday at the MIPCOM television trade fair in Cannes.
Zhang painted a rosy picture of the online video business in China, pointing to the country's 3 billion daily video views and the huge audiences that watch U.S. TV series like The Strain and Z Nation on Sohu.com. Some 1.4 million Sohu.com users watch each new episode of Syfy's Z Nation on the first day of release, he said.
Zhang downplayed recent reports that the Chinese government is cracking down on video companies by making online content comply to the same strict censorship rules that apply to cinema releases or free-to-air television. The government has also introduced a quota capping the total amount of foreign video content online at 30 percent.
"Thirty percent foreign content is around what we have already [on Sohu.com]," Zhang said, arguing that the new regulations, including new online censorship laws, will not hinder the industry's development in China.
"In China, the Internet has always been freer, the regulation always looser than for newspapers, for example," he said. "I think that will continue. [Censorship] has been more about the big screen, the medium that reaches the 1.2 billion people in China, not the Internet."
Zhang also had good news for Hollywood, saying Sohu.com, which until now has licensed series exclusively, would begin buying Hollywood movies as well. Sohu.com's platform is free-to-use and backed by advertising, which has made films a difficult proposition in the past, he said. “You can only have one minute of advertising on a film, whereas on 40 episodes [of a TV series] you have 40 minutes of advertising.” The rise in online payment methods in China makes VOD for films a viable option, he argued.
Going forward, Zhang said Sohu.com would be investing heavily in original content, developing online series in house and buying from independent producers in China. But he insisted the company would not buy up or invest in a major studio in China, as competitor Tencent has done, when it paid $69 million for a 4.6 percent stake in film studio Huayi Brothers Media.
Zhang also dismissed the threat to his company from Alibaba, the Chinese Internet group which has a market value of roughly $230 billion following its record-breaking stock listing Sept. 19. Alibaba, an e-commerce site, is expected to use a lot of its new cash to invest in developing its content offerings.
"I don't think Alibaba is really a serious competitor to the existing video companies," Zhang said, arguing that producing content was not in Alibaba's corporate DNA.