Revenue generated by the Chinese online video market reached 23.97 billion yuan ($3.82 billion) in 2014, increasing 76.4 percent from a year earlier and helped by the sale of self-produced content rights, according to technology consulting firm iResearch.The fast growth of last year's revenues was mainly driven by the sales rights of self-produced content to broadcasters rather than profits generated from advertising, the consulting firm said.
From the beginning of 2014, the majority of China's online video enterprises increased investment in self-produced content and announced deals with broadcasters for the sale of content rights. To reflect this, in July last year, online video site iQiyi sold its self-produced sci-fi romance series Qiyi Jiating to Jiangxi Satellite TV channel.
For 2015, online video companies are expected to continue expanding their business to include more movie and series production in their agendas, which will help them consolidate their brands and diversify their profit pattern.
Self-produced content by online video companies presents many advantages such as low production costs, high profits and easier marketing. Additionally, the production of their own content helps these enterprises build a brand image and gain loyalty from the audience.
"Self-produced content will be the future of China's main video enterprises. We expect companies like LeTV and its partner company, Le Vision Pictures to invest more in film production and co-produce more films in 2015", said iResearch.
In terms of advertising, mobile video was the main source of revenue in this area, supported by the growing number of mobile Internet users in the country. And for some online video enterprises, mobile advertising revenue accounted for 20 percent of their total sales, according to iResearch.
Meanwhile, mergers in the industry accelerated in the sector in the last two years. For the coming year, there is more merger potential with the rapid development of the online video industry, noted iResearch.
The strong prospects for the entertainment industry in China have triggered an acquisition rush in the sector. China's largest conglomerates, such as Internet giant Alibaba and real estate behemoth Wanda, have also invested in entertainment production companies as the industry takes off.