A gaggle of security guards dressed in black, red carpets, film and TV stars, screaming female fans and even ticket scalpers.
It was entertainment promoting entertainment when iQiyi, a video subsidiary of Baidu.com Inc staged an event in Shanghai to publicize its paid VIP services.
"There’s little difference between online video and entertainment industries,” explained Gong Yu, chief executive of iQiyi.
Indeed, that is the crux of the hot new trend. The digital revolution has transformed the viewing tastes of young Chinese audiences, and video websites like iQiyi are trying to grasp new opportunities by airing experimental productions of original online series and variety shows.
With success comes financing. Production budgets for some online series are rapidly rising, with a few costing up to 5 million yuan (US$781,250) an episode. That surpasses the spending on some traditional TV series.
Cyber entertainment, of course, offers diversion anytime, any place as it travels with viewers on their digital devices.
China’s online video website market was valued at 4.1 billion yuan in the first quarter, according to the latest figures available from Analysys International, a Beijing-based IT research firm. That represented a 39 percent increase from a year earlier.
In October, top online video firms made news headlines as iQiyi promoted its VIP service, Letv debuted its new smartphone and TV and plans for a self-developed car, and Alibaba announced an investment Youku Tudou.
Despite all the gloss, most online video giants are still losing money, even as their user bases expand. So far, the cost of wooing users is outstripping the returns.
By contrast, US-based Netflix posted net profit of US$29.4 million in the third quarter, thanks to increased subscribers, most of them paid users.
Meanwhile, Apple, Amazon and other global industry giants are penetrating into online video as part of their “eco-systems.”
Pirated DVDs sold in stores and on the streets of China used to be the fastest and cheapest way to see film and TV dramas. For a time, pirated editions even dominated
online downloads. But all that is changing. Chinese video sites are now banking on self-produced dramas, Hollywood partnerships and mobile devices to counter illegal downloads and streaming.
To turn their bottoms lines to black from red and maybe reinvent themselves as China’s Netflix or even Apple, domestic entertainment websites are creating their own Chinese-style business models.
VIP membership services
IQiyi, which has 500 million members and 5 million paid users, said it plans to use 50 percent of company resources and capital to develop paid VIP services in 2016.
Paying users will be able to watch popular dramas ahead of the crowd, like “The Last Tomber.” When that show, based on adventures in Chinese tombs, aired it was unexpectedly popular and even crashed iQiyi servers.
The company plans to produce 40 dramas in 2016, with some, like “Shushan Wars,” reserved exclusively for VIP subscribers.
"The era of VIP paid services has arrived,” declared Gong.
It took five years for the company to hit 5 million VIP users, he said, but that figure will double in a year.
Sohu, another video giant, has bought the rights to Hollywood movies and is charging users to watch them on a pay-per-view or monthly subscription basis.
"The only viable business model is charging,” Charles Zhang, CEO of Sohu, has said.
In 2015, paid users of China’s video industry accounted for revenue of 590 million yuan, compared with 210 million yuan in 2014, industry reports said.
Eco-system
Letv’s strategy is to create an “eco-system” similar to Apple’s. To do that, it is deploying its own smartphone and a 120-inch smart TV priced at 499,900 yuan. It’s also planning to manufacture a new energy car with an inbuilt sophisticated entertainment system.
Letv has one of the biggest video databases in China. It hopes to parlay that content across all platforms that it provides.
"Our eco-system now covers 400 million people in China,” said Jia Yueting, chief executive of Letv. “It’s the core advantage in this fiercely competitive market.”
PPTV, an Internet video firm that launched TV products in June, said it expects to sell 1 million smart TVs within a year.
The Shanghai-based video website, which has 370 million registered users, was acquired by Suning in 2013 for US$2.5 billion.
It aims to reach its sales goal with an aggressive pricing strategy, free videos, including exclusive sports content, and strong distribution channels, according to Chang Jiang, TV business head of PPTV.
Not to be left out of the sweepstakes, e-commerce heavyweight Alibaba has bought a major stake in video streaming site Youku Tudou for US$3.6 billion.
The deal highlights Alibaba’s expansion into the film and video sector and gives it a platform to broadcast its content to China’s growing ranks of middle-class consumers.
Chinese models
The investment also opens the possibility of merging e-commerce and online industries. For example, buyers may watch videos of products listed in online shops on Alibaba’s website.
Meanwhile, top firms like Youku Tudou and Letv are tapping into the virtual reality sector for music festivals and show broadcasting.
Virtual reality allows users to see videos in 360 degrees, with vivid 3D and interactive experiences.
Virtual reality has great market potential, said Victor Koo, chief executive of Youku Tudou.
China’s market in that emerging sector is forecast at 720 million yuan in 2016, a fourfold surge from this year, according to Analysys International.