Yesterday, the three biggest video platforms in China – Tencent Video, iQiyi and Youku, announced the cancellation of advanced on-demand services respectively after a public rebuke. Their on-demand services gave VIP members the right to watch the upcoming episodes ahead of schedule by paying extra fees.
After three years’ rolling out, this service has been proved to be extremely lucrative – in 2019, Tencent made 156 million RMB alone by letting the viewers pay for the last six episodes of The Untamed before being officially aired. Another series, Joy of Life, is said to generate 30 million RMB a day for Tencent through its advanced on-demand service. However, such shrewd business moves have irritated the Chinese audience.
In 2019 when the drama Joy of Life was released on iQiyi and Tencent, it immediately gained popularity in China for its well-developed and intriguing plot. Both platforms saw great potential in it and started offering the option of watching ahead of schedule by paying an extra fee even before the first half of the series was aired.
Despite the huge revenues, this decision turned out to be the last straw – the two platforms were sued by their users for undermining VIP customers’ legitimate rights. That is, the free access to new series only applies to certain episodes, not all, and the ad-free right to normal ads but not VIP ads.
This led to a heated discussion and caught the authorities’ attention. On 9 September, China Consumers Association, initiated by the government, demanded video platforms cancel the advanced on-demand services and remove any kind of advertisements during an episode that lasts for 45-minutes or less.
This is just the beginning of tightening regulation on video-sharing platforms in China, no one knows exactly how far this will go. However, one thing is almost certain that the new requests from the government will leave the three companies that are still not profitable, facing even larger deficits.