Hari, who worked at PepsiCo, Universal, and MTV, discusses China's shift from pay-TV to internet streaming. Video now makes up a third of China's broadband traffic. Advertisers are spending 15% of their media budgets on new-media video platforms, and consumers pay for quality content through subscriptions and internet cafes.
So in plain and simple terms, you're saying less linear programming, more on-demand programming, less local pay-TV provider, more wide area internet access to content.
With the consumer in control, at the centre of it, being able to customise their offering wherever they are, on the move, on the go, regardless of the setting and environment, regardless of the device, no longer dictated by a single player that mandates what particular device that they access that content on. Basically, they're in control.
So, Hari, with your experience and background on this very question, and from your experience and background in both the consumer side with PepsiCo and with the media side in Universal and MTV and such, what do you think is the impact on the consumer's choice on these broadband—
I think I would just share 3 simple points of view, or 3 thoughts. The first thing would be about where content creation is really thriving in China. And we're seeing a whole lot of very, very unique and creative programming that's coming through from online portals and online video portals. So examples would be like the Starbucks webisodes, where every minute they broadcast one moment or one minute of a drama series that phased out over 60 days. There are many other examples that I'm sure the other speakers in the panel, whether it was Gary from Tudou and Victor from Youku, would be able to talk But the exciting thing is that we're seeing a creative explosion in China in terms of video content production. And consumers are responding to it. And I think that's what's really, truly exciting. The latest report from Wired magazine would suggest that almost 1/3 of all of the broadband traffic consumption in China today is dedicated towards video viewing on the internet. So there's already a very, very large demand for quality content, and consumers are willing to pay for it. Whether it is through their broadband services or whether it's going to an internet cafe and paying their 4 RMB. Last but not least, advertisers are also very, very willing to support it and now fund it. So depending on which company or industry or sector you're in, upwards of 15% of the media or advertising mix would now today be going towards new media, and in particularly video programming and video types of sites are grabbing a big, big share of that.
But is this due to the creativity itself, like an uncoiled spring from the pent-up controlled broadcasting systems they've had over the years, and this gives them a more open chance to be creative? Is that what's—
Well, I would agree with Em earlier that first of all, consumers are in control. And as a result, they're sort of dictating and demanding what types of content's going on. And the programmers and broadcasters are being punished or rewarded as a result of it. And we're seeing a winner-takes-all phenomenon in China today.
Look, Paul, I think you're ultimately right in essence. I mean, this is water that wants to go to the sea and it's going to get there. And the regulators, particularly in China, of course, are trying to control how that water gets to the sea through various channels and dams and everything else. But it's the creativity in the online market that is particularly creating alternative choices. And if you look at— because ultimately, what are we competing for, as everybody in this audience, is the consumer's time and money, their discretionary time and money. And people want to be entertained, and they want to spend their money and time in compelling ways related to compelling content. And they're not finding that they can do that through the traditional broadcasters, particularly in the China market. And as a consequence, they're finding that outlet online. And it's not necessarily always with video content. There's a lot of video content online out there, of course. But it's also in casual gaming. It's also with online communities. It's also buying virtual bunches of flowers for your girlfriend online. You know, there's such significant amounts of time and money being spent on these things, which are alternative media. That's nice. Because of that outlet that is needed.
That was the next question I was going to—
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