Gui Yan, who has contributed to the production of many movies and TV dramas, is planning on Internet dramas. “Internet drama has a future. Many video websites have set up their special departments for Internet drama production. Internet dramas cost less and have easier access compared to TV dramas. Especially as technology evolves, equipment is no longer a major problem and contents emerge as the critical factor. Old Boy’s success last year ignited the Internet drama market. It was a time when major websites began their Internet drama plans. Unfortunately, though Internet dramas have mushroomed since then, few can be called real masterworks.”

 

Gui Yan has some in-depth views regarding the Internet drama, as he has had designs on developing the business for a long time. He appreciates Lu Zhengyu very much, a symbolic figure in the Internet drama circle. In 2004, Lu Zhengyu shot a feature named Infernal; a re-make of the famous Hong Kong crime movie, Infernal Affairs , with a small digital camera. The feature attracted huge attention on the Internet, and was looked upon as the most fantastic remake of the original movie by a major domestic portals like Sina. Lu Zhengyu later produced an eight-episode office comedy, in collaboration with Youku, a Chinese video giant. The drama had only six minutes for each episode, yet became a big blockbuster. It was viewed more than 30 million view times accumulatively on Youku alone, and had over 10,000 reproductions. The figures indicate that there is a comparably huge market for Internet dramas.

 

 

Gu Yongkeng, CEO of Youku, discloses that the general income of his company reached $58.7 million, while the copyright outlay took up over 20% of the total turnover. The video business has doggerel, “Top companies buy copyrights. Second-class companies try to sell themselves. Companies on the bottom purchase licenses.” Few video websites can survive after facing fierce battles within the business and few are capable of competing in biddings wars over Internet copyrights. Tudou, Youku, Sohu, Ku6, Baidu and other minority enterprises may be the rare winners.  However, it is a common practice of video websites to pay a pretty penny for copyright purchasing while sparing no effort to sue their rivals in high key, yet nobody dares to give an inch in such a winner-take-all business practices. No sign ever indicates the end of the war.

 

Since the beginning of 2009, copyrights of online videos have been soaring, as the country has issued a number of policies to crackdown online piracy. Although many websites are declaring that copyright fees are not the major threat, it has already become a fatal part of video websites in their life-or-death competition as more of them begin to strive for mainstream profit models.

 

Secretary-general Wang Bin of Copyright Union of Internet Society of China, even criticized the practice of paying high prices to obtain exclusivity rights in an attempt to approach of seizing the exclusive displaying by high prices to defeat market competition, “There are some companies with strong economic power that spare no expense to obtain exclusive display rights only for the purpose of suing those websites playing the videos violating their exclusivity rights. This practice defeats business rivals and improves their reputation. In other words, high-price purchasing is not only a commercial operation, but a competition approach. The industry has already sunk into a cutthroat competition where enterprises strike their rivals with the exclusive displaying rights as the weapon, and take revenge suits when they themselves are called to court.”

 

Zhang Guowei, video director of Sina Video said, “The authorized videos are the future of video websites in the big picture, but also causes market homogenization. The Internet drama is the key to break the deadlock. Each website can invest in dramas they favor and diversity in contents will result.” Wang Wei, CEO of Tudou sees the Internet drama as a significant way of keeping down the soaring copyright fees and forming the individuation for all video websites.

 

As the copyright fee of films and TV series go up, video websites are eager to find cheaper ways to get more videos. The Internet drama seems undoubtedly suitable.

 

 

Youku, in collaboration with China Film Group, launched the “11 Degree Youth Movies” project and gained a good reputation from it. Many of the artistic young therefore throw themselves into Youku’s arms. Sponsored by an auto manufacturer, Youku only provided the media platform for the Internet serial movies. The cooperation has set a good example for Internet dramas.

 

Similarly, Sina, together with well-known director Peng Haoxiang, promoted a Internet movie project called “Peng Haoxiang 4+1”, sponsored by a cell phone company, which originally intended to put ads on Sina website only and later was offered the plan of implanted ads. Different from the grassroots character of “11 Degree Youth Movies”, “Peng Haoxiang 4+1” invited all-star casts and producing teams.

 

“4” stands for four short videos to be displayed on Sina called “Fancies of Four Nights.” Respectively in genres of suspense, fantasy, science fiction and madness, “Fancies of Four Nights” tell urban love stories. “1” means a long movie to be screened in the theater in 2011. On October 15, 2010, the debut of Devil of the Nail Clippers, led by celebrated Zhou Xun and Zhou Weijun, preluded as the first short movie of the series on Sina. “Peng Haoxiang 4+1” has attracted quite an attention since its first shoot, and therefore is regarded as the “high-end products” for Internet dramas.

 

On Tudou’s part, the video website started an “Orange Box” Internet drama plan, with the trendy drama That Love Comes taking the lead. The drama had a dazzling cast including Taiwan Icon Zheng Yuanchang, rising star Li Feier and super model Pei Bei. According to Chen Hanze, supervisor of Tudou Internet dramas and producer of That Love Comes, the cost of a single episode of That Love Comes exceeds 500,000 Yuan, which is way much higher than the copyright expense of an episode of trendy dramas.

 

Apart from the huge cost pressure, video websites place heavy investments on Internet dramas also because of the permanent vitality of original creations. For most video websites, although it is still an effective way to temporarily raise flow, there is a lack of loyalty among the viewers who may easily follow their favorite dramas to a different website. The original dramas undoubtedly bring hope to the video websites on building up viewers’ loyalty.

 

 

The real motivation behind the great effort to produce Internet dramas not only lies in the attempt to reduce copyright costs, but also in the pursuit of new profit models.

 

Pan Qin, vice president of Youku, said that a relative guaranteed profit-generating point should be implemented and screened ads. In addition, charges from cell phone, cable channels, outdoor media and other terminals are also a considerable amount of income. “Some TV channels and outdoor media have already passed their purchase intents to us. I expect the wireless mobile terminal will grow into a most important channel in the seeable future, and the idealist profit model will be a multi-channel distribution.”

 

The ultimate rule of the drama industry is that who controls who earns. Relevant managers of Youku exposed that the reason of produce Internet dramas was easy—to break the monopoly of TV drama corporations so as to turn the video websites into the initiate party.

 

 

The short TV drama Love Finally, or the male version of Sex and the City, produced by Ku6.com, together with Sun Media Group and Trends Group, and shot by a Korean director, is popular among Internet users. The drama with each episode about 10 minutes is starred by four cool men of different styles including Yuan Chengjie. Besides, it concerns hot girls and sexuality. All appeal to audience rating and young Internet users particularly.

 

However, potential risks of online TV drama do exist. The themes of such unchecked online TV drama made by video websites are broader in that no censorship from the government is involved and hence they can create without seeking a permit for shooting and public screening. Nevertheless, when it comes to copyright acquisition and broadcast on other media, censorship is inevitable. According to Chen Hanze, Director of the Department of Self-made Drama from Tudou.com, the time they applied for the shooting permit for That Love Comes, they had no idea where to refer to. And finally, the TV drama was categorized into Films and TV Dramas. “We followed the rules from the invitation of foreign actors to the final review”, said Chen. In this sense, problems of reviewing online TV drama and the broadcast on other media are tricky and pressing.

 

According to Administrative Provisions on Internet Audio-Visual Program Service issued by State Administration of Radio Film and Television(SARFT), Internet audio-visual program service is legitimate if a permit is obtained or by following filing procedures in accordance with SARFT. However, it contradicts with the SARFT notice concerning strengthening Internet broadcast of television dramas management, which states that Internet dissemination of films, television dramas, cartoons, theoretical films as well as their corresponding audiovisual products without permit is forbidden. Treating as video programs, self-made online TV dramas are legitimate for online broadcast. However, if they are categorized into Films and TV Dramas, does it suggest they are supposed to obtain permit prior to Internet dissemination?

 

Lilan, Vice President from Development Research Center of SARFT held that there was no clear categorization of the new arrival of self-made online TV dramas and they were listed as online video programs in operation. Regardless of categorization, the contents should conform to SARFT rules. As a result, self-made online TV dramas will be supervised as video programs sooner or later and therefore lose their edge.

 

 

With opportunities and risks, can online TV dramas become a lucrative business for video websites? No one knows actually.

 

Data from Development Research Center of SARFT present that the number of online video users has reached 248 million by end of 2010, and 40 million of them watch video exclusively via the Internet. The watching habits and interests of Internet users are different from those of TV audience.

 

Pan Qin, Vice President of Youku. com observed that a video episode of 7-10 minutes was generally acceptable and Internet users usually watch varied video episodes up to an hour per day. As a result, each episode of the self-made online TV dramas lasts 8-10 minutes to cater for viewers’ watching habits. Short episodes do not only satisfy viewers but only become suitable for broadcast via iPhone and iPad, which can act as a backup.

 

“Popular TV dramas via the traditional broadcast platform are not necessarily the case on the Internet,” Chen Hanze noted. “Even we will produce family dramas in the future, we will learn from Korean dramas from the perspectives of contents, methods and promotions instead of merely following what we consider to be the conventional approach.”

 

Youku.com favors themes of career, romance and lifestyle, short but content packed, which perfectly match viewers’ watching habits and the quick-fix society. “Owing to the prolonged period of censorship, traditional TV dramas cannot update with the latest issues and events,” Pan Qin said. “However, the Internet platform is different. The self-made online TV dramas can promptly respond to audience.” In his view, the cost of traditional films and TV dramas are high, and the payments for actors and actresses usually surpass the value of the film or drama itself. That’s why they won’t blindly follow the trend of inviting stars but place top priority on scripts and the creative team for self-made online TV dramas production.

 

There are currently three modules for web TV series: the first one is the drama made exclusively for advertisers. “Advertisers care about ratings more than box office revenue.” Yao Jianjiang, Vice President from Ku6.com said. In this sense, the goal of advertisers and video websites are consistent: hit volume. Hence, earnings from inserting commercials into online TV dramas are the major source of profits. For instance, thanks to the commercials of Budweiser beer inserted into the drama, That Love Comes gained profits prior to actually being broadcast. Besides, the overseas distribution copyright is sold to TV stations in 11 countries and it also derives profits from the derivative of photo album.

 

Even the similar copycat The Office is favored by famous brands such as Master Kong Green Tea. The first two seasons of The Office attracted nearly 70 million clicks. And the third season is considered the most popular video content, following the world cup. Moreover, video websites and producers occasionally invest in creative dramas by new promising Internet directors and some blockbusters. In all, the profits from the projects will remain too low to be sustainable without relying on commercials placement, apart from significantly cutting reducing production expenses.

 

The cost of self-made TV drama is small, compared to the expense of imported dramas, according Pan Qin. “Self-made TV dramas are currently of small scale that won’t take the place of imported dramas” he said.

 

The inserted commercials and the overseas copyright distribution seem to indicate that self-made online TV dramas can be a lucrative business. But no website dares to merely rely on that business.

 

Yao Jianjiang’s position is that the profit from self-made online TV dramas is tiny. This sentiment is echoed by Pan Qin. “It’s not the major source of profit for our company.” Pan said. “Generally speaking, the larger the scale is, the more profits it will gain. But at present, the scale of self-made online TV dramas is not large enough to generate sufficient profit.” Tudou.com intends to shoot three online TV dramas per year and even if each of them earns money, the profit margin is foreseeably too small to support requisite revenue for the whole operation of the company.