China Electronics Wholesaler

China Takes A Mixed View As Web Streams More Video

Doug Tsuruoka Fri Mar 7, 6:12 PM ET

The latest case of the Chinese government's ambiguity toward the Internet doesn't involve blogs. It concerns streaming video. ADVERTISEMENT

On Jan. 31, officials eased Internet curbs that limited video-sharing, or streaming video, services to state-owned companies, saying that private firms already active in this fast-growing market could continue to do business.

Analysts say the original controls were issued to stop anti-government videos made by dissidents from popping up on the Web ahead of the 2008 Beijing Olympics.

But streaming videos on the Net are one of China's hottest new businesses and officials hesitated to crack down for fear of hurting the economy.

"Companies that began operation legally before the regulation was issued and have not violated laws or regulations can be licensed and continue operating," the Ministry of Information Industry and the State Administration of Radio Film and Television said in a statement.

The government's decision lets Chinese video-sharing companies like Tudou.com, 56.com and Youku.com, which were operating before the new rules were issued, stay in business.

But Tom Doctoroff, head of China operations for ad agency JWT, says that until a few years ago, there were no rules governing such streaming content or file sharing. He says officials then decided that all video-sharing companies be "registered" with the government.

Doctoroff says the use of registration is a euphemism in China for state control.

"Now (the Chinese government says) that these rules only apply to new companies, so established entities such as Tudou -- China's YouTube -- are in the clear," Doctoroff said.

"Again, ambivalence," he said.

Analysts say there are hundreds of video-sharing Web sites in China today.

The most popular, like Tudou, can attract 100 million viewers a day. The programs range from full-length TV programs to home-made amateur video clips.

The government hasn't said if the latest curbs apply to amateur videos.

Video streaming in China is getting state of the art.

On Feb. 25, for instance, content distributor ChinaCache said it was introducing flash video streaming services in partnership with Adobe China, a unit of U.S. software maker Adobe Systems (NasdaqGS:ADBE - News).

China's eight top video-sharing firms have received about $190 million from private investors since 2005, according to consulting firm BDA China.