China online video April 2011

Pleaserefer importantdisclosures analystcertification insideback cover ourwebsite www.macquarie.com.au/disclosures. GREATER CHINA Inside Executive Summary ChinaInternet Video Overview ChinaInternet Video Business Model 29 China Internet Video Content 46 Risks ChinaInternet Video 59 Youku.com 105 Sohu.com 126 Macquarie China Insights team 155 Powered MacquarieChina Insights China Insights Macquarie's20- plus member team based Shanghaiproviding research, data analytics corporateaccess throughout China. More details contactscan report.Jiong Shao, CFA, CMT +852 3922 3566 jiong.shao@macquarie.com Steve Zhang, CFA +852 3922 3578 steve.zhang@macquarie.com Jose Pun +852 3922 3593 jose.pun@macquarie.com Jing Yang +86 21 2412 9028 jing.yang@macquarie.com April2011 Macquarie Capital Securities Limited China Internet Video Curb Your Enthusiasm Event report,we take deepdive China’sonline video industry marketpotential, growth rate, players, business models, segments contentproviders, othercritical elements industry.We conclude Chinainternet video substantialgrowth comingyears, revenuegrowing from Rmb2.1bn overRmb16bn 2014E.While growth stronggiven lowbase, business models internetvideo companies remain unproven significanthurdles. However, given onlinevideo stocks have already reached levels substantialprofits, we recommend investors tread carefully when investing space.We initiate coverage Neutral.Impact Threeprofitable internet video business models have emerged developedmarkets, nonehave yet been successful YouTube’suser-generated content (UGC) model Chinadue viewers’preference professionallyproduced content (PPC). Hulumodel, based revenuesharing contentproviders, Chinesecontent providers largelyunwilling revenue-sharing basis due onlinevideo industry. Netflixsubscription model Chinesevideo viewers piratedcontent has made video viewers unwilling Industryfaces intense competition well-financed.Internet video leaders PPTVhave recently raised significant financing from public privatemarkets, while established internet players Baidu(Qiyi) aggressivelyinvesting onlinevideo. Telecom operators alsoinvesting Internetvideo triple-playstrategy, while traditional TV stations contentonline. somany players sizeablecoffers, we believe marketshare could drawnout Littledifferentiation contentacross different video sites contentcosts continue skyrocket.PPC makes up videocontent Chinatoday, nearlyall movies TVshows accessiblefrom multiple video sites due commonlyused licensing sublicensingpractices. usercan go launchany P2P software video,making user stickiness elusive. Furthermore, severalwell-financed players, content costs upwardtrend despite having increased 100-200% Significantmismatch between content cost amortization schedules monetizablelifespan usuallyamortized over 5-year(license period), while monetizable lifespan onlyabout 2-3 months, after which viewership adrevenue drop off sharply. Due significantmismatch timingbetween revenues costs,accumulated amortization costs contentmay eventually have substantialnegative impact videocompanies’ profits. Macquarie Research China Internet Video April2011 ExecutiveSummary Fig Chinainternet video industry ecosystem Source: Macquarie Research, April 2011 report,we take deepdive entirevalue chain China’sinternet video market. We investigate marketpotential, growth rate, players, business models, segments contentproviders, othercritical elements internetvideo industry. We conclude Chinainternet video witnesssubstantial growth comingyears, growing from Rmb2.1bn overRmb16bn 2014E.However, while growth verystrong, businessmodels Internetvideo Chinaremain unproven significanthurdles overcomeover nextfew years before undisputed market leaders emerge sustainableprofits can werecommend investors tread carefully when investing space.We highlight Youkuhas reached 50x forward sales, whereas search leader Baidu, profitablebusiness model, itspeak multiple has traded 30xforward sales. Chinaonline video market significantlydifferent from otherdeveloped countries. We highlight keydifferences reasonswe think established models developedmarkets have failed findsuccess China.Fig Whyestablished models do ChinaReason DevelopedMarkets Why Model Does ChinaYouTube Large database User-GeneratedContent (UGC) lowcontent cost, lots interestfrom online video viewers Chinese online video viewers prefer PPC UGC,making monetizeUGC- based platforms. Hulu Professionally Produced Content (PPC) viewing platform; variable cost model based revenuesharing between Hulu contentproviders China’s content licensing market stillimmature. Content providers require upfront payments rather than sharing advertising revenue, which puts significant pressure videosites when content costs increase significantly. Netflix Subscription-based model largedatabase professionallyproduced content Video viewers Chinahave historically contentdue wideavailability piratedcontent, making videosites chargeusers content.Source: Macquarie Research, April 2011 Macquarie Research China Internet Video April2011 Wealso note followingkey challenges currently facing onlinevideo industry. Until addressed,we believe businessmodels Chinesevideo sites operate profitabilitylevel industrylevel can potentially reach. Fig OnlineVideo Advertising Penetration Rate Chinavs. US U.S. China 2011E Online Video Advertising from Professionally- Produced Content $1 bn $540 mn 2011E Total Online Ad Spending $25.6 bn $6.12 bn Penetration Rate* 3.9% 8.8% 2011E Total Advertising Spend $146.5 bn $26.7 bn Penetration Rate* 0.7% 2.0% Source: Enfodesk, Managlobal, Macquarie Research, April 2011 Note: US Online Video Advertising from Professionally Produced Content assumes Hulu management's projected 2011 revenue $500mnand50% revenue split contentproviders Penetrationrate calculated OnlineVideo Advertising from Professionally-Produced Content divided TotalOnline Ad Spending TotalAdvertising Spend firstchallenge industryfaces intensecompetition. Although Internetvideo companies Chinahas declined from over 200 three years ago about20 today, several today’sleading Internet video players have sizable financial resources. example,Internet video leader Youku recently raised US$250m from its IPO PPTVreceived US$250m from Softbank. addition,several major established Internet players have ventured videospace. example,Sohu spent US$15-20m buyingcontent nowranked timespent monthlyunique visitors China’sInternet video sector. Qiyi (Baidu’s video venture) aggressivelyramping up its video content monthlyunique visitors jumping from 2.1 million April2010 102million February2011. Both Sina Tencentrecently made comments about getting more aggressive video.Furthermore, telecom operators offeringInternet video triple-playservices, traditionalnetwork TV stations anotherway delivercontent audience.Therefore, well-financedplayers longvideo war until one twocompanies laststanding, perhaps 3-5 years from now. Feb2011, were343 million Internet video users China,up 30% y-y, eightvideo sites each had least30% penetration among Internet video users, suggesting highlyfragmented marketplace. otherwords, eightsites, least30% ChineseInternet video users visited Feb.Over last12 months, Youku has gained modestly about65%, while playerTudou has largely maintained its penetration around55%. biggestshare gainers Sohu.Since its inception less than yearago, Qiyi now has about 30% penetration. significantinvestments video,Sohu has been gradually improving its penetration from yearago high30s today. Somewhat surprisingly, smaller players Ku6,Xunlei, 56have largely maintained penetrationrates. While many industry observers have been predicting upcoming industry consolidation bigvideo sites becomebigger traffic,today ChineseInternet video industry remains highly fragmented competitive.We note peer-to-peersoftware subsegment Internetvideo industry, making marketeven more competitive. Macquarie Research China Internet Video April2011 InternetVideo Website Monthly Unique Visitors 2010-201110-01 10-02 10-03 10-04 10-05 10-06 10-07 10-08 10-09 10-10 10-11 10-12 11-01 11-02 Total 270.5 264.3 309.4 315.8 305.5 307.9 318.9 324.5 317.1 313.9 322.9 329.3 335.6 343.4 Youku 171.1 153.5 182.1 193.7 194.8 199.2 207.3 213.7 203.0 206.5 203.6 209.4 215.9 225.6 Tudou 152.0 134.4 152.9 165.9 167.7 170.2 177.0 183.6 176.1 177.1 175.6 182.4 186.7 188.9 Sohu Video 61.8 65.7 81.7 81.3 84.5 84.1 91.6 95.5 84.9 89.3 95.7 107.9 119.6 128.0 Qiyi 2.12.6 2.2 28.1 43.4 44.6 50.4 51.6 56.3 76.5 102.4 Ku6 98.2 79.1 90.8 101.1 110.8 124.0 125.0 123.3 110.5 113.0 120.1 120.3 122.0 112.4 Sina Video 107.0 88.5 104.0 110.6 114.0 107.6 107.4 117.2 114.4 119.2 122.4 115.5 117.7 124.0 Xunlei 112.3 94.3 108.7 117.1 122.0 119.9 120.3 118.0 111.4 115.1 105.5 109.5 129.2 120.5 56 95.7 81.4 95.3 103.7 113.1 110.0 108.1 112.7 103.7 110.7 103.6 110.5 107.0 106.7 PPTV 30.6 34.8 39.9 32.9 30.6 45.6 48.5 49.2 38.5 41.8 51.6 54.6 56.3 46.5 CNTV 31.5 35.7 40.1 45.1 41.7 72.6 58.3 52.9 52.4 58.0 65.9 59.0 67.1 73.7 PPS 45.3 40.9 40.8 48.9 48.2 50.4 55.9 54.7 48.4 52.6 55.0 54.4 60.5 56.8 Six Rooms 36.2 29.7 30.6 28.6 29.4 32.7 34.6 36.2 27.8 26.3 27.9 26.0 27.3 33.0 Joy.cn 41.2 35.1 43.3 43.0 47.7 51.4 50.8 51.4 49.4 48.7 35.9 34.7 40.0 41.9 Letv 15.2 19.6 19.2 19.6 18.5 17.4 20.0 30.9 26.3 25.1 25.2 28.4 35.9 42.8 Source: iResearch, Macquarie Research, April 2011 Fig OnlineVideo Website Penetration Rate, monthlyunique visitors, 10-11 10-01 10-02 10-03 10-04 10-05 10-06 10-07 10-08 10-09 10-10 10-11 10-12 11-01 11-02 Youku 63% 58% 59% 61% 64% 65% 65% 66% 64% 66% 63% 64% 64% 66% Tudou 56% 51% 49% 53% 55% 55% 56% 57% 56% 56% 54% 55% 56% 55% Sohu Video 23% 25% 26% 26% 28% 27% 29% 29% 27% 28% 30% 33% 36% 37% Qiyi 1%1% 1% 9% 13% 14% 16% 16% 17% 23% 30% Ku6 36% 30% 29% 32% 36% 40% 39% 38% 35% 36% 37% 37% 36% 33% Sina Video 40% 33% 34% 35% 37% 35% 34% 36% 36% 38% 38% 35% 35% 36% Xunlei 41% 36% 35% 37% 40% 39% 38% 36% 35% 37% 33% 33% 38% 35% 56 35% 31% 31% 33% 37% 36% 34% 35% 33% 35% 32% 34% 32% 31% PPTV 11% 13% 13% 10% 10% 15% 15% 15% 12% 13% 16% 17% 17% 14% CNTV 12% 14% 13% 14% 14% 24% 18% 16% 17% 18% 20% 18% 20% 21% PPS 17% 15% 13% 15% 16% 16% 18% 17% 15% 17% 17% 17% 18% 17% Six Rooms 13% 11% 10% 9% 10% 11% 11% 11% 9% 8% 9% 8% 8% 10% Joy.cn 15% 13% 14% 14% 16% 17% 16% 16% 16% 16% 11% 11% 12% 12% Letv 6% 7% 6% 6% 6% 6% 6% 10% 8% 8% 8% 9% 11% 12% Source: iResearch, Macquarie Research, April 2011 secondchallenge, which littledifferentiation contentacross different video sites China.Professional produced content (PPC) videocontent nearly100% TVdrama series accessiblefrom multiple video sites because currentlicensing sublicensingscheme commonly used Chinatoday. hitTV show usercan go websites simplylaunch any P2P software PPCcontent has made competition lotstiffer videosites, userstickiness can evasivebecause samecontent clickaway. Macquarie Research China Internet Video April2011 thirdchallenge skyrocketingcontent costs significantmismatch between content cost amortization schedule typicaltimeline generatingadvertising revenues from contentviewed online. reliabledata industry-widecontent pricing. Anecdotally, content costs increased 100-200% 100xover lastthree years, depending financialylstrong players continueits upward trend. Furthermore, once airedonline, usuallyamortized over 2-5 years depending license.However, typicaltimeline videosites generaterevenues from abouttwo threemonths videoviews drop off sharply, advertisingrevenues. Because significantmismatch between revenues costs,while advertising revenues from older shows get replaced thosefrom newer shows, amortized costs oldershows amortizedcosts newershows. somepoint, accumulatedcosts contentmay have substantiallynegative impact videocompanies’ profits. Fig Timevalue contentSource: Company Data, Macquarie Research, April 2011 Fig CCTVprime-time ad bidding value (Rmb bn) Year Total Bidding Value YoY growth rate 2000 1.92 2001 2.16 12.5% 2002 2.63 21.6% 2003 3.41 30.0% 2004 4.41 29.2% 2005 5.25 19.0% 2006 5.87 11.8% 2007 6.80 15.8% 2008 8.03 18.1% 2009 9.26 15.3% 2010 10.97 18.5% 2011E 12.67 15.5% Source: CCTV, Macquarie Research, April 2011 industryreport, we alsoinitiating coverage marketshare videoviews Underperformrating targetprice US$32.Given all majorindustry challenges highlighted earlier

暂无简介

文档格式:
.pdf
文档页数:
158页
文档大小:
8.04M
文档热度:
文档分类:
金融/证券 --  股票报告
文档标签:
Content video Source Internet users China research April licensed sites

更多>> 相关文档

页面底部区域 foot.htm