Market Insight

Tencent partners with HBO to stream TV shows in China

December 05, 2014

Jun Wen Woo Jun Wen Woo Senior Research Analyst – Online Video, IHS Markit

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Tencent, one of China’s leading internet portals, has signed an agreement with HBO to stream the Time Warner-owned network’s TV dramas and movies. Under the deal, Tencent is now the exclusive online distributor of HBO in China.

Founded in November 1998, Tencent is one of the largest internet platforms in China with hundreds of millions of online users. This partnership will give HBO access to wide audiences in China and is also aimed at cutting down on video piracy in the country. Financial details of the deal and exact launch date have not been disclosed.

Our analysis

Tencent’s move echoes other deals recently made in China. A similar partnership took place in July between e-commerce group Alibaba, which partnered Lionsgate to offer a subscription-based service to stream Lionsgate-distributed movies in China. Also, electronics company Xiaomi announced that it intends to invest $1 billion in TV programming acquisition in early November. Even though Tencent excels in its social networking apps (WeChat and QQ), its online video offer has yet to reach the forefront of the online video market.

Tencent is working hard to stay ahead in the online services industry, and has inked various content deals to keep up momentum. Earlier this month, Tencent sealed a deal with Warner Music Group to distribute songs in mainland China through various online and mobile platforms.

Tencent’s rivals including Sohu, LeTV, Youku Tudou, which is backed by Alibaba and Xiaomi, and Baidu’s iQiyi, which is also partly owned by Xiaomi. The current partnership with HBO is designed to help Tencent stay competitive in this fast-growing online industry.

But the partnership does have its challenges. In September, China’s media regulator, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT), issued an announcement of its intention to require video-streaming sites to obtain licences to stream overseas TV series. The rules will come into force in April next year. Foreign TV series will likely be heavily censored to remove sex scenes, violence, political themes and other sensitive issues. Earlier this year, HBO drama Game of Thrones met with a lukewarm reception when it began broadcasting on CCTV to Chinese audiences. The cleaned-up version led to complaints and dissatisfaction among online viewers. Since HBO’s TV shows are known for their provocative content, the release schedule is expected to be delayed due to the strict filtering process by the Chinese media regulator.

Geography
China
Organization
HBO Tencent
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