Netflix has acquired a second original series from Chinese streaming platform Youku. I Hear You, produced and owned jointly by Alibaba-owned Youku and Chinese film studio Sugarent Film & TV, will be made availble by Netflix to subscribers in all 190 markets today (15 May).
In China, the 24-episode romantic comedy was premiered simultaneously on streaming platforms Youku and Mango TV on 28 January 2019. Netflix acquired Youku series Day and Night in 2017.
The broadcast window between Chinese and worldwide release has shortened significantly for the two Youku series acquired by Netflix: Day and Night (白夜追凶) premiered on 30 August 2017 on the Youku platform, and then 23 March 2018 on Netflix (a 205-day gap); whereas I Hear You (最动听的事) will be made available on Netflix just 107 days after its premiere in China. Netflix is not available in mainland China, but is available in Mandarin-speaking countries including Taiwan, in which is has two original series, Nowhere Man and Triad Princess, in production.
Online platforms in China are starting to replicate Netflix’s model of producing original content for local and global audience, in the hope of exporting it outside China. Distribution on Netflix means an increase of 139 million in audience base. I Hear You is an adaptation of Chinese novel of the same title.With revenue growth from membership fees and online advertising slowing down in China, online video players in China are also keeping subscription fees low and offering discounted rates to reduce churn. Alibaba introduced 88VIP in August 2018, which is similar to Amazon Prime. Users are able to access a range of services within the Alibaba platform such as Youku, food delivery service Ele.me, music streaming service Xiami and movie ticketing app Taopiaopiao for an annual fee starting from 88 Yuan ($13). iQiyi also has a similar strategy, striking a partnership with online retailer JD.com on a joint membership program launched in May last year.
According to IHS Markit, China’s online streaming platforms overtook TV broadcasters to become the largest investors in programming in 2017, with increased spending on original content.
Youku is one of the major streaming platforms in China, commanding a 30% market share of online video advertising revenues and 28% of total online video subscription revenues. Even though the platform licenses most of its content, it has increased its original content budget in the last two years. Out of the many titles it has produced, Youku has exported more than 50 of them in the last two years, in which we estimate 60% were drama, 20% were variety shows and the remaining were animation and documentary.
We expect that as China’s programming market matures, content producers will increase investment in original content with aims to export outside China. The broadcast window will further shorten as demand grows.