Willing to pay for quality, consumers embrace membership models
Youku is a leading digital and cultural entertainment platform in China. Since 2015, it has been part of Alibaba, the giant e-commerce and social network ecosystem. Mr. Yang Zheng (Tony), the Senior Vice President of Alibaba Digital Media & Entertainment Business Group, focusing on creating and marketing innovative digital content to accelerate the growth of China’s entertainment industry.
COMPANY AND MARKET
How do you define the core mission of Youku?
People are spending more and more time on the internet, and nearly half of it is spent on digital entertainment. Our mission is to create a holistic digital entertainment experience that helps young people in China achieve greater happiness through visual, auditory and kinesthetic experience. Digital entertainment reflects and shapes how young people see the world and thus we believe we shoulder an important mission to help make entertainment for young people more positive.
How does Youku fit with Alibaba?
Youku is one of the two core platforms of Alibaba’s digital entertainment group, which is available for mobile, PCs, and over-the-top devices (OTT). Youku offers various content formats including, but not limited to, Youku original content, licensed content, live shows, and virtual reality.
How is Youku content changing to keep up with evolving viewer interests and attention spans?
Chinese consumers’ demand for content is experiencing a shift from volume to quality. Youku is driving the escalation of both quality and volume of content consumption, and continuously improving the content quality and the ecosystem of China's entertainment industry. Youku put forward the concept of the "super episode," which depends on the highest quality production values. We believe that in the future, the boundaries between online drama series and TV series will gradually disappear.
Can you provide some specific examples, please?
Youku divides drama series into three categories for different target audiences, broadcasting media and business models. These include: (1) prime time TV series focused on family happiness, (Revenue: primarily advertising); (2) super TV series, mainly broadcast on the internet and possibly in movie theaters (Revenue: advertising and membership); and (3) internet exclusives based on viewer demand, targeting primarily young people (Revenue: membership).
What changes do you anticipate in 2018?
We believe that in 2018 online variety shows will enter the blockbuster era, as development accelerates and polarizes into a dumbbell effect, with expanded variety of content for both mass and targeted audiences.
我们认为，2018年网络综艺节目将进入“大制作时代” - 发展进一步加速，并呈现出哑铃式的两极分化状态，面向大众和目标观众的内容都会更加丰富多样。
In this growing and competitive market, how does Youku differentiate from competitors like iQiyi and Tencent Video?
We believe that the future of the entertainment industry depends on the combination of content and technology—a mixed model of Hollywood and Silicon Valley. We do not think and act as a simple video content platform. We operate Youku in the context of the Alibaba ecosystem, which is an important competitive advantage. Over the past year, taking advantage of Alibaba’s technology expertise, Youku made a series of improvements to the user experience, enabling users to have a smoother high-definition viewing experience.
How do you recommend that companies can best use video to build their brands?
As with all their viewing, consumers want to see brand content with a better story, more resonating emotions, and more sophisticated production. Brands can also make the consumer video experience richer and more innovative. Viewers can interact with brand content from a single screen or multiple screens.
CONSUMERS AND THE CHINESE DREAM
How are Chinese consumers changing in the videos they watch, and how and when they watch them?
People are more and more willing to pay for good content. Membership models continue to expand with the introduction of excellent content and exclusive member opportunities. It is estimated that by 2019, user payment will account for 38 percent of total video industry revenue.
A premiumization trend today crosses many categories. How does it affect Youku?
Youku plans to lead the revolution of digital entertainment industry, and to truly become young people's “first and must go” place for digital entertainment content and experience. As consumers in China are also pursuing "quality" and "branding" of content itself, Youku pioneered the concept of super episodes with film production quality. The success of these series confirms our belief that the market is hungry for high-quality content.
The successful miniseries The Great Shokunin suggests there is a growing appreciation for Chinese craftsmanship (as a balance to modern materialism). What are the most popular genres and what trends are driving their popularity?
A program succeeds because it satisfies the user's emotion and makes others think that user has aesthetic good taste. On the other hand, young people are also looking for more knowledge. Viewers are looking for a benefit for their time invested—the pleasure of listening to an interesting conversation, or watching beautiful scenery, or learning about history, for example.
The Chinese Dream is in part about restoring China to its historic stature as a global leader. Is Youku active overseas? Does it have international ambitions, and if it does can you please elaborate?
The cultural industry is undergoing robust growth in China, and we believe the export of high-quality content will help people around the world gain a better understanding of the soft power of China. For example, we recently signed an exclusive deal for Netflix to distribute our online drama series Day and Night to audiences outside of China. It will be distributed to over 109 million subscribers in 190 countries and regions around the world. We believe Youku can be a pioneer and become a leader in driving this initiative.