The Chinese government’s main regulator for entertainment on Friday tightened control over the broadcasting of foreign content over the Internet, dealing a blow to the nation’s booming online video streaming market.
The regulator, the State Administration of Press, Publication, Radio, Film and Television, also known as SARFT, issued a notice saying that video websites must obtain one of two licenses — a film screening license or a television screening license — to legally stream foreign films or television shows.
The regulator said the websites must register information about their foreign films and television shows by March 31 next year. The sites will not be able to broadcast such content after that date if they have not registered.
According to Xinhua, the state-run news agency, the notice means that video websites will have to apply for a license for each individual film or show, in addition to having to procure a license for the website overall to provide video streaming service.
But the regulator said it encouraged online entertainment providers “to import an appropriate amount of cinema and television works that are healthy, well-made and showcase good values.”
Yin Hong, director of the Center for Film and Television Studies at Tsinghua University, said during a phone interview on Friday that he believed that the announcement in effect meant more hoops to jump through for streaming websites. Up to now, the streaming websites have only had to get an audiovisual broadcast license and negotiate broadcast rights with the content’s copyright holder, a simpler process, he said.
March 31 will effectively serve as the deadline for applying for the licenses, which will all be issued by the regulator Mr. Yin said.
Announcements earlier this year by the entertainment regulator reiterated its oversight of short films and web-only productions, as well as Internet television set-top boxes. In April, the regulator ordered streaming video websites to take down four popular American TV series, without giving a reason.
Dong Qianqiu, the public relations director of iQiyi, a streaming site owned by Baidu, China’s largest search engine, said her company supported the policy and would “implement it strictly.” The rules “can help to standardize the foreign media content market and help streaming video websites’ long-term development,” she said.
“We don’t see material impact on our traffic or revenue in the near term,” said a representative of Youku Tudou, a competitor. The person did not want to be identified because of the sensitivity regarding government policy. “The new regulations won’t take effect until 2015. It allows us time to adjust and comply.”
A representative of Sohu, another popular video website, declined to comment. Sohu made headlines for winning the rights to broadcast Netflix’s Washington drama, “House of Cards,” which became a major hit in China.
For the past few years, China’s Internet users — who now number 600 million — have been able to watch hundreds of foreign television show and films on demand. Streaming sites stocked their libraries with licensed content, and American shows like “Modern Family” and “The Big Bang Theory” gained significant followings, although domestic and Korean dramas remained the most popular.
The video streaming market has grown rapidly, helped by the spread of smartphones. According to iResearch, an Internet industry research firm in Shanghai, revenue will rise nearly 40 percent this year. Last year, revenue was 12.8 billion renminbi, or about $2 billion.
The streaming sites have been allowed to operate relatively freely compared with traditional cable and television broadcasters, which are subject to strict content censorship and quotas of how many and which foreign shows they can air. But further restrictions were expected as regulation caught up with the young industry.
So the notice posted Friday did not come as a complete surprise.
The policy requiring licenses for providing foreign entertainment has always existed, said an analyst at an Internet company, who asked not to be identified because he was not authorized to speak to the media. But when license rules were introduced, years ago, there were no video websites, with their ability to give access to vast amounts of foreign TV shows, so in practice the policy applied only to publishing and cable television, he said.
“I don’t think SARFT is doing this out of consideration for television channels,” the analyst added. “I lean more towards it coming more out of ideological control.”
Because of the relaxed monitoring of video streaming websites, themes that might normally have been barred — superstition, sexual content and violence — could be seen online, even while seemingly innocuous themes such as time travel were barred from Chinese television.