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China, Japan and South Korea Drive Online Video Development

As Audiences Migrate to the Web, Online Video Advertising Represents Growth Opportunity for Pay-TV Owners

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HONG KONG (AdAgeChina.com) -- China, Japan and South Korea will drive the next wave of online video development, says the Cable & Satellite Broadcasting Association of Asia (CASBAA). And China will emerge as the world's largest wired broadband market, with 190 million connections by 2012.

Almost three-quarters--74.1%--of broadband access is done from home connections. Young Chinese are big users of internet cafes, the source of broadband access for almost 40% of the youth market. About 75% of respondents to a survey conducted by the China Internet Network Information Center said they share video content with other web users.

Just over 33% of South Koreans watch movies online and, according to a recent survey by the Korean Film Council, that could have a devastating effect on that country's domestic DVD and movie industries. Forty-seven percent of respondents said they illegally downloaded movies without paying or paid less than 50 cents per title during the past year.

"Although movie piracy has become rampant in both China and Korea, Japan remains a relatively strong copyright protected regime. Traditional sources of paid content are still popular in Japan," said CASBAA's Hong Kong-based CEO, Simon Twiston-Davies.

Nevertheless, online video advertising represents "a strong growth opportunity," he added, as audiences migrate to the web. Tudou.com, a popular video sharing site in China, said its ad revenue reached 11.296 million RMB ($1.65 million) in the first half of 2008. Other sites drawing big audiences include Youku.com in China, Nico Nico Douga (Smiley Smiley video) in Japan, and Pandora TV in South Korea.

"Ultimately China's online population will surpass Korea's more developed digital advertising market, but the sophistication and maturity of the Japanese market will support its continued growth," Mr. Twiston-Davies said.

Overall, online advertising in China, Japan and South Korea is forecast to grow from $10.3 billion in 2009 to $15.1 billion in 2012.

Despite the current uncertainty over digital rights, regulation and business models for online video services, the emerging online video landscape offers opportunities for content owners, broadcasters, advertisers and subscription television players.

"It is time for the TV industry to review new strategies to provide offerings to this new breed of customers," Mr. Twiston-Davies said.


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