"Foreign Language Restriction Order" implemented, video websites turn to self-produced dramas

Foreign dramas often adopt a system of filming while being broadcast, while the current approval system for domestic dramas requires project establishment first and then full drama review. The whole process takes at least several months, so delays are inevitable.

Starting this month, the "Notice on Further Implementing the Regulations on the Management of Overseas Films and TV Series Online" (commonly known as the "Foreign Restriction Order" in the industry) issued by the State Administration of Press, Publication, Radio, Film and Television officially came into effect, and unregistered overseas films and TV series will be ordered to be removed from the shelves. Before the "Foreign Restriction Order" officially came into effect, several Chinese video streaming websites were warned for not deleting Japanese anime videos that were accused of having violent and pornographic tendencies. Trends have proven that the good days of "synchronous updates" of overseas dramas on Chinese video websites will come to an end. So, are overseas dramas a hot commodity for video website ratings? How much impact will the policy changes have on video websites?

Pirated discs may be revived

According to the provisions of the "Notice", there are four main principles for introducing dramas on video websites: "quantity restrictions, content requirements, review before broadcast, and unified registration."

"Foreign TV series and movies that are newly released in 2015 must obtain the full version of one season and add subtitles to the local bureau for review. After the review is passed, they can be broadcast online only after obtaining an import license number." At present, most of the popular American and Korean dramas adopt the strategy of "filming while broadcasting". The broadcast process will inevitably not get the "full film" required by the State Administration of Radio, Film and Television, and postponement is almost inevitable.

"In the past, a lot of content that video websites introduced was self-censored and of a relatively large scale. This is because video websites are under the jurisdiction of both the State Administration of Radio, Film and Television and the Ministry of Industry and Information Technology. For the Ministry of Industry and Information Technology, it encourages new media because more traffic can bring greater commercial value." Peng Kan, director of research and consulting at Lezheng Media, told Nandu reporters that the policy tightening is happening step by step.

The "Notice on Further Implementing the Regulations on the Management of Overseas Films and TV Series Online" issued on September 2 last year clearly stipulates that the basic information of the films and TV series to be introduced must be reported in February and August every year. "Foreign films and TV series that are required to be disseminated on the Internet and other information networks must obtain a "Film Screening Permit" or "TV Series Distribution Permit" in accordance with the law."

This also means that video websites and TV stations have begun to follow the same constraints in the introduction of foreign films and TV series, and no longer favor one over the other. Relevant statistics show that the number of films and TV series that can be introduced in 2015 is 30% of the number of domestic films and TV series that were newly launched in the previous year (2014).

What is even more scorching is that "foreign dramas often adopt a system of filming while being broadcast, while the current approval system for domestic dramas requires project approval first and then full drama review. The whole process takes at least several months, and delays are inevitable." Peng Kan believes that strict approval will make it difficult to ban piracy and it will resurge. "Pirated discs in Zhongguancun may become popular again."

Investment banks pessimistic about decline in overseas drama purchases

In fact, the market situation is not as bad as imagined.

Southern Metropolis Daily reporter checked the recent hot lists of major websites. The top 10 on Youku Tudou , iQiyi, Sohu Video and other websites are dominated by local TV series. On iQiyi, the most popular Korean drama "My Love from the Star" and American drama "The Flash" are both ranked outside the top 30, with a popularity index less than 1/100 of the first place "The Splendid Destiny". Even on Sohu Video, which is famous for American dramas, its most popular "The Flash" has less than 1/10 of the number of views of the first place "The Young Masters", ranking 21st on the comprehensive hot list.

It can be seen that "foreign dramas are not popular content. They may have an impact, but they will not affect the mainstream audience." Zhang Tiankuo, senior public relations manager of iQiyi, told the Southern Metropolis Daily reporter. Sohu Video, which is famous for American dramas, did not respond to this. But Zhang Chaoyang said in an interview with reporters that the audience who watch American dramas are a small elite group, and the traffic ratio is relatively low compared to domestic dramas.

However, US investment banks and capital markets do not think so. Currently, Youku Tudou's stock price has fallen from around $18 in late February to around $12. Deutsche Bank has further lowered Youku's target price to $10 and downgraded its rating to "sell." The reason given by Deutsche Bank for the downgrade is simple, mainly due to a decline in market share and a decline in popular content purchases.

The collective shift to self-produced dramas

Of course, due to the "time difference" in the domestic broadcast of foreign dramas, the concepts of "exclusive broadcast" and "exclusive" that were previously popular on various video websites will be less attractive to users. Industry insiders said that as the content becomes less attractive to users, the cost of purchasing the copyright of foreign dramas is expected to decrease.

According to Korean media reports, before 2010, the online broadcasting rights of Korean dramas in China were only 1,000 to 3,000 US dollars per episode, but by 2013, the price had quickly exceeded 10,000 US dollars per episode. Last year, when My Love from the Star was broadcast, the copyright fee for a single episode was as high as 40,000 US dollars. "With the reduction in copyright prices and the increase in advertising resources due to the reduction in the inventory of American dramas, video websites have more resources to invest in self-produced dramas, which are the biggest beneficiaries." Relevant people from iQiyi and Youku told Southern Metropolis Daily reporters that they will increase investment in self-produced dramas while ensuring the richness of the product line.

In 2015, iQiyi will produce 500 episodes, 30 series and 15,000 minutes of online dramas, which has already surpassed all TV drama production companies in China at that time. Youku Tudou CEO Gu Yongqiang also announced that the company will invest 600 million yuan in self-produced content in 2015.

However, is this a field where you can get ahead by just spending money? "It is obvious that our industry will either advance or retreat," said Gu Yongqiang. In the future, Youku Tudou Group should focus on content centers to generate more distribution power, rather than having two outlets (Youku and Tudou).

The changes have just begun.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.