China online video advertising market gets a boost from smart TVs

With mainlanders taking to online videos on internet-enabled screens, ad spending in the segment is tipped to top US$2b this year

PUBLISHED : Wednesday, 18 September, 2013, 12:00am
UPDATED : Wednesday, 18 September, 2013, 3:25am

The growing demand for internet-linked "smart" television on the mainland is poised to help drive greater advertising spending in the country's online video market, analysts say.

"Consumers on the mainland are increasingly spending more time watching online videos. Smart TVs are now providing them with a better online viewing experience, which is encouraging marketers to spend more advertising money on this media segment," Wang Xiaofeng, a Beijing-based analyst at Forrester Research, said yesterday.

Forrester estimates that online video advertisers on the mainland will increase spending by about 50 per cent to US$2.1 billion this year, up from US$1.4 billion last year, as more domestic consumers favour advertising-supported online content over traditional television pay-per-view content. There are currently about 450 million regular online video users on the mainland.

As an internet-connected device, like a smartphone, smart televisions deliver computing capabilities which regular household televisions do not. These include internet browsing, digital media streaming and the downloading of software applications, such as games, over the internet.

Wang said: "Marketers in China have also been shifting their advertising budget from traditional TV services to online video due to regulations that limit TV ads … and the lower cost of online video ads."

There is huge interest in smart TVs, from both consumers and advertisers

Kitty Fok, managing director for China at technology research firm IDC, said mainland demand for smart TVs had developed rapidly over the past two years.

IDC forecasts that their sales on the mainland will reach a record 23.97 million units this year, higher than the combined forecast of 22.06 million for flat-panel televisions with light-emitting diode or liquid crystal display screens, or LCD screens with LED backlighting.

The market initially started with internet-linked set-top boxes, which served as compact computers, paired with digital TVs, Fok said. That had now progressed to include a new range of smart TVs, which have embedded computing and run advanced operating systems. "There is huge interest in smart TVs, from both consumers and advertisers, in light of the government's aggressive plans to develop triple-play networks, which combine telecommunications, broadband and cable TV services," Fok said.

Although global brands such as Lenovo, Samsung Electronics and LG Electronics have smart TVs available on the mainland, the perceived brand leaders have a more local focus. Barclays analysts said that local smart TV offerings included those from Baidu and TCL Multimedia Technology, smartphone brand Xiaomi, video-on-demand service LeTV, Skyworth and Alibaba, and internet streaming provider PPTV.