Perspective... Austin Powers beware! Sarft is cleaning up the online video industry

The unruly sibling of China's media family had a traumatic 2008 - sites had to apply for operating licences, and several saw service blackouts as they fell foul of the authorities. But post-licences, post-Olympics, things seemed to have settled down. Until now.
First, just to prove they were still watching, the authorities blocked YouTube. Then, more ominously, the State Administration of Radio, Film and Television (Sarft) released a list of new content regulations.

The regulations include a long list of content that site owners need to block. There’s the obvious stuff - anything that disparages China or disrupts social order. There are also bans on pretty much any sort of content a grown-up might be tempted to watch: video depicting extra-marital affairs, violence and ‘excessively frightening images’ are all out.
And the ban on ‘deliberate displays in which private parts are only obscured by limbs or small coverings’ threatens to rob Chinese netizens of the entire series of Austin Powers films.

There’s an extra twist to the rules too. All films and television shows transmitted online must first obtain offline broadcasting licenses. The upshot is that video sites, if they want to be any more than repositories of user-generated clips, need to start playing by the same rules as the highly regulated TV stations.

There’s plenty at stake here. Online is increasingly viewed as a rival video distribution channel to television in China. For overseas content owners in particular, video sites have offered a new channel to market with a lot less red tape than most Chinese TV stations. After last year’s licensing drama, two major standalone video sites survive: Tudou and Youku. Both have looked at building an online TV model in their quest to turn a profit. Tudou’s launch of a high-definition service in September was a step toward this.

Assuming they are enforced, the regulations threaten to scupper a lot of these initiatives. At the very least, they will make buying rights to content more time-consuming. It’s a victory for TV stations, who feared ad dollars slipping away to the web. And it’s a blow for the video sites, which face a setback in their path to profit.

Longer-term, however, the battle may be about more than online versus TV. One possible solution under the new regulatory system would be for video sites to ally with TV owners. CCTV already has CCTV.com and is planning a national online TV station. In response, might the likes of Shanghai Media Group turn to an existing player like Youku or Tudou, both of which have strong brand awareness, to channel its content? It’s the sort of proposition that, for advertisers, could start to deliver real value.

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