Targeting China’s Younger Generation

Written By Daniel Allen on April 24, 2007 at 8:06 am | In youth, marketing, internet, retail, mobility, consumer, China

Youth-focused corporations make marketing moves in China.

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A recent report from PricewaterhouseCoopers (PWC) predicts that China will emerge as Asia’s largest market for media and entertainment in three years. The report, entitled “Global Entertainment and Media Outlook: 2006-2010” states that Asia will witness a double-digit increase in internet, television distribution, video games, and casino and other regulated gaming.

Overtaking Japan, China will top the market by 2009 with an annual growth of 18 per cent. China’s surge in the media and entertainment sector will be fueled by rising spending via broadband internet and the fast expanding video game industry. China’s growth story will be a part of the worldwide boom in entertainment and media industry that PWC forecasts to reach US$1.8 trillion by 2010.

Currently Chinese and overseas entertainment companies are engaged in strong marketing activity, forging alliances that will guarantee their content reaches China’s growing generation Y, and engaging in innovative promotional campaigns that will raise company profiles and brand awareness.

Case Studies

MTV

Viacom’s MTV, like most Western media companies, has struggled to get its programming onto Chinese TV, frustrated by regulations, restrictions and delays. MTV is currently broadcast into southern China and select foreign hotels and residences.

However, a breakthrough may be at hand. In October last year, Shanghai Viacom (an alliance between Viacom and the Shanghai Media Group), one of the world’s biggest media companies, announced it had struck a deal to provide television and music video content to Baidu, one of the largest and fastest-growing internet companies in China. The alliance is the biggest effort so far to introduce American television and entertainment content and programming into China.

MTV China has also struck deals with China’s two major cellphone service providers, China Mobile and China Unicom, to deliver music charts, entertainment news and ring tones, and MTV’s popular cartoon show “Sponge Bob Square Pants” has recently began airing on government-controlled China Central Television (CCTV).

In another marketing move, MTV Networks and the Body Shop jointly launched the “Stop HIV: Spray to Change Attitudes” campaign in January in Hong Kong, to raise awareness of HIV and AIDS among young people. The campaign aims to raise funds for MTV’s Staying-Alive Foundation, with the selling of a limited edition Rougeberry fragrance in the Body Shop chain stores in Hong Kong.

Image source: MTV China

WangYou Media

WangYou Media is looking to make stars out of China’s amateur musicians and aspiring performers. The company’s website, WangYou, is a cross between YouTube and MySpace. Users upload original videos, music, audio content and pictures to their WangYou homepage and can view other users’ content and interact with them through social networking services.

At risk of being lost among China’s excess of social networking sites, WangYou have added a twist - the company is partnering with traditional media companies such as radio and TV networks to repackage WangYou’s user-generated content (UGC) into radio and TV programs. WangYou has been producing a weekly radio program that airs in 17 provinces since November 2005. In addition to the radio program and website, WangYou also offers a wide range of wireless services that integrated with the online platform.

In mid-2006 WangYou Media established a partnership with QQ.com and Baidu.com for multimedia distribution. Under the partnership, WangYou Media will authorize Baidu and QQ to distribute a selection of quality audio and video contents generated and uploaded by WangYou users.

In August 2006 WangYou sponsored the launch party of “Red Town” in Beijing. Red Town is a Chinese site for promoting superstar amateur artists that come through its online platform. “New Perfume” band, consisting of four Chinese 21–year-olds, performed live at the event. The band members met 6 months ago through WangYou, and were voted by WangYou users as the best act in a competition. The band was apparently offered a contract with one of the big US-based record labels, but turned it down to sign up with Red Town instead, saying “this is how music is best spread and promoted today”.

Image source: Wangyou Media

Tudou.com

Tudou is a multimedia podcasting web site that allows internet users to share original audio and video clips, and has rapidly developed a reputation as the leading video sharing company in China. Currently nearly 20,000 videos are uploaded to the site daily, with 25 million videos also streamed each day.

Tudou.com recently announced that it has completed Series C funding in a round led by Chinese venture capital firm Capital Today and US venture capital firm General Catalyst Partners. Korean private equity company KTB Network also invested. Existing Tudou investors JAFCO, IDG Technology Venture Investment (IDGVC) and Granite Global Ventures also participated. Capital Today’s Wen Baoma and General Catalyst’s David Orfao will join Tudou’s board of directors.

Image source: Tudou

Trend impact

Music is just one part of a large sector of entertainment, media and innovation industries that have the potential to drive China’s economy in the future. The combination of a relatively undeveloped piracy-dominated physical market and a rapidly-developing wireless environment, China is now uniquely placed to become the world’s showcase digital music market. However, consumer access is an issue which needs to be resolved if China’s market potential is to be fully realized. Overseas companies are still prohibited from owning and running a single company in China to develop, produce market and distribute recordings.

China’s video-sharing sites, which blossomed last year after Google bought the top online video-sharing site YouTube for US$1.65 billion, are struggling to build convincing business models, since the more popular they become, the more bandwidth costs tend to balloon as traffic gets heavier. Venture capital companies are now starting to favor online companies with more traditional business models such as online payment, e-commerce and digital music.

Last year, 11 online video firms received a combined US$52.7 million in venture capital funding, up almost 40 percent over 2005, according to the data firm iResearch. Revenue from online video in China totaled about 500 million RMB, or US$64.7 million, in 2006, and is expected to rise to 3.4 billion RMB by 2010.

While there have been some successful video-sharing projects in China - such as the bandana-wearing Back Dorm Boys, who became famous via video sites - about 90 percent of the 400 to 500 online video firms in China are expected to wither away as they struggle to turn traffic into cash. Established web companies like Tom Online, SINA, Sohu.com and Netease.com, which market watchers believe are considering expansion into video sharing, have a bigger chance of success in the online video business as they already command a high level of traffic and have more resources.