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China Telecom composes the core industry chain with the pattern of “platform, content and terminal service” and pushes the development of video business with partners for all-win situation. It also hopes to find a better profit pattern for China’s video business.
In the period of “3-network convergence”, various kinds of video business get into people’s daily lives. As one of the three major telecom operators in China, China Telecom founded Video Operation Center in November 2009 and then located it in Pudong, Shanghai. This Center is responsible for the development, operation and support of the nationwide business of mobile phone video, online video, IPTV and “ mTouch”. Its rising branded business “E-surfing Video” makes use of advantages of China Telecom’sfull service businesses and multi-screen interaction to bring unprecedented audible and visual experience for the users.
Moreover, China Telecom uses the pattern of “platform, content and terminal service” to make out the core industry chain. It built partnership with IGRS, Tri-Sun Electronics and Huawei to push the industry chain up for all-win situation. It also hopes to find a better profit pattern for China’s video business.
On January 26, on which China Telecom Video Operation Center for the first time launched three kinds of mobiles featuring E-surfing Video business, our journalists interviewed Kang Jian, standing deputy director of China Telecom Video Operation Center.
Forceful Rise
China Business Focus (CBF): How is the operation of the businesses of E-surfing Video, like mobile phone video, PC video, IPTV, “mTouch” etc? What about their number of users?
Kang Jian: When China Telecom officially took over the mobile phone video business from China Unicom in 2010, there were only 100 thousand users. After one year’s development, the number of independent users of E-surfing Video (mobile phone) users has exceeded 11 million and the number of charged users is over 3 million. The daily traffic increased from previous 60G to over 1100G. The services include mobile phone live, on-demand video, news, movies, client end for government and enterprises, brand pack, features, etc. The CDMA 3G network provides wonderful experiences, as well as high-definite and fluent video for the users.
As for the videos for PC, the Web version, client end and video service tailored for iPad has been launched, covering live channel, on-demand video and HD video service. The integration of business was started at the end of last year.
There were 4 million IPTV users last year, of whom 1.3 million were in Shanghai. Due to the restriction of national laws and regulations, as well as the involvement of different departments, the existing pattern, which gives each province independent operation right, is continued.
“mTouch”, which integrates video call, video delivery, reading, information, life, household application and intelligent control, is also very popular. There are 60 thousand users in Shanghai, 40 thousand of them need to pay for the services. The number of concurrence users reaches 10 thousand every day.
Though it is inferior to iPad in appearance and users’ experience, “mTouch” is different from iPad. iPad can be compared to a supermarket, from which users can pick up the applications they like from the App Store, but the increasing number of applications could confuse them. The biggest advantage of “mTouch” lies in the back-end operation system which recommends and highlights the popular applications to stimulate the users’ demand. Now the most popular application is weather forecast and video. The update of video programs of “mTouch” is very quick. Everyday there are 300-400 pieces of entertainment information and news updated. In addition, online booking of film tickets or dinner and the other convenient services are very popular too. Our next service enables the users to pay electric power, water and gas supply through “mTouch”.
Hurdle from Copyright
CBF: China Telecom launched E-video, which provides cross-platform interaction for the users of mobile phone, PC, TV and “mTouch”. What does China Telecom think of “3-screen convergence”? Is there any problem?
Kang Jian: the significance of “3-screen convergence” lies in not only the development of products, but also deciding who will have louder voice in the video industry in the future. Since the contents and platform are available, the crux is the communication standard among different platforms. Therefore China Telecom takes the lead in the industry. We work with IGRS to introduce the cross-platform communication agreement with our own intellectual property; we work with Tri-Sun Electronics to extend the application onto smart housing. We also introduce Huawei as device suppliers.
Presently, the major problem we encounter in spreading “3-screen interaction” is related with copyright of contents. Now the video copyright in China is under disorderly management. The interaction among mobile phones, PCs and TVs entail the copyright allowing the contents to be delivered at three different platforms. The cost is very high.
However, the video industry in the future must be converging and cross-platform. It is not enough to work on a single platform. We must make sure that the users can watch the video they want in different platforms anytime and anywhere. In particular, after the application of 3G network, the convergence of mobile network and Internet is faster than ever before and extends their arms to the cable TV network. “3-network convergence” is the trend, which will lead to the three undifferentiated platforms.
CBF: Have you ever met some problems in the review and processing of cross-platform videos? In addition, can the users of mobile phone videos be satisfied under current expense cost?
Kang Jian: We have cooperation with the content suppliers having business license, such CCTV International, in the field of mobile phone video. Our partners take the job of reviewing the contents and then send them to the platforms of China Telecom, which deliver them to users. There are more contents suppliers with license for online video and thus no problem exist. IPTV shares the same situation with mobile phone. The only difference is that the former’s operation is based on provincial level while the latter’s operation is unified in China.
Basically, the contents source is transformed into the format we need through transcoding. What our Video Operation Center needs to do is recommend these contents to the users at different platforms. Compared with the mobile phone, the Internet accommodates a bigger amount of contents.
Profit Pattern
CBF: What is China Telecom’s role in the whole video industry chain? What is its profit pattern?
Kang Jian: the whole video industry chain includes content provider (CP), service provider (SP), platform provider and terminals. China Telecom plays the role of platform provider and commits itself to improving the ability and service, meeting the demand of CP and SP and delivering the platform to different terminals as their demand.
China Telecom’s advantages lie in the huge number of users, great ability of building and delivering platforms. We don’t get engaged in video industry to crash down our competitors; instead, we focus on building a video eco-system that could bring benefits to everyone engaged in it. We plan to work with others to expand and consummate this business.
We are working on building the largest genuine contents pool and digital video publication channel in the world. We aim to be the largest supplier of Internet and mobile phone video business, as well as the largest provider of Internet video platform.
We can see from the Internet video industry that problems still exist. Take Youku.com for example. It has been in business for five years and has a high market value after going public, but it fails to see large profits.
In the previous TV platform, the profits mainly come from premium programs (though there are no in China) and advertising. The profit pattern suiting Internet video deliverer is the free content plus ads. However, the ads deliverers have a low recognition of these video websites, which leads to the great depreciation of their advertising value. In addition, the charge for copyright greatly increased in 2009, which made the situation worse.
In my opinion, the contents themselves have value, so good content should be charged to keep the industry growing at a right track. China Telecom’s video business in the future will adopt the pattern of charging for a part of contents in addition to ads. This can also form some new business cooperation patterns.
We are now negotiating with proprietors of video copyrights in and out of China with the goal of introducing some popular movies and TV series. Our users can choose what they like at home. This market has a great outlook and a new publication is likely to be formed, which will replace DVD as a supplement to traditional theater and cinema.
In the period of “3-network convergence”, various kinds of video business get into people’s daily lives. As one of the three major telecom operators in China, China Telecom founded Video Operation Center in November 2009 and then located it in Pudong, Shanghai. This Center is responsible for the development, operation and support of the nationwide business of mobile phone video, online video, IPTV and “ mTouch”. Its rising branded business “E-surfing Video” makes use of advantages of China Telecom’sfull service businesses and multi-screen interaction to bring unprecedented audible and visual experience for the users.
Moreover, China Telecom uses the pattern of “platform, content and terminal service” to make out the core industry chain. It built partnership with IGRS, Tri-Sun Electronics and Huawei to push the industry chain up for all-win situation. It also hopes to find a better profit pattern for China’s video business.
On January 26, on which China Telecom Video Operation Center for the first time launched three kinds of mobiles featuring E-surfing Video business, our journalists interviewed Kang Jian, standing deputy director of China Telecom Video Operation Center.
Forceful Rise
China Business Focus (CBF): How is the operation of the businesses of E-surfing Video, like mobile phone video, PC video, IPTV, “mTouch” etc? What about their number of users?
Kang Jian: When China Telecom officially took over the mobile phone video business from China Unicom in 2010, there were only 100 thousand users. After one year’s development, the number of independent users of E-surfing Video (mobile phone) users has exceeded 11 million and the number of charged users is over 3 million. The daily traffic increased from previous 60G to over 1100G. The services include mobile phone live, on-demand video, news, movies, client end for government and enterprises, brand pack, features, etc. The CDMA 3G network provides wonderful experiences, as well as high-definite and fluent video for the users.
As for the videos for PC, the Web version, client end and video service tailored for iPad has been launched, covering live channel, on-demand video and HD video service. The integration of business was started at the end of last year.
There were 4 million IPTV users last year, of whom 1.3 million were in Shanghai. Due to the restriction of national laws and regulations, as well as the involvement of different departments, the existing pattern, which gives each province independent operation right, is continued.
“mTouch”, which integrates video call, video delivery, reading, information, life, household application and intelligent control, is also very popular. There are 60 thousand users in Shanghai, 40 thousand of them need to pay for the services. The number of concurrence users reaches 10 thousand every day.
Though it is inferior to iPad in appearance and users’ experience, “mTouch” is different from iPad. iPad can be compared to a supermarket, from which users can pick up the applications they like from the App Store, but the increasing number of applications could confuse them. The biggest advantage of “mTouch” lies in the back-end operation system which recommends and highlights the popular applications to stimulate the users’ demand. Now the most popular application is weather forecast and video. The update of video programs of “mTouch” is very quick. Everyday there are 300-400 pieces of entertainment information and news updated. In addition, online booking of film tickets or dinner and the other convenient services are very popular too. Our next service enables the users to pay electric power, water and gas supply through “mTouch”.
Hurdle from Copyright
CBF: China Telecom launched E-video, which provides cross-platform interaction for the users of mobile phone, PC, TV and “mTouch”. What does China Telecom think of “3-screen convergence”? Is there any problem?
Kang Jian: the significance of “3-screen convergence” lies in not only the development of products, but also deciding who will have louder voice in the video industry in the future. Since the contents and platform are available, the crux is the communication standard among different platforms. Therefore China Telecom takes the lead in the industry. We work with IGRS to introduce the cross-platform communication agreement with our own intellectual property; we work with Tri-Sun Electronics to extend the application onto smart housing. We also introduce Huawei as device suppliers.
Presently, the major problem we encounter in spreading “3-screen interaction” is related with copyright of contents. Now the video copyright in China is under disorderly management. The interaction among mobile phones, PCs and TVs entail the copyright allowing the contents to be delivered at three different platforms. The cost is very high.
However, the video industry in the future must be converging and cross-platform. It is not enough to work on a single platform. We must make sure that the users can watch the video they want in different platforms anytime and anywhere. In particular, after the application of 3G network, the convergence of mobile network and Internet is faster than ever before and extends their arms to the cable TV network. “3-network convergence” is the trend, which will lead to the three undifferentiated platforms.
CBF: Have you ever met some problems in the review and processing of cross-platform videos? In addition, can the users of mobile phone videos be satisfied under current expense cost?
Kang Jian: We have cooperation with the content suppliers having business license, such CCTV International, in the field of mobile phone video. Our partners take the job of reviewing the contents and then send them to the platforms of China Telecom, which deliver them to users. There are more contents suppliers with license for online video and thus no problem exist. IPTV shares the same situation with mobile phone. The only difference is that the former’s operation is based on provincial level while the latter’s operation is unified in China.
Basically, the contents source is transformed into the format we need through transcoding. What our Video Operation Center needs to do is recommend these contents to the users at different platforms. Compared with the mobile phone, the Internet accommodates a bigger amount of contents.
Profit Pattern
CBF: What is China Telecom’s role in the whole video industry chain? What is its profit pattern?
Kang Jian: the whole video industry chain includes content provider (CP), service provider (SP), platform provider and terminals. China Telecom plays the role of platform provider and commits itself to improving the ability and service, meeting the demand of CP and SP and delivering the platform to different terminals as their demand.
China Telecom’s advantages lie in the huge number of users, great ability of building and delivering platforms. We don’t get engaged in video industry to crash down our competitors; instead, we focus on building a video eco-system that could bring benefits to everyone engaged in it. We plan to work with others to expand and consummate this business.
We are working on building the largest genuine contents pool and digital video publication channel in the world. We aim to be the largest supplier of Internet and mobile phone video business, as well as the largest provider of Internet video platform.
We can see from the Internet video industry that problems still exist. Take Youku.com for example. It has been in business for five years and has a high market value after going public, but it fails to see large profits.
In the previous TV platform, the profits mainly come from premium programs (though there are no in China) and advertising. The profit pattern suiting Internet video deliverer is the free content plus ads. However, the ads deliverers have a low recognition of these video websites, which leads to the great depreciation of their advertising value. In addition, the charge for copyright greatly increased in 2009, which made the situation worse.
In my opinion, the contents themselves have value, so good content should be charged to keep the industry growing at a right track. China Telecom’s video business in the future will adopt the pattern of charging for a part of contents in addition to ads. This can also form some new business cooperation patterns.
We are now negotiating with proprietors of video copyrights in and out of China with the goal of introducing some popular movies and TV series. Our users can choose what they like at home. This market has a great outlook and a new publication is likely to be formed, which will replace DVD as a supplement to traditional theater and cinema.