Youku is investing in drama and sports content in its bid to win the battle for China’s online viewing audiences.
The Alibaba-owned platform is facing off against iQiyi and Tencent Video in China’s highly competitive online video market as it vies for control of the 609 million online viewers. The market, which reached 76% penetration in June, is currently led by Tencent Video, followed by iQiyi and Youku. However, while it may be in third place, Youku’s viewers are on the rise with average daily subscribers increasing by more 180% in the last two years.
The growth is being driven by Youku’s original content, which includes dramas and variety shows, such as The Advisors Alliance, Day and Night, Street Dance of China and This is Fighting Robots, as well as its investment in sports, notably its streaming deal for the recent Fifa World Cup.
Yang Weidong the president of Alibaba Digital Media and Entertainment Group, president of Youku and chief executive of AliMusic told The Drum, the strategy is to use original programming and popular content to engage users and attract new audiences.
“Our competitiveness is defined by our capability to produce consistently high-quality content.”
“Over the past year, Youku has created a series of excellent dramas and variety shows and integrated the strength of Alibaba’s ecosystem, hence proving our own capability in content production.
“Sports content opens up a new battlefield alongside the dramas and variety shows. The ability to secure the rights to broadcast a sports event is a decisive factor in its own right that gives the hosting platform an advantage,” says Yang.
Youku has been busy in the content arena inking deals with Hollywood production houses to license content such as Breaking Bad, Suits and Sherlock, as well as creating its own programming, such as The Flame's Daughter, Bloody Romance and the Chinese version of Saturday Night Live, however, it is its foray into sports that has been one of the biggest successes.
Youku’s World Cup coverage attracted more than 180 million unique mobile users – which Yang points out is around one-seventh of China’s 1.3 billion population.
Alibaba has also invested in Suning Sports, which will work with Youku to operate a joint sports platform called Youku Sports. The platform will leverage football broadcasting rights, including the UEFA Champions League, the AFC Champions League and the Chinese Football Association Super League, to take advantage of China’s growing obsession with football.
“Sports content is a strategic area we are exploring. We have witnessed the success of World Cup live broadcasting,” says Yang. “Youku is becoming the leader in rich sports content among the mainstream video platforms in China.”
Presumably, it’s working, with Youku reporting video views per user grew 16% year-on-year in 2018 while account login rates surged 46% over the same period.
When it comes to China’s battle for eyeballs, Yang believes high-quality content is the most important factor for attracting and keeping audiences. However, so do its rivals, which has led to an explosion in local and international content which audiences are lapping up.
Like its competitors, Youku operates a free, advertising-funded model and paid subscription model, where the majority of dramas and variety shows are offered free as they are released simultaneously on mainstream TV channels and online, however, its in-house productions and co-produced content are usually exclusive to subscribers.
Youku boasts an attractive user base of predominantly 18-to-30-year-old white collar workers, with a female skew.
Unsurprisingly, China’s online video explosion has also seen a surge in advertising with inventory prices skyrocketing as platforms become saturated with commercial content and Youku is no exception. The company offers a raft of commercial solutions to advertisers from native advertising, content-based advertising, digital product placement within programming, interactive advertising and insight-based advertising.
Youku also leverages Alibaba’s big data technology to help brands identify the most effective content to target their customers and works with them to create customised and targeted advertising.
“Youku has a designated team that creates tailored 15-second native advertisements to be broadcast between different parts of an episode. They have proved to be very popular among advertisers. One successful example is an advertisement that Youku produced last year during the screening of The Advisors Alliance. The advertised product was sold out within 10 minutes,” says Yang.
Youku is also leveraging the breath and scale of Alibaba’s ecosystem to cross-promote its content.
“We are uniquely positioned to offer extended services to our consumers and brand partners, thanks to the synergies offered by the entire Alibaba ecosystem.
“For instance, Youku’s marketing operations have been incorporated into Alimama, the omnichannel marketing platform within the Alibaba ecosystem, which provides a one-stop solution for brands and merchants to reach their target audiences,” he says.
Youku runs regular promotions across Alibaba’s various media, social networks and offline applications, as well as partnering with platforms such as Alibaba Pictures and Alibaba Music. It recently teamed with Mobile Taobao to launch a FaceTime-like interactive video to promote the series Day and Night and attracted over 30million users in one week.
“The World Cup is another case in point. To promote this important event, nearly 30 business units within the Alibaba ecosystem, including Taobao, Tmall, Alipay, Koubei, Ele.me, Hema and Fliggy, launched 99 joint marketing initiatives, whose synergy created a huge impact across the platforms,” says Yang.
Youku has also been working with Alibaba’s e-commerce platforms Taobao and Tmall as part of the company’s ‘Entertainment Content + E-commerce’ model, which aims to “increase consumption and drive traffic to each platform”.
“The unique Alibaba Entertainment Content + E-commerce model has opened up an effective way to integrate the potential of more than 500 million users on Alibaba’s e-commerce and entertainment platforms," says Yang
"In addition to its role in generating commercial value from the content, Alibaba’s e-commerce marketplace has transformed into a new marketing platform. Take Street Dance of China, a program jointly produced by Youku and Tmall, as an example. During its screening, Tmall set up a dedicated zone to sell street dance-related merchandise, while the intellectual properties of the merchandise were sold to merchants on Tmall through AliFish, Alibaba’s IP licensing platform.”
Youku also recently partnered with Alibaba’s sports arm AliSports to create offline events for the launch of its basketball program Dunk of China.
In 2018, Youku reported revenue from commercialised content increased by 84 times the rate in 2017, while the number of commercialised content was two times that of the previous year.
“Overall, we aim to offer general entertainment content catering to different types of viewers, while producing unique and popular content that targets young people, reflecting the importance of this segment," says Yang.