China is a huge market for Internet companies — the largest in the world, as a matter of fact. Combine this with the fact that a lot of Western companies are blocked in the country, and you have a thriving market where local Internet companies dominate.
An interesting TechNode report shows how Chinese video sites fare against one of America’s biggest video providers – Hulu, the popular online subscription video streaming service.The interesting results: although Chinese companies dominate in terms of unique monthly visitors, the revenue they are getting is nowhere near Hulu’s, which earns $240m despite only 30 million unique monthly active users.
This may not be a shortcoming for the Chinese video companies in monetizing their services, but rather an indication of how different the Chinese spending habits are. According to the report, Hulu, which is only available in the US, makes US$8 per user while its Chinese equivalents can’t even make US0.5 per user.
This is one of the biggest challenges for software and online service companies in China. Software developers find it much harder to monetize from paid downloads, so they are forced to rely on advertising revenue, which is harder to generate.