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China is the Largest TV & Broadband Market

According to In-Stat, there's a growing trend where Internet TV sets can download or view video content from the Internet in China. In fact, China has become the largest market for both TV and broadband access in the world.

There are 400 million household TV Sets in the China market; 160 million Cable TV households in the China market, with 30 million DTV users at the end of 2007; and more than 70 million fixed broadband subscribers, with more than 250 million Internet users.

Internet video-related activities are fast becoming the most popular among Chinese Internet users. The total number of Internet video viewers in China -- by In-Stat's definition, anyone who watches video from Internet sources or downloads video content via the public Internet -- reached 98 million in 2007.

Accordingly, the content, especially the latest videos on the Internet, has been spreading widely and there are now many Internet video portals. Motivation to download or view video from the Internet on TV sets in China is strengthened by the following:

TV viewers have to receive the programs and advertisement on their TV sets, passively, without any control. Even though some cable operators are testing VoD, time-shifting TV and other two-direction services, all these pre-commercial services are in their infancy and are not expected to experience fast growth over the next 3 years due to the high cost of two-way network reconstruction.

The importance of TV content has not yet been recognized in China. Premium channels have not attained market traction. Chinese content providers often receive a minimum for their content -- for premium pay-TV channels, typically a 5:4:1 revenue split is applied where the cable network owners get 50 percent, TV stations 40 percent, and content suppliers only get 10 percent.

Due to the insignificant sales of pay-TV channels, Chinese content producers would rather sell quality TV programs to public TV to attract advertisers first, and thereby viewers second.

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