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Sept. 7 (NBD) -- China's top three video streaming providers - Youku, iQiyi, and Tencent Video - reported sharp increase in number of members in the second quarter of this year. Tencent Video has had 74 million members as of the end of the quarter, achieving a 121 percent surge from a year ago. Members of iQiyi totaled 67.1 million, up 73 percent compared with the same period last year. Youku posted a 180 percent year-over-year rise in the number of average daily paid members, according to Alibaba's financial results for the quarter.

Despite the expanding membership, the platforms are facing significant challenge from short video apps. 

A report on China's mobile internet in the first half of 2018 released by big data provider QuestMobile shows that time spent in watching short videos has amounted to 726.7 billion minutes as of June this year, a 471 percent jump compared with the same period of 2017, while time spent watching online videos has only risen by 9.1 percent to 761.7 billion minutes.

Besides, another set of data from QuestMobile revealed that iQiyi and Tencent ranked first and second among all video platforms in May with daily active users (DAUs) of 122 million and 109 million, respectively. But short video apps Douyin and Kuaishou came third and fourth by a small margin, reporting 107 million and 103 million DAUs, respectively. 

The emerging short video industry has grabbed users from video streaming websites, and the competition will get fiercer in the future.

Under such situation, video streaming websites cannot win the competition simply by developing new contents. Undoubtedly, new contents can bring new paid members, but as paid members can skip advertisements, this could lead to lower coverage of advertisements, hence lower income. 

Therefore, they are actively seeking to create new business models to find new sources of income. 

A senior executive with Tencent noted at the earnings conference call for the second quarter of this year that the company has achieved some progress in cashing in on variety shows. Tencent saw strong growth in video advertising revenue in the quarter, which was mainly contributed by the sponsorship for reality shows. Fans of idols presented in the show were also strong contributors to the revenue as they have to watch advertisements put in the show. 

It is noted that iQiyi also made huge gains from its self-produced shows in the same way.

Email: zhanglingxiao@nbd.com.cn