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Jan. 16 (NBD) -- News information platformJinri Toutiao is advancing in the long-form video industry, with its Xigua Video announcing an investment of 4 billion yuan (591.6 million U.S. dollars) in the production of original variety shows in August last year.

After gaining a foothold in the short video sector, the Beijing-based tech company's new move leaves the question that why it enters the lengthy video sector.

Booming as short videos are, the market size is far behind that of the long-form video segment.

According to service provider QuestMobile, the increase rate of short video users is slowing down after rapid growth at the early stage. It is predicted that the short video market will exceed 30 billion yuan (4.4 billion U.S. dollars) by 2020. As a contrast, a report from chnci.com showed China's online video industry is expected to reach 122 billion yuan (18.1 billion U.S. dollars) in 2018.

After years of development, the short video segment has forged a business model, which is not mature enough though, making profits mainly from advertisement and rewards in live streaming, while the long-form video industry makes profits via advertisement and premium memberships. 

Data indicated the payment rate of China's streaming media only stood at 8.8 percent, lagging far behind the U.S., South Korea, Japan and countries in Europe, which leaves much room for further development.

Furthermore, to meet varied demand, it will brook no delay for Jinti Toutiao to create diversified contents for more traffic and growth, since short videos have been more and more tedious due to high similarity.

Although the company owns several competitive short video platforms, with TikTok and Xigua Video ranking second and third in terms of active users, it still faces cut-throat competition among a large number of similar brands. 

Under such circumstance, grasping more user values in the short video industry will be increasingly hard.

To hit the road in the long-form video industry, Jiniri Toutiao's Xigua Video resorted to self-made contents, which curbs the financial burden for property rights but will possibly cause a loss of user traffic. 

But, different from other long-form video players, as a platform with a huge user base and high traffic, Jinri Toutiao aims to retain more users and solve problems realted to copyright infringements.

In the future, it may create long-form videos through the combination of big data and contents and invest into or acquire mature online video platforms, integrating short videos with long-form videos based on the advantage of these platforms.

However, to gain a foothold in the long-form video sector is not that easy. The new platform will undoubtedly be challenged by the three online video titans in China – iQiyi, Youku and Tencent. At that time, the biggest problem stumping Jinri Toutiao will be the whopping capitals for copyrights and production.

Moreover, it is unknown when the online video industry is able to make profits. After all, even industry leader iQiyi still remained loss-making as of the third quarter of 2018.

Email: wenqiao@nbd.com.cn