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TV ad revenue in China is second largest to Japan in Asia

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MUMBAI: The ad revenue in China has been growing at the rate of 12 per cent a year. It reached $ 3.4 billion in 2004. This makes it second to Japan in the Asia Pacific region. The cable and satellite revenue reached $ 2.5 billion.

One of the sessions on the first day of Frames was China: What's Up in Entertainment. Media Partners Asia executive director Vivek Couto pointed out that C&S revenues refer to basic television. Pay channels are now starting to come in through set top boxes. They could reach one million subscribers by the end of the year.

This is however a very small percentage of the market which consists of 120 million cable homes. National broadcaster CCTV corners a third of that market. The advertising pie is fragmented. For instance the top four companies in the outdoor ad market take 20 per cent of the revenue. A lot of the other operators are mom and pop outfits. CCTV takes up around 30 per cent of the revenue. Couto noted that foreign broadcasters still do not have a level playing field. While China's distribution infrastructure is superior to India's the programming lags behind due to government laws.

"Digitising of networks is happening ahead of the 2008 Beijing Olympics. However the uptake of STBs is not as good as it could be. Another area of debate is the revenue sharing between pay broadcasters and MSOs. As is the case in India there is talk about using the telephone to deliver services like broadband."

Tom Group CEO and executive director Sing Wang said that sports marketing is worth $ 5 billion. This is driven by events that cover a variety of sports. The online and mobile marketing is worth $ 1.9 billion. India could take a chapter from this and not give up on the Internet though the going has not been easy for the likes of Satyam.

The key to growth of the net in India is developing infrastructure. What is helping the Internet in China is that since it is new it is very liberal as far as regulation is concerned. Over the next three years this market could grow to $ 7.5 billion.

On the television front China produces 20,000 hours of programming. Only a quarter of this is aired. Now Chinese companies are looking to expand abroad so that their content reaches a wider audience. There is also some attempt now to make sitcoms that appeal to viewers. On the flip piracy in China is amounting to $2 billion a year.

Wang added that on the film front China has a long way to go in terms of unlocking potential. That is because there are not many multiplexes. 200 Films were made in China last year but the box office is only worth $200 million. Another factor hindering growth is that the government only allows for 20 films to be imported. However things could look up with multiplexes expected to come up in the next three to five years.

As far his company is concerned Wang said that its net profit margin after tax is 26 per cent. That is because it does not spend lots of money advertising. Word of mouth advertising, which is done through parties, meetings has been very effective in helping it get customers. He also feels that the government in China and in India should not be afraid of foreign competition especially in the film sphere. "They have their market. We have ours."

Also companies like Sony and Time Warner have done joint ventures with local Chinese companies. Whether this will work only time will tell. News Corp is different in that it has also invested in telecom in China.

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