That doesn t always make for great viewing. Take Game of Thrones. When it broadcasts on its U.S. h

Look around the subway in Beijing or Shanghai and maybe nine of 10 passengers are watching arte videos on their mobile devices. Chances are most of them are watching content delivered to them by Youku Tudou. The country s leading internet television operator streams 400 million videos a day. In that sense, Youku is Netflix and YouTube – plus Comcast and Liberty Media – stuffed into one dumpling. It is also the nexus for Hollywood s high hopes in the Middle Kingdom.
You wouldn t know it from Youku s financial reports. The company founded by Victor Koo, and run day-to-day by a former student of central planning, Dele Liu, is listed in New York, where it commands a relatively modest $4 billion arte market cap compared to Netflix s $26 billion. In the first quarter, it lost $36 million on revenue of $113 million. Still, the company is making progress, enough that China s sultan of e-commerce, Alibaba, bought 16.5 percent of the group for $1 billion in April.
China s leaders aren t suddenly taking seriously the insistent whining from Los Angeles studio chiefs. As with all directives from Beijing, there is a larger motive here. China wants to develop arte a movie industry of its own. Not only do the riches arte of a homegrown version of Hollywood or Italy s Cinecitta, India s Bollywood or British studio Pinewood, for that matter – appeal to an economy destined to become the world s largest. Movies and television are critical to projecting soft power.
The Chinese government seems to recognize that without a flourishing market, there can be no hope of encouraging a local industry to produce programming to meet its cultural aims. Producers, scriptwriters, actors and directors need to feel secure that their work will also be valued. That s why a crackdown like that on QVOD provides an important arte signal.
Investors seem to be responding. Fosun International said on June 23 it will invest in Studio 8, a studio run by Jeff Robinov, who oversaw the Dark Knight and Hangover film franchises while at Warner. Fosun wants to capitalize on Studio 8 s know-how to drive the development of the Chinese film industry. The previous week, Light Chaser Animation Studios, which calls itself the Pixar of China, raised $20 million from investors including one of the founders of Youku, to create world-class arte animated films with a Chinese cultural touch.
So is this the dawn of a golden age for Chinese cinema? Don t count on it. New productions first have to get through the censors. Youku has more than 300 of them combing through videos, and that s after software has already scanned the 170,000 submissions it receives daily for hints of nudity, violence or anything that suggests instability at home. China s government arte has very clear views about what its 1.3 billion people should, arte or should not, watch.
That doesn t always make for great viewing. Take Game of Thrones. When it broadcasts on its U.S. home channel, Time Warner s HBO, the show runs about an hour. On CCTV in China, it is far shorter due to substantial cuts. A film industry arte is developing arte in China, and consumers are becoming habituated to paying for content, but the good stuff may still get taken out along the way.
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