It’s a digital hit in China

Scott Tong Apr 2, 2007

It’s a digital hit in China

Scott Tong Apr 2, 2007

KAI RYSSDAL: You’ve got your choice tonight when you settle back on the couch for a little quality television time. You could watch the NCAA basketball finals, Ohio State and Florida. You could catch some of Dancing with the Stars. Or you tune into Fox. 24’s on. A show called Prison Break’s on right before that. It gets respectable ratings, nothing spectacular. But over in China, it’s the hottest show bar none. From Shanghai, Marketplace’s Scott Tong reports on the power of word-of-mouth marketing in the world’s biggest consumer market.

SCOTT TONG: Officially, the TV show Prison Break doesn’t exist in China. Shows about crime or violence are banned.

PRISON BREAK: Hey buddy, give me his gun.

But in much of China, there’s the law, and then there’s reality.

PRISON BREAK: You’re not shooting anybody. Neither are you. Give yourself up and your kid can walk.

Each week, tens of millions of young Chinese viewers keep up with the great escape by downloading from illegal websites.

Twenty-six-year-old Ken logs on a mere eight hours after an episode airs in the States.

KEN: And right there, it pops out. I mean, Prison break is like the most popular show these days, so it’s always on the first line. So you can just click it and the downloading process just starts automatically.

On Ken’s favorite site, 50,000 people downloaded Prison Break last week — that’s five times more than any other show. For instance, Desperate Housewives.

So how did Prison Break become the program du jour?

Some say the pace and the special effects make the domestic Chinese dramas seem dull.

Twenty-five-year-old Celine catches Prison Break by buying bootleg DVDs. Seems they’re for sale every other block.

CELINE: It’s very hot in the United States. And the hero of the show is very attractive.

When a show like this gets so popular, Shaun Rein suspects there’s just one explanation: digital word-of-mouth.

SHAUN REIN: You have to understand the power of the Internet in China.

Rein runs the market research firm CMR.

REIN: It’s much more powerful than in the United States or any other country in the world. More people who are in the youth segment — between the ages of say 18 to 28 — are online than in any other country.

More than 130 million Chinese are online today. The vast majority read blogs to get other people’s opinions and buying preferences.

REIN: The numbers in China just demolish YouTube and numbers in the United States.

And that makes home video a huge market opportunity: an estimated $3 billion a year.

Thing is, just about all of that goes to the pirates, who seem to operate with impunity in China.

[SOUND: Street Hawker]

This street hawker offers DVDs for 75 cents. Prison Break is always prominently displayed. A traffic cop stands 15 feet away — ignoring him.

I ask the seller if he’s ever been busted. He shrugs and says, “Yeah, once — they confiscated my DVDs.” But a few days later, he just reloaded and was back in business.

So what’s Hollywood to do about all this? If you can’t beat em . . .

ELLEN ELIASOPH: Part of the strategy is to actually compete with the pirates.

Ellen Eliasoph is with Warner Brothers, China. The company has just started putting out low-cost, legitimate DVDs on the street — for about $2 or $3 each.

Warner is betting that people will pay a little bit more for reliability. Cause customers may not get that with the bootleg videos.

ELIASOPH: They may find that the packaging says it’s one movie, but that what’s actually on the DVD is something else. And sometimes, there’s strange dubbing in Yugoslavian or whatever it is. And they’ll just say, “Well, I just wasted my money.”

She says the legal DVD campaign is starting to work, but she won’t cite any numbers.

ELIASOPH: Some pirate retail chains have been converting over to stocking the legimate ones. And the sales volumes, particularly for the ones where we have our own Chinese-language movies that we’ve developed, sales volumes are really going up nicely.

Still, Prison Break fanatic Ken isn’t sure he’ll pay a premium just cause it’s the Real McCoy.

KEN: If they put the selling price two times, or even higher than the pirates ones, I don’t think it’s gonna work.

It’s a tough environment, and the industry knows it’ll take a decade or more for the Hollywood empire to strike back against the pirates. Still, in a place where two and a half billion DVDs are bought every year, even a tiny share of that treasure chest is real money.

In Shanghai, I’m Scott Tong for Marketplace.

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