Caixin
Aug 19, 2020 07:17 PM
BUSINESS & TECH

Taiwan Stops Streaming Services From Tencent Video, iQiyi

iQiyi headquarters in Beijing, May 8.
iQiyi headquarters in Beijing, May 8.

Taiwan will ban Chinese mainland video streaming services starting next month, saying delivery of TV-style programming over the internet hasn’t been open to mainland-invested companies.

The move will affect two of the mainland’s most popular brands, Nasdaq-listed iQiyi Inc. and the video service from internet giant Tencent, which are both currently available on the island and were singled out by name in the Tuesday notice (link in Chinese) from Taiwan’s commerce regulator. The ban will take effect starting Sept. 3, the notice said.

Of the two mainland-based companies, iQiyi was the earlier to arrive in Taiwan. It applied to set up a local subsidiary in 2016 to offer its core over-the-top TV (OTT-TV) services, the industry word for video programming delivered over the internet to TVs, usually using set-top boxes. The company set up its online site in Taiwan in March 2016, with the service offered through a local agent.

iQiyi was the second most popular paid membership app in Taiwan last year, according to App Annie. The company’s local agent revealed in May that it had 3 million local users. But the commerce regulator pointed out that iQiyi’s application back in 2016 was never approved because OTT-TV services were never opened to investment from Chinese mainland companies.

Tencent Video arrived more recently when it began offering its offshore WeTV product in Taiwan in May 2019, also through a local agent. Tencent and iQiyi had no immediate comment on the ban as of publication time.

The commerce regulator’s notice also said Chinese mainland OTT-TV companies would be prohibited from offering their products in Taiwan through agents or distributors. It added that the island’s broadcasting authority had already created new regulations banning local Taiwan individuals, companies and other organizations from performing such roles.

Tencent Video is part of leading game company Tencent Holdings Ltd., while iQiyi is controlled by online search giant Baidu Inc. China’s other major player in the space is Youku, which is owned by e-commerce giant Alibaba. All three have emerged in recent years as a preferred video-watching vehicle for young people, who have increasingly eschewed more limited offerings from the mainland’s traditional, state-owned TV stations.

In addition to purchased programs, OTT-TV companies like iQiyi and Tencent Video are also making a growing volume of original programs, similar to Western companies like Netflix and HBO in the U.S.

Even before the commerce regulator’s announcement, Taiwan had been taking other steps to limit mainland-based video services. Last month, the island’s broadcast authority issued a draft document saying local companies couldn’t rent out machinery rooms and computer servers to Chinese mainland-based companies from a variety of related sectors. That document is still open for public comments through Sept. 20.

Contact reporter Yang Ge (geyang@caixin.com) and editor Gavin Cross (gavincross@caixin.com)

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