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Social Media Is Defined As Various Activities That Integrate Social Interaction, Content Generation and User Participation

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Social Media Is Defined As Various Activities That Integrate Social Interaction, Content Generation and User Participation -------------------------------------------------------------------------------------------------------------------------------------------------------- Under the Attack of Social Media: The future of Chinese Media Industry 2008 Yinglu Zhang, Xiaoming Zuo --------------------------------------------------------------------- UNDER THE ATTACK OF SOCIAL MEDIA: THE FUTURE OF CHINESE MEDIA INDUSTRY SCENARIO PLANNING ANALYSIS AND MANAGERIAL RECOMMENDATIONS --------------------------------------------------------------------- Ford Motor Company Fellowship / Wharton Mack Center for Technology Innovation Yinglu Zhang Xiaoming Zuo The Wharton School University of Pennsylvania April, 2008 Supervised by: Professor Paul J.H. Schoemaker 2008 Yinglu Zhang, Xiaoming Zuo, All rights reserved - 1 - -------------------------------------------------------------------------------------------------------------------------------------------------------- Under the Attack of Social Media: The future of Chinese Media Industry 2008 Yinglu Zhang, Xiaoming Zuo Table of Contents 1. Executive Summary ....................................................................................................... 3 2. Background ................................................................................................................... 3 3. Scope of the Project ...................................................................................................... 6 4. Research Method .......................................................................................................... 6 5. Industry Analysis............................................................................................................ 7 6. Identification of Key Uncertainties Through Industry Interviews and Secondary Analysis . .................................................................................................................................... 17 7. Creating Scenarios ...................................................................................................... 19 8. Discussion of Results and Future work ........................................................................ 23 9. References .................................................................................................................. 28 10. Acknowledgement ...................................................................................................... 29 9. Biographies of Interviewees ......................................................................................... 29 List of Tables Table 1: Comparisons of Social Media and Tradition Media in China in 2007 .............................. 5 Table 2: Market Values of the Chinese Media Industry (2003-2007) .............................................. 5 Table 3: List of Stakeholders in the Media Industry ........................................................................... 8 Table 4: Key Drivers Shaping Audience Needs and Their Roadmaps ........................................... 9 Table 5: Key Drivers Derived from Government Policy and Intervention and Their Roadmaps 11 Table 6: Key Economic Drivers Shaping the Industry and Their Roadmaps ............................... 14 Table 7: Important Technological Drivers and Their Roadmap ...................................................... 15 Table 8: Global Drivers and Their Roadmaps ................................................................................... 16 Table 9: Social Drivers and Their Roadmaps ................................................................................... 17 Table 10: List of Categorized Divers (Trends and Uncertainties) .................................................. 18 Table 11: Uncertainty Rankings .......................................................................................................... 19 Table of Figures Figure 1: Status of Internet Users Providing Internet Contents (China 2007) ........................................ 4 Figure 2: Key Strategic Uncertainties Driving the Future of Chinese Media Industry ......................... 20 - 2 - -------------------------------------------------------------------------------------------------------------------------------------------------------- Under the Attack of Social Media: The future of Chinese Media Industry 2008 Yinglu Zhang, Xiaoming Zuo 1. Executive Summary Over the past couple of years, Social Media has received an incredible amount of attention throughout the world. But along with the connectivity that Social Media brings to a widening range of users, questions arise as to how the entire media industry can grow with a successful and sustainable business model and a strategy that can potentially expand the traditional pie and leading against its global competitors. However, every country has its own uniqueness especially when it comes to predicting the future development of an industry which is strongly correlated to the political systems, economic development, social systems and technology advance. China has been a very hot topic in the past 10 years. Many people talk about investing in China. The rest of world outside China is eager to find out how it is like doing business in china, what the cultural and political implications are, how much the economic return will be, and most importantly how to be best prepared to make a success in China. As a fast developing country, China absorbs like a sponge from the rest of the world and adapts in an amazing speed in every aspect. The Chinese media industry not only shares the common uniqueness as many other industries in China, it also stands out from the rest because it survives amongst the controversial high government censorship in the media content but at the same time thrives in a fast growing economy with consistent double digit GDP growth in the past 10 years. In this paper, we focus particularly on the future media industry in China, esp. the future of Chinese media industry under the attack of the emerging social media and other new media. In particular, how should the Chinese Media industry adapt in order to survive and bring positive impact to developing countries like China? We will analyze the social, economic and political impacts of the Chinese media industry in China. We also explore the future business potential and provide strategic recommendations for the future Chinese media industry. 2. Background Social media is defined as various activities that integrate social interaction, content generation and user participation. Using technology as conduit, social media can take many different forms, including internet forums, weblogs, wikis, podcasts, pictures and video. Social media is fundamentally different from traditional media such as newspapers, books, television, and radio by such characteristics as interaction and user-generated content. As in other parts of the world, social media emerged as an important media format in Chinese media industry since 2005 and has evolved into a distinctive media force after three years. According to CNNIC’s China Internet Report 2007, 65.7 percent out of a total of 210 million Internet users in China have posted or uploaded contents onto Internet. - 3 - -------------------------------------------------------------------------------------------------------------------------------------------------------- Under the Attack of Social Media: The future of Chinese Media Industry 2008 Yinglu Zhang, Xiaoming Zuo That said, instead of simply watch or read whatever media contents readily provided by traditional media, 138 million of Chinese internet users chose to contribute contents, to form online communities, to share interests, and to participate in a variety of interactive online activities. In a rapid pace, social media becomes a new audience experience that defines what future media industry must deliver. Figure 1 depicts the picture of internet usage in China in 2007. send/reply tips upload pictures upload music upload movie Status of Internet Users upload other video items Providing Intenet Contents upload TV plays upload TV programs never send tips/upload contents 0.00 10.00 20.00 30.00 40.00 % % % % % Figure 1: Status of Internet Users Providing Internet Contents (China 2007) While we are impressed by the speed of such evolution and the disruptive impact of such change, we are not able to conclude that social media, as a business form, represents a real threat to traditional Chinese media competitors. After 3 years of intensive investments from venture capital firms, today social media websites are still largely unprofitable. Most are struggling with revenue sources. Questions are raised on the feasibility of current business models. As a result, social media companies have yet to be deemed a real contender in Chinese media industry. The following table shows the comparison between social media companies and traditional media companies. - 4 - -------------------------------------------------------------------------------------------------------------------------------------------------------- Under the Attack of Social Media: The future of Chinese Media Industry 2008 Yinglu Zhang, Xiaoming Zuo Key Aspects Social Media Traditional Media mop.com; hexun.com, CCTV, SHMG, HNSTV, People's Who are they tudou.com; donews.com; daily and etc. tianya.cn, douban.com and etc. Multiple revenue sources including advertising, Business model Online advertising subscription, and direct content sales. Entrepreneurial investment, Stete-owned. Private investment Capital source
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