The 2015 Q3 saw the Chinese online video market earning 1.19 billion yuan ($182 million) through membership fees on streaming websites, increasing 256 percent from 2014 Q3.
According to the Global Times, not only have online dramas such as "The Lost Tomb" added to attracting paid VIP members to streaming sites, but also online films have played a part. By the end of the third quarter of 2015, more than 500 online movies, those longer than an hour and only released online, were available on streaming sites in China.
Reports indicate that 259 out of 618 movies produced in the Chinese mainland in 2015 were selected for distribution in theaters. Based on the competition for distribution, investors are unlikely to risk, preferring instead to support movies featuring famous and experienced directors, actors and scriptwriters.
The reliance on established names makes it hard for new faces to succeed in movie industry. Luckily, less expensive online movies offer a chance for industry freshmen to make an impact.
Although the expenditure for theater release normally reaches a minimum of 5 million yuan, online films are mostly produced for less than 1 million yuan, can be produced in one to three months, and they do not have competition with other movies slated for release in theaters.
The same publication revealed that streaming sites earn money in two ways: membership subscriptions and advertisement income. Websites in turn pay online movie studios a percentage of the income according to the number of viewers the latter's films receive.
Online movies normally put behind a "member only" pay wall in the first six months online, during which sites usually pay 2 yuan per view in case the movie is exclusive to the site or 1.5 yuan for non-exclusives. Thereafter, films become free for non-members to view along with paid advertisements.
In the event one of these movies becomes popular enough, it can easily attain a higher return on investment than some theatrical releases. For instance, "Daoshi Chishan," a movie with a similar name to director Chen Kaige's film "Monk Comes Down the Mountain," is an online film developed for just 280,000 yuan, yet it earned 7 million yuan online.