TMTpost: Will Chinese Customers “Buy” Apple’s Entertainment Services?

Apple entertainment services’ entry in China is, of course, a good thing for the Chinese online music service industry. Yet, few Chinese customers are willing to pay for their music service based on the status quo in China.

Apple’s entertainment services finally arrived in China

Over the past few years, mainland China has already become the largest market of Apple’s phones and tablets, but its media services, the foundation of Apple’s entire ecosystem, weren’t available to Chinese customers in the past. Many Chinese customers used to have no idea what’s the use of iTunes Store in their iPhones.

Now, Apple’s entertainment services finally are finally on air in China. On September 30, Apple announced that Apple Music™, iTunes® Movies and iBooks® were now available to Chinese customers. Movie fans can now rent or purchase movies from a great selection of Chinese studios as well as Hollywood blockbusters on the iTunes Store, such as Jurassic World and Avengers: Age of Ultron. Movies on iTunes will be available starting at 5 RMB for rental in HD and 18 RMB for new releases in HD. At the same time, music fans in China are invited to a three-month trial membership of Apple Music, though they can only listen to instead of downloading music items for now. Moreover, the iBooks Store offers customers a wide selection of both paid and free Chinese language books from 20 top Chinese publishers.

The launch of these three new services demonstrated Apple’s acknowledgement of the mainland Chinese market. In the past, Apple was regarded mostly as a hardware maker among Chinese customers, since they used to have no access to Apple’s entertainment ecosystem due to both safety concerns of the Chinese government and the lack of Apple’s efforts to localize in China.

Whether we admit it or not, Apple has already become a late entrant in the Chinese market, especially in terms of music streaming services and movies. (I shall not talk about iBooks in this article since there is no significant difference between iBooks and major Chinese e-book stores, even in price)

It’s already too late?

While American users have to pay a great deal to enjoy Apple’s entertainment services, such as downloading music and movie items, Chinese users are very price sensitive and prefer to download them for free. That’s why many Chinese online music and video platforms used to provide music and movie items for free at first and then gradually charge users for some particular items or services (LeTV is the only exception, since it has always been charging users for its services and purchased the copyrights of several films and TV series at a low price when every other platforms scrambled to copy others’ resources). It is fair to say that Apple is almost forced to enter the Chinese market late since Chinese customers love downloading music and movie items for free.

Yet, there is another possibility: if Apple had charged Chinese customers for music and movie items along with the popularity of iPhone and iPad in the past few years, copyright awareness would have emerged earlier among Chinese customers, and Apple would also have a larger say in the Chinese online entertainment service industry.

As a matter of fact, major players such as LeTV, Souhu, iQiyi, Youku Tudou, Tencent Video, etc., have gradually established a mature business model and a set of effective charging mechanism in the Chinese online entertainment service industry. In this sense, Apple will face great challenge in attracting Chinese customers to its own platforms. In other words, Apple needs to be persuasive enough in demonstrating to Chinese customers the uniqueness and advantage of Apple’s services and contents. However, this is no job.

iTunes Movies is left in an embarrassing situation

Up till now, Apple couldn’t provide the most competitive contents to mainland Chinese customers yet (as it did in the US and other English-speaking countries) due to various reasons. Instead, it could only team up with film companies such as Bona Film and Huayi Brothers and provide similar movie items as Tencent Video, iQiyi and LeTV, etc. Movie items on iTunes Movies remained limited, while even those on air were released in other platforms long ago, since these Chinese online video platforms have long been looking for opportunities to buy copyrights of Hollywood blockbusters such as Jurassic World, Sex and City, Avengers: Age of Ultron, let alone Chinese films such as Black Coal, Thin Ice, The Continent and Zhong Kui, etc.

What about the price of Apple’s services, then? According to Apple’s announcement, movie items on iTunes Movies will be priced at 5 RMB for rental in HD and at least 18 RMB for buying new releases in HD, much higher than the average charge of Chinese online video platforms. Movie items on major Chinese platforms are generally priced at 5 RMB each, while the annual VIP membership fee of LeTV is only 490 RMB. Besides, these platforms allow users to pay membership fee on a flexible basis, such as by month, by quarter, by half year, etc. In this case, I find Apple’s offer not at all attractive.

Another huge disadvantage of Apple is that it doesn’t sell big-screen devices in the Chinese market. Apple TV is something similar to Chinese TV boxes but fails to enter the Chinese market yet. Therefore, Apple’s users could not watch movies via smaller-screen devices such as iPhone and iPad. While Apple’s users are still suffering from the bad user experience on small-screen devices, they could just install apps of major Chinese online video platforms on their smart TVs, or even buy LeTV’s own smart TVs.

To sum up, high price, bad user experience and incomplete entertainment ecosystem will be blocking Apple’s development in this sector.

Apple Music has no attraction to Chinese customers

Apple did lower the price of its music services a lot: from 10 US dollars in the US to 10 RMB for Chinese customers. However, major online music streaming service providers such as QQ Music, NetEase Cloud Music, Ali Music all allow users to listen to music online for free, and download ordinary version of all music items. Users are supposed to only pay for their Internet service and when they want to download HD version of a music item. Under this circumstance, how can Apple attract Chinese customers to turn to Apple Music and pay for its music service?

Of course, Chinese free online music streaming service providers are all suffering from their “free” strategy while affording the high copyright fee. Baidu even attempted to sell Baidu Music due to the high maintenance cost and the lack of an effective charging mechanism. In this sense, it is likely that Apple’s entry might drive the Chinese online music streaming service industry to partly give up their “free” strategy and charge users with a little sum of money. Yet, it is more likely that no Chinese online music service providers will follow suit and Apple Music will pale into insignificance.

In conclusion, Apple entertainment services’ entry in China is, of course, a good thing for the Chinese online music service industry. Yet, few Chinese customers are willing to pay for their music service based on the status quo in China. The harsh fact it that Apple has already fallen far behind Chinese online music service providers in establishing an entire ecosystem of abundant contents and user-friendly services. In this sense, Apple shouldn’t have too high expectation towards the performance of its entertainment services in China.

[The article is published and edited with authorization from the author @Muguang Xiangxia, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.

(Chinese Version)


Originally published at www.tmtpost.com.

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