A boy checks out iQiyi video content at an international copyright fair in Beijing. [Photo by Da Wei / For China Daily]

China's streaming websites convincing millions to outlay cash for exclusive, high-quality shows free of ads

In China, as pay-to-watch is becoming popular online, the days of free online entertainment supported by advertising may be numbered.

Chinese audiences are becoming accustomed to paying for a variety of membership packages offered by iQiyi, Youku Tudou Inc, Tencent Holdings Ltd and LeEco Holdings Ltd to watch popular dramas and other content online.

"The two barriers to paid online viewing - rampant piracy and lack of payment systems - no longer exist. The fee-based online viewing business has entered a phase of rapid development," says Yang Xianghua, senior vice-president of iQiyi.

In June 2015, iQiyi had 5 million paying users. By December, the number had doubled to 10 million, constituting 2 percent of total viewers.

It has grown since. By the end of March, iQiyi was targeting 60 million, or 10 percent of its current viewers, for pay services, according to Yang.

"So, we've made a large investment in technology and content. For example, we purchased a great number of high-quality films and TV dramas," Yang says.

According to a report by iResearch Consulting Group, the number of paying viewers last year soared 264 percent to 28.8 million, and it is expected to reach 54.4 million this year.

Revenue from online viewing memberships jumped from 1.39 billion yuan ($214.6 million; 188.7 million euros) in 2014 to 5.13 billion yuan in 2015, up 270 percent. The next couple of years will see continued rapid growth in revenues, which some predict will reach 18.79 billion yuan in 2018.

However, the penetration rate of paid users is still low, at 5.7 percent, suggesting the potential for development is huge.

It's huge because the quality and popularity of TV dramas, including foreign shows, have improved, bringing about a sharp rise in paying viewers in China. For instance, Descendants of the Sun, a South Korean TV drama, is attracting a huge number of Chinese eyeballs.

The 16-episode love drama between a United Nations peacekeeping troop captain and a volunteer doctor in a fictional war-torn country is now airing on iQiyi at 9 pm every Wednesday and Thursday, the same time it's on South Korea's KBS.

IQiyi claims there had been more than 1.2 billion views of the series by March 25. Its VIP membership is ad-free and two episodes ahead of free users. It is priced at 19.8 yuan per month, 58 yuan per quarter or 198 yuan per year.

South Korea's Yonhap News Agency reported the number of iQiyi's paying users rose by 50 percent to at least 15 million after the netcast began. This suggests the website's revenue may have received a boost of no less than 190 million yuan.