Regulators are restricting video websites' content from TV set-top boxes. Han Bingbin reports.

The country's top media regulator has taken its firmest steps yet to restrict streamed content from reaching TV set-top boxes.

The State Administration of Press, Publication, Radio, Film and Television last week required streaming sites, such as Sohu and iQiyi, to remove apps that viewers can download to the boxes to access content and watch them on TV screens.

Video streaming of entertainment programs on electronic devices is very popular among Chinese viewers. Provided to China Daily

Video streaming websites have dominated the market for shows and films viewed on computers and mobile devices.

They offer over 450 million viewers a variety of programs, ranging from local entertainment shows to foreign TV series.

The regulator has since 2011 required set-top boxes to be allowed to only access licensed content through designated content providers, such as China Network Television, Shanghai-based BesTV and Hangzhou-based Wasu Media & Network Co.

Currently, 14 enterprises are registered to provide content, but only seven have the authority to run the boxes.

The administration is expected to inspect the apps this week.

Streaming websites that are found to have not removed their apps will reportedly have their operating licenses revoked.

They'll no longer be allowed to license overseas programs or produce their own, which they previously could.

Leading streaming sites like Youku, iQiyi and Tencent Video have all announced the termination of their third-party video services in set-top boxes in response to the new restriction.

China's Internet TV market was expected to reach $1.38 billion in 2016, according to a study by the consultancy Digital TV Research.

"But (the restriction) will have a huge impact on the streaming sites," says Pang Yiming, an analyst with the Beijing-based consultancy Analysys International.

"All they've been working on has been overturned."

Many have speculated one reason for the move is to protect traditional TV channels.

But a more conspicuous motivation is that it'll enable the administration to more closely monitor content.

In June, the regulator warned seven Internet TV license holders that it might revoke their licenses because they allowed unapproved access to streaming sites to provide content it found either obscene or detrimental to political stability.

But the regulator obviously doesn't want to kill the streaming sites.

It hopes to establish clear rules and have the ultimate say over content sources so it can draft the Internet TV industry's developmental blueprint, says Wu Chunyong, a veteran industry analyst and editor-in-chief of IT portal Dwrh.net.

"The only way out for streaming sites now is to play by the rules and work with content providers," he says.

Rather than using their own apps, streaming sites should now work with licensed content providers to gain access to set-top boxes. This may be done, for example, by sharing with license holders the profits that come from advertisements or fees paid by viewers.

Given that the administration encourages broadcasters at and above the provincial level to apply for content-providing licenses, the number of legal content providers can be expected to reach as many as 40 in the near future, Wu says.

The expected competition among providers will likely blunt the costs streaming sites pay to upload programs through providers, Wu says.

LeTV.com, for example, is reportedly teaming up with Chongqing TV, which is planning to apply for a content-providing license. LeTV.com was among the first streaming sites to enter the set-top box market and previously launched its own namesake Internet TV set by working with license holder China Network Television.

But it was specifically named by the administration for carrying such illegal content as unlicensed programs and illegal preset streaming channels.

The new business model will mean more responsibility for content-license holders.

Previously, they made money from allowing third-party apps to be installed onto set-top boxes without checking the content, an anonymous industry insider told China Business News. But with the new restriction, licensed content providers will have to supervise what's coming in as technically being their own content, rather than the streaming sites'.

Meanwhile, new opportunities are opening up for these licenses holders, most of which are traditional broadcasters and media companies.

As third-party apps are shut out, license holders are being encouraged to develop their own content rather than just getting it from streaming sites.

Wasu Media &Network Co will invest in a number of production companies to widen its program sources, Southern Metropolis Daily reports.

In May, it invested an additional 100 million yuan in Tangren Media, one of China's most prolific producers of costume dramas.

By reaching an agreement with 21st Century Fox on copyright cooperation in TV series, Shanghai Media Group subsidiary BesTV has forged partnerships with Hollywood's six leading production houses, including Universal, Disney and Paramount, from which it can license programs.

This will affect streaming sites to some extent, but the impact isn't expected to be vast, Wu says.

According to a report by IT portal Zhongguancun On Line, streaming sites like PPS and PPTV have more than 5,000 movies, while most of China's Internet TV license holders lack content.

So, for the moment at least, until their investments and tie-ups with production houses come onstream, licensed providers will have to rely on streaming sites' content, Wu says.

Contact the writer at hanbingbin@chinadaily.com.cn.

He Wei contributed to this story.

(China Daily USA 09/25/2014 page9)