A multi-billion dollar so much bigger than its European counterpart, China's online video sector operates with a different business model. Although the market is saturated by Chinese companies, Jiaflix, a U.S. company, is getting ahead of the competition.
Jiaflix Enterprises uses a business model which is a hybrid of Netflix subscription model and transaction-based on-demand service. Compared to Youku Tudou, LeVision and iQiyi, China's firms generating income trough advertising, Jiaflix's business model makes it smaller albeit more specialized.
Marc Ganis, Jiaflix president, stated that Jiaflix's incomes are currently in the low tens of millions, but overall, the company is growing significantly.
Ganis said: "We have great relationships with the Hollywood studios and a joint venture relationship with M1905, the online arm of China Central Television's Movie Channel. M1905 has digital rights to more than 7,000 Chinese movies and strong relationships with Chinese producers. That makes us a one-stop location for Chinese and international movies."
Ganis stated that Jiaflix's services are cost-effective, requiring a monthly subscription fee of only RMB30 ($4.90) per month and only RMB20 ($3.25) a month at the beginning. Ganis explained that the low price is to encourage the Chinese audience to get into the habit of paying for movies online.