In this undated photo, a passenger watches a TV show on a laptop during a high-speed train ride from Shanghai to Beijing. (PHOTO / CHINA NEWS SERVICE)

With cinemas across China still struggling to make ends meet amid orderly closures, video-streaming platforms are seeing soaring traffic and revenue.

According to industry researcher Endata, video-streaming platforms have seen a surging number of daily active users and total visits in the first quarter, spurred by increasing need for online entertainment from audiences under quarantine or those practicing social distancing amid the coronavirus pandemic.

Web series, which help attract traffic to video-streaming platforms, saw increase in views of 9 percent year-on-year in the first quarter, Endata said.

Web series accounted for about 73 percent of the total series that were newly displayed on video-streaming platforms in the first three months, up 10 percentage points compared with the same period last year, according to the report.

Video-streaming platforms cannot only make money from subscriptions, but they can also attract more advertisers and partners like game operators and e-commerce plays as they can design pop-up windows linking to games and online retailers that are relevant to products appearing in videos

Zhou Xuan, Director of the Chinese Film & Television Industry Research Center at the University of International Business and Economics

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Average daily viewership for 26 web films released online during the extended Spring Festival holiday also surged 100 percent year-on-year, according to a report by box office tracker Maoyan.

Industry researcher QuestMobile said the average number of daily active users for video-streaming platforms hit 310 million over the Spring Festival holiday (from Jan 24 to Feb 2), 7.3 percent higher compared with last year's Spring Festival holiday.

Video-streaming platforms were even busier as more new films abandoned theatrical releases and turned to online displays amid widespread cinema shutdowns.

On Jan 24, Lost in Russia became the first feature film to switch from theatrical release to online display. The film was purchased by Byte-Dance for 630 million yuan (US$88.96 million) and was provided free for viewing on ByteDance platforms, including Toutiao and TikTok.

Within three days following the film's web debut, total displays surpassed 600 million.

Other films, including Enter the Fat Dragon and The Winners, also debuted online.

While film producers are making money, cinema owners are not happy about the cancellation of theatrical releases.

"The situation (films withdrawing cinema releases and opting to launch online) dealt another blow to cinemas. Even if cinemas open for business, they will find it hard to attract audiences if more films－especially those with high audience expectations－go online," said Wang Zheng, general manager of Mianyang Zhonghuan Culture Communications, a company that owns eight cinemas and manages 22 others across China.

"Currently cinema owners like us are already facing cash flow challenges with little revenue coming in and continuous expenses for rent, equipment and staff," Wang said.

Many entertainment companies whose main business is cinema operations expect to register a loss for the first quarter.

Wanda Film lost about 600 million yuan in the first quarter, the company said, adding that cinema shutdowns and delayed film releases were the main reasons of the loss.

Huayi Brothers reported a loss of over 143 million yuan in the first quarter. Another cinema chain－Guangzhou Jinyi Media Corp－announced losses of 153 million yuan in the first quarter.

Both Wanda and Huayi have announced plans to boost development of online businesses. Wanda said in its 2019 financial report that the company has included online games into its major business sector, while Huayi predicted that its online businesses would see rapid growth in the first quarter.

The influx of users who spent more time on video-streaming platforms has led to revenue growth for operators, said Zhou Xuan, director of the Chinese Film & Television Industry Research Center at the University of International Business and Economics.

"Traffic to websites means money. Video-streaming platforms cannot only make money from subscriptions, but they can also attract more advertisers and partners like game operators and e-commerce plays as they can design pop-up windows linking to games and online retailers that are relevant to products appearing in videos," Zhou said.

Mango Excellent Media Co Ltd expected its profit to reach 430 million to 490 million yuan in the first quarter, up 2.89 to 17.24 percent year-on-year, thanks to its major video-streaming platform Mango TV, the company said.

Although the big three－Tencent, iQiyi and Youku－have not released first quarter performance data, industry estimates from CSC Financial said that in general, videostreaming platforms are likely to see revenue growth in the first quarter, spurred by increasing viewer demand from a larger audience base.

To better attract audiences, videostreaming platforms are adopting cutting-edge technologies such as virtual reality to provide viewers with more interactive involvement.

For example, in the New House Guest Report VR, a spinoff of popular sitcom iPartment, audiences can visit the apartment by scrolling on iQiyi's VR app and VR devices. iPartment also adopted game elements in a recent episode in which audiences can create their own endings by clicking different choices at certain points of the story.

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Organizers of the 32nd Flying Apsaras Awards, given by the government to the top Chinese TV dramas, said in April that awards would be given to outstanding TV series broadcast on Chinese TV channels or major online streaming platforms. This marks the first time that web series will be considered.

But not all web series will be eligible for consideration. Organizers said all candidates, whether broadcast on TV or streamed online, must have TV broadcast permits, which have high production standards.

"Nevertheless, this is a very positive signal for web series producers and video-streaming platforms. The industry has a very promising future," Zhou said.