Ever since Walt Disney Co. brought its Magic Kingdom empire into the Middle Kingdom with the 2005 opening of a Hong Kong theme park, the company has been flooding China with its brand through TV shows, movies, theater productions and merchandise. But Disney's characters are far from household names in China, partly because of the government's tight grip on media.
Steamboat Ventures, established a few years ago to invest on behalf of Disney, is working behind the scenes with some big players in the world's second-largest Internet market. The Burbank, California, firm opened a Hong Kong office last year and has since taken stakes in three Chinese start-ups with a strong presence in Internet broadcasting. China had 137 million Internet users last year, according to the quasi-governmental organization China Internet Network Information Centre, and a large number of those eyeballs are turning to Internet television for programming not offered on local TV.
Last week Steamboat invested alongside Silicon Valley firms Draper Fisher Jurvetson and Sequoia Capital in CTS Media, a Shanghai-based company that inserts advertisements into streaming online video.
CTS is the exclusive advertising platform provider to Internet TV provider BestTV. Disney and several other studios reportedly have inked a deal with BestTV to distribute movies through a video-on-demand platform in development. That would be a boon for U.S. studios, which are eager to create a new channel for legal film distribution in China.
Steamboat also put money into video-sharing Web site 56.com in December, and in March it invested with Draper Fisher and Sequoia in UUSee, China's largest Web TV operator with more than 36 million registered users. Importantly, UUSee is the only peer-to-peer network approved by China, and it distributes programming from state-run CCTV.