The shift to digital is not a new topic in the United States, with mobile devices, cord cutting, and OTT usage changing the way consumers interact with content. However, China has also quietly been working through a massive digital transformation, creating the largest digital content consumption economy in the world.

China has more than 400 million TV households, which makes it the largest market for traditional TV viewership in the world. From a raw numbers standpoint, China still dwarfs other countries, with over 250 million pay-TV subscription households (for context, the United States has fewer than 100 million pay-TV subscription households). However, Chinese video consumption habits are rapidly changing, dramatically shifting the ecosystem away from live linear programming and towards mobile and digital devices at an unmatched scale.

The Chinese government has invested considerable resources to bring broadband internet access to the masses. Most urban areas have extensive coverage, but China's digital infrastructure is not capable of reaching much of the rural population. As a result, the rural areas still rely on traditional over the air and satellite TV for entertainment, maintaining the audience size for these platforms until the infrastructure catches up and allows for the digital transformation to reach them.

Chinese adults are projected to consume over half of their major media via digital devices this year, while TV consumption time continues to fall. As the gap in platform consumption time continues to widen, more Chinese companies will look for additional content to attract and keep users on their sites. Licensed popular shows and formats and original programming are ways digital sites are attracting audiences in an increasingly fragmented online video market. In the United States, users have a handful of major digital content sites, such as YouTube, Netflix, Hulu, and Amazon Prime. In China, there are many sites that each try to differentiate themselves in terms of quality and content, with subscription fees that are much lower than we are used to the U.S. Alibaba's recently completed acquisition of streaming site Youku Tudou for around $4 billion demonstrates the growth potential and value of the Chinese online video industry.

The gaming industry also has a big stake in the shift to digital, as the 2015 Chinese domestic mobile gaming industry was pegged around $5.5 billion and growing. Online live streaming of video games, including eSports, is an industry that has great potential. Douyu TV, China's version of Twitch, recently closed a $100 million round of funding led by Tencent, reportedly valuing the company at over $1 billion.

China's focus on media and entertainment includes investment domestically and internationally. Virtual reality and augmented reality are new areas that have seen Chinese investment, capitalizing on the future of digital consumption. As smartphone and broadband internet penetration rates continue to climb, digital platforms will continue to see high growth. China's unique opportunities for scale mean that they will have a key position of influence in content creation and distribution for the foreseeable future with its digitally savvy consumer population of over 1.3 billion people.