China will dramatically step up its crackdown on web content to include censorship of feature films streamed online in a raft of tough new rules that until now mostly had been aimed at overseas TV dramas.

Until late last year, online video sites largely were self-censoring, but the government is cracking down hard on pornography, violence or anything that might challenge the authority of the ruling Communist Party, and Hollywood movies are the next target of the campaign.

“We are at an early stage in this process,” said an industry source at the Berlin International Film Festival. “The government is planning to extend the censorship rules to include movies next, after imposing restrictions on TV dramas.”



Read MoreChina Censor Orders 'Agent Carter,' 'Empire' Taken Down From Streaming Sites

China is the world’s second-biggest film market, and Hollywood studios have started reaping profits from selling content to sites such as Youku Tudou, Baidu’s iQIYI, Sohu.com and Tencent. But negotiating its regulatory environment can be tricky, and censorship of movies online would make the market more challenging.

“It probably wouldn’t be a huge problem if some scenes of sex or violence were cut,” said one leading U.S. sales agent, “but if scenes started to be rearranged, or there were other wholesale changes, watch out.”

There are fears that increased censorship also could encourage more piracy, and could give domestic movies, which have to go through the censorship process very early on, an advantage.

“The government wants to make sure it has oversight over all content that is shown online, and it was always obvious that they would extend the crackdown on TV dramas to features,” said the source.



Read MoreChina Widens Online TV Censorship Rules To Include Hong Kong Shows

Last week there were reports that the rules had been extended to include Hong Kong TV shows.

April 1 is a key date, as that is when the new rules come into play, and more details about the restrictions are expected to emerge in the coming weeks.

Story continues

Marc Ganis, whose Jiaflix outfit has teamed with the China Movie Channel’s streaming movie website M1905 to stream international feature films, confirms that China’s State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) likely will become more active in regulating the digital distribution of video content, including???movies.

“They’ve started now with television shows; movies are on the horizon,” Ganis tells THR.

In September, SAPPRFT announced it must OK all foreign TV shows before they can be posted on video sites, and producers must present the whole season for approval before it can be screened.

The TV rules mean shows like Game of Thrones, The Newsroom and Band of Brothers could face delays of up to nine months before being???broadcast.

Jean Prewitt, president and CEO of the Independent Film & Television Alliance, says the size of China’s massive market makes it “essential” for the success of the independent film and TV industries. “China has not yet eliminated historical barriers for imported films, but television opportunities have existed,” says Prewitt. “Any steps to create new barriers through censorship or other regulations seriously threaten the ability of independents to access distribution opportunities. IFTA strongly advocates that all trade barriers be eliminated including expanded and unwarranted censorship regulations.”

>

??