HONG KONG (MarketWatch) –- New broadcast regulations that ban commercial breaks from television dramas could dampen the fortunes of Chinese television broadcasters, but may add up to a boon for online video-streaming sites and other new media, according to analysts.

From the start of next year, television dramas — including wartime historical pieces and other audience favorites — must be aired without interruption, under the policy unveiled Monday.

Instead, the regulations relegate commercials to periods between program changeovers, bringing China into line with existing policies in South Korea and for the U.K. state broadcaster BBC.

Analysts say the fallout of a major rule change on the world's most populous television market is hard to measure, though one consequence could be an exodus of ad revenue in search of new ways of connecting with consumers.

"Customers [who advertise on television] will seek other advertising channels, such as online video and Internet advertising," Deloitte Touche Tohmatsu Ltd.'s China analyst William Chou said.

Advertisers will likely take a skeptical view of the effectiveness of television-commercial branding under the new system, as viewers would be expected to flip channels or alter their viewing habits so as to avoid ad clusters.

"The impact to the audience is different," Chou said. "The commercials in-between the shows are less valuable rather than within the show."

Chou said one estimate currently being circuited put the annual loss of revenue for each mainland Chinese broadcaster as high as 20%, or potentially as high as 20 billion yuan ($3.13 billion) annually on an industry-wide basis.

Protecting the plot

The new regulations were officially unveiled Monday by the State Administration of Radio, Film and Television (Sarft), with a Sarft spokesman quoted by the state-run Xinhua news agency as saying stripping out the ads "can effectively ensure the integrity and coherence of the TV plots and conform to the public interests and aspirations."

The plans for the new rules came to light earlier this year, with Monday's statement filling in the details, including the start date for the regulations.

Media Partners Asia's vice presidsent of content Mike Savage said in Hong Kong that the move comes amid fierce competition by marketers to reach consumers via television.

"There are more and more brands coming onto the market, [so] it's a case where demand outstrips supply," Savage said.

He said prices for TV ads, already inflating at a rapid clip ahead of the announcement, could shoot higher as international brands vie for the few time slots likely to be remain desirable.

And despite the loss forecasts, Savage doesn't view the new regulations as too harmful for the broadcasters, saying television remains "irreplaceable" as a medium to reach a mass audience in the eyes of marketers.

"I don't think we are going to see a major turn of spending away from TV," he said.

Changes sparked could include shorter programs and content adjustments as "stations are going to do what they can to hold onto the share of [ad] budgets," said Savage.

Plan backfired?

Deloitte's Chou expects broadcasters to hike their ad rates in what he sees as an ill-fated effort to offset declining revenues.

The move, he said, would likely backfire by pushing clients towards more affordable ad rates offered in online media.

Among the likely winners, he cites video-streaming sites, such as New York-listed Youku.com YOKU +1.65% and privately held Tudou.com.

If the new rules do hurt China's broadcasters, it would mark an ironic outcome for moves originally meant to help state-controlled television get a leg up.

Chou said the central government had likely been seeking to boost the appeal of television as popular entertainment, amid signs it was been losing out to ad-free video streaming sites.

China's television broadcasters are closely aligned with the central government, often operating under direct or arms-length control of the ruling Communist Party.

But in any event, many analysts are skeptical that traditional television can keep up with online media where viewers have more freedom to choose what they want to watch.

Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.