Rather than using their own apps, streaming sites should now work with licensed content providers to gain access to set-top boxes. This may be done, for example, by sharing with license holders the profits that come from advertisements or fees paid by viewers.

Given that the administration encourages broadcasters at and above the provincial level to apply for content-providing licenses, the number of legal content providers can be expected to reach as many as 40 in the near future, Wu says.

The expected competition among providers will likely blunt the costs streaming sites pay to upload programs through providers, Wu says.

LeTV.com, for example, is reportedly teaming up with Chongqing TV, which is planning to apply for a content-providing license. LeTV.com was among the first streaming sites to enter the set-top box market and previously launched its own namesake Internet TV set by working with license holder China Network Television.

But it was specifically named by the administration for carrying such illegal content as unlicensed programs and illegal preset streaming channels.

The new business model will mean more responsibility for content-license holders.

Previously, they made money from allowing third-party apps to be installed onto set-top boxes without checking the content, an anonymous industry insider told China Business News. But with the new restriction, licensed content providers will have to supervise what's coming in as technically being their own content, rather than the streaming sites'.