Online video battle heating up in China

06 January 2012

BEIJING: Competition is heating up in the Chinese online video sector, as sites like Youku and Tudou battle to attract members of the country's burgeoning internet audience.

CMM Intelligence, the insights provider, reported that 394m people watched this kind of content in 2011, measured against the figure of 284m recorded in 2010.

Looking ahead, the organisation predicted some 445m netizens may watch online video in 2012, as the internet population expands and consumer habits change.

Youku is one of the main video platforms in China, boasting 200m visitors per month, while Tudou has 90m registered users, according to company data.

In a bid to enhance its position, Youku has partnered with China Telecom, the wireless network, to show video on mobile phones, and previously struck a deal with DreamWorks, the movie studio, to stream the Kung-Fu Panda films on its paid-for service.

Tudou recently announced a tie-up with TV Tokyo Corporation to offer animated shows on the web only 60 minutes after they have been broadcast in Japan.

At present, the two firms are locked in legal disputes. Youku has accused Tudou of "stealing" 60 of its programmes, while Tudou claimed Youku abused its exclusive rights to the series "Kangxi Has Come".

"Tudou is playing games," said Jean Shao, a Youku spokeswoman. Gary Wang, Tudou's CEO, argued: "Youku think they can live on free traffic without paying for the content, and they are trying to hide the fact that they are actually not as competitive as they pretend to be."

State broadcaster CCTV is also making moves in the web video arena, while the Discovery Channel and MTV, both owned by Viacom, have formed a tie-up with Baidu, the search engine operator.

"Everybody is shooting for that golden demographic - the young people who are just out of school, have a lot of disposable income and that watch online video instead of television," David Wolf, chairman of Wolf Group Asia, the consultancy, told the AP.

"We all know it's taking place but nobody wants to go out and publicise the data. The online video guys are terrified that if there are statistics that show the 'golden demographic' dropping TV to watch online video, then the government is going to come after them."

Analysys International, the research group, valued total internet video revenues at $238m during the first three quarters of last year. Youku took 25.6% of the market, with Tudou on 14.5%.

Data sourced from AP/Business Week; additional content by Warc staff