In the VC panel of Paypal X China event a few days ago, we were discussing the monetization of web service with four famous VC panelists from Qiming, Gobi, RedPoint and Lightspeed. As the moderator I threw the question to four VCs: How do you think of Chinese online video-sharing market? Some are optimistic, some are a bit not. Looking back this market in 2009, a completely different story compared with several years ago when +200 similar sites co-existed.
Acquisition – the happy ending
You have to say sometime it’s better not to be the No.1. Ku6, the leading video-sharing site (but seems not as popular as Youku and Tudou) was reported its acquisition by Hurray, the subsidiary company of Shanda (Nasdaq: SNDA), the Shanghai-based leading online game development and operation company. The new company formed by the merge between Hurray and Ku6 will hold USD 160 million in cash assets and the founder and CEO of Ku6, Li Shanyou will serve as the CEO of the new company. RMB300 millions are ready for 2010, 1/3 for copyright content, 1/3 for service integration and the rest for the cost of bandwidth. I guess it is a happy ending because it is also reported that Ku6 might run out of cash before the acquisition.
The 5th round of investment – fight for IPO
Although Youku says its revenue in 2009 has reached RMB200 million, it still needs more cash. Youku has recently announced its 5th round of investment from Brookside Capital, Maverick Capital and Sutterhill Venture, this time the figure is set to USD40 million. Victor Gu, the founder and CEO of Youku believes his company could break even in 2010 and he is also expecting that in next 18 months we would see one leading company goes IPO.
Content is the key – believe what should be believed
A friend told me the first company Shanda contacted was actually Tudou, not Ku6; another rumor also said Tudou will soon secure its 5th round investment worths USD40 million too; and Gary Wang, also denied the rumor that Tudou planned to go IPO by end of 2010. Tudou will continue to focus on its video content and promises RMB100 million to be spent on copyright content in 2010.
Portal’s power – everyone wants more share
Gary of Tudou was asked by an audience for his opinion on the debate of who’s the No.1 video-sharing in China (Youku or Tudou) in Shanghai Lunch2.0 event a few months ago. He said, he does not really care about it. But if he has to point out who are the real competitors, he thought they would be the portals, such as Sohu, Tencent etc. “They will keep low key until we found a good revenue model for video-sharing”, Gary said.
It seems that Sohu is the first which believes the time (for more share on video-sharing market) is coming. No surprise, the battle field of this war between portals and independent sites are on the copyright of video content. The ‘description’ meta tag of Sohu’s video site clearly shows its ambition and also the strategy: Sohu Video, the largest online video site with copyright content. Obviously, Sohu as the leading Chinese portal, has much better cash flow for buying copyright content. Early this month, Sohu won a copyright infringement lawsuit against Youku.
It’s a show just started. How and when other portals such as Sina, Tencent will join the war, we will find out the answer probably very soon.
State-run online video service – the good or bad news
Although the online video market is highly regulated in China. But if it is a huge and super-hot market, everyone wants a share. Portals are there for a while and now some state-run traditional tv/video services want to follow as well. The very latest news is from CCTV which has just announced its own online video site: CNTV (China Net TV). Now CNTV has News, Sports and Entertainment Channel, and all content are copyrighted. It also offers video-sharing and video-on-demand service. The spokesman said, more channels will be launched early next year including Finance, Movie, Music, TV Series, Health etc. With the support of CCTV networks, CNTV’s service will be integrated with IPTV, Mobile TV and so on, and will be multi-language serving global audience.
And CCTV is not the only one. Early this month, another very popular local TV operator, Hunan TV has announced its new online video site where all Hunan TV’s content will be available.
Where is the way out?
Chinese video-sharing market, started with +200 copycats of Youtube, now becomes a completely different story. Independent sites, portals, industry leaders, venture capitals, state-run TV stations, government are all involved. 2010, for Chinese online video-sharing, will not be quiet; more breaking news might come out; another battle field, the mobile market has emerged too. There is no way I can draw the conclusion here, but let’s end with a comment from a friend, a normal netizen:
As long as I can find good content online for Free, who cares about who are the leaders.