2012 was an eventful year for the online video industry. Major happenings shook the industry. First of all, copyright fee for contents has came down to a more rational level. Secondly, the merger between Youku and Tudou, the leaders in the industry, has shocked the whole internet community. Thirdly, the entry of internet giant Tencent has made others quiver. Fourthly, a copyright procurement alliance was established between Sohu video, Tencent video and iQIYI. Last but not least, iQIYI sold shares to Baidu, the Chinese searching giant.

After several rounds of market reshuffle, only a few rich and powerful players survive in the online video market, including Youku Tudou, Sohu video, Tencent video, iQIYI, Letv. All in all, the industry has become more concentrated in 2012, which means the competition will be more fierce in the future.

Sohu video is very good at sailing with the wind in the online video sector, as it always take the suitable action at the appropriate time. This is the reason why it has dealt deftly with issues such as copyright protection and rising fees for films and television series when the arose. Sohu is also the industry leader in importing U.S. Television series.

sohu TV promoting TBBT on its website

For 2012, Sohu attracted users through monopoly resources, as it developed and implemented a offensive strategy that emphasized on spending money to purchase TV drama with exclusive licenses. While its strategies are effective, Sohu has yet to catch Youku, the market leader.

From the perspective of Deng Ye, CEO of Sohu video, Sohu has made progress in the past year by seizing a decent market share and expanding user base, which makes Sohu well prepared in terms of capital and content to fight with its rivals in the upcoming year.

For next year, copyright will still be deciding factor. According to Mr. Deng copyright cost has been and will be the largest expenditure of online video services. Even though Sohu has adjusted its copyright strategy to spend the money more effectively, copyright expenditure of Sohu in 2012 was still 50 million dollars.

To move up the ladder, Mr. Deng wants Sohu to spend money more wisely. In 2013, as the copyright price declines further, Sohu will implement a defensive strategy to reduce the purchasing quantity, deemphasize the exclusive drama, and agree to exchange content. The establishment of the copyright procurement alliance along with Tencent and iQIYI is part of this strategy.

With the money saved, Sohu can begin to put more emphasis on user loyalty and brand differentiation. Besides the exclusive drama, Sohu wants to differentiate itself from other competitors through self produced drama. To that end, Sohu has made investments in multiple films and television series. In addition, Sohu also launched a dedicated America TV series channel to enhance one of its strong suites.

Right now, Sohu ranks second in terms of unique visitor, playbacks, and visiting duration. WIth plans to leverage and integrate resources within the Sohu group and with a new strategy in hand, Sohu hopes the additional competitive advantage with catapult the company into the number one spot.