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.

Dr. Gang Lu - Founder of TechNode. He's a Blogger, a Geek, a PhD and a Speaker, with passion in Tech, Internet and R'N'R.

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  1. I wouldn't agree with the statement “Chinese video-sharing market, started with +200 copycats of Youtube”. Sure there are copycats of Youtube, but not all of them. I definitely don't know all those sites and will not comment. The one I like most, tudou.com, is not a copycat of Youtube. It was launched about the same time as Youtube, in February 2005. So how can it copy Youtube if Youtube was not even launched. I actually like Tudou better than Youtube because it has much better UI and its playlists are much easier to follow.It is a fact that there are copycats in China of Youtube, Facebook and twitter. But the real winners have their own characteristics or are not copycats at all. Using the word “+200 copycats” doesn't seem appropriate to me and gives people the impression that Chinese web is full of copycats.

  2. Thanks for the comments, Angela.1. If you were watching chinese web closely since ~2005 when youtube started hitting the industry, you would understand saying +200 video-sharing copycats make some sense. There were many many small sites trying online video-sharing in the year of 2005,2006…. Most of them were dead quietly even before they got recognized..2. Tudou, is my favorite one too and i know it is launched at almost the same time as Youtube. But I dont want to argue with you if it is copycat or not which i think does not really matter any more since all these existing sites are walking on their ways.3. If you read through my blog and my writing, I hope you can understand more about my opinion: a). there were/are many copycats in China. b). Chinese web is young still and in its own learning curve, copying other successful model does not simply mean a Bad thing. c). I always tell people to see Chinese web from different angles: Chinese web is evolving, from copy-2-china to localized-in-china to innovated-in-china..

  3. thanks for the reply. I agree and understand that there are many copycats in China. I didn't watch the evolve of video sites, but am recently paying attention to twitter-like sites in China and saw many versions of them. Agree with your opinion: localize and innovate-in- China makes real difference.

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