Chinese Video Site, Xunlei To Go IPO on Nasdaq

The plethora of web services that offer high quality video streaming is rapidly growing. With a lack luster choice of good entertainment content on TV, people are quickly realizing how good it is to simply go online and watch whatever you want, when you want. I’ve personally used Xunlei and am impressed with the speed and quality of video streaming.

Going IPO

Shenzhen Xunlei Network Technology Ltd, the Chinese video and music file-sharing company partly owned by Google Inc, is planning to raise about US$200 million in an initial public offering in the United States in the next few months.

As we just reported, now is probably the best time to go IPO in the US where already in the first half of this year, seven Chinese companies raised a total of $1.333 billion, accounting for 80 percent of all money raised by Chinese listings in the U.S. Timing is also critical because wide public perception senses the valuation bubble growing dangerously fast.

Plagued with piracy and copyright issues

However like many other content sites in China like Baidu, they are being plagued by accusations of piracy. The Motion Picture Association of America, in 2008 filed a civil complaint against Xunlei in Shanghai Pudong District Court for enabling piracy of movies including Spider Man 3. Due to mounting pressure from overseas and the government, Xunlei is moving towards more legitimate and licensed content.

A leader in consumer internet platform for digital media content in China

According to its SEC filing, the key advantage Xunlei claims to have is its proprietary, digital media indexing technology and a massively distributed computing network.

Based on the number of software launches Xunlei claims to have 78.7% market share in China as of February 2011. These downloads are available to internet users free of charge. Their streaming service called Xunlei Kankan is currently the 3rd largest streaming portal in China.

Revenue growth of 59.7%

Xunlei generates revenue from multiple sources including cloud-based subscription services, online advertising, and other services. By the end of March 2011, they had developed over 1.3 million subscribers from the large user base of Xunlei Downloader and Xunlei Kankan.

Revenues increased from US$16.8 million in 2008 to US$29.6 million in 2009 and to US$42.8 million in 2010, representing a compound annual growth rate, or CAGR, of 59.7%