Sina Invests US$40m in Tudou for 4% Share

Since online video site, Tudou, just went public only just last week, they have already attracted a US$40m investment from Sina for 4%. It is believed that Tudou will remain independent but it is speculated that Tudou will eventually operate Sina’s video platform since video makes up a small portion of Sina’s business.

Perhaps, Sina has felt pressure to react to rumours that Tencent has its eyes set upon the leading video site, Youku. CEO, Jiang Lan of Share Media, a video advertising agency believes that Sina chose to invest in Tudou due to its low valuation, where it trades at less than 25% of Youku’s valuation but still holds the number 2 position.  But already their investment has lost US$550 million in value after Tudou shares dropped 7.54% and closed last Friday, US time at US$19.24.

Sina CEO, Charles Chao has announced that video will become a part of Sina’s “total media platform,” and become an important part of the overall revenue model. In the second quarter, Sina video advertising revenue grew 110% year on year.