Youku Launches Individual Channels. Chinese Video Sites Seek Diversity

Youku-Tudou, one of the biggest online video streaming services in China, just launched Individual Channels. The platform has been open to user-generated videos and announced a revenue-sharing plan in June of last year. This time it will offer Individual Channel owners tools to better show their videos, manage their followers and analyze metrics.

After a round of consolidation, including Youku’s merging Tudou, a handful of online video services stood out. But their business model has been pretty much the same: rolling ads on videos they have bought or originally produced, and collecting subscription fees. A majority of video content on different sites are the same. A very small percentage are self-produced by those services and few has gained much attraction like some Netflix-produced series — small money when it comes to advertising or content distribution. To drive traffic, each video site has bought a few exclusive rights to existing popular TV programs. Subscription renvenue are not meaningful either.

Youku- Tudou managed to turn first quarterly profit in Q4 2013. But the pre-roll, mid-roll and post-roll video ads on Youku are terribly annoying to many Chinese users.

Everyone can sense that there needs a change. The latest rumor is that Sohu’s video business and Tencent’s would like to merge. But Charles Zhang, CEO of Sohu, denied it today.

Some have figured out their own ways. iQiyi ranks high in Baidu search results as it has had the Chinese search giant as its controlling shareholder. LeTV now is way more than an online video streaming service that has been making money from content distribution, Smart TV/set-top box sales, among others.

Youku-Tudou is still one of the first choices whenever Chinese users want to upload videos. It is estimated that roughly half of Youku’s traffic was from user-generated videos which don’t generate advertising revenues proportionally while consume much bandwidth. The Individual Channels program may be able to attract good content producers that will bring meaningful revenues for Youku. And now is a good time as micro-film just took off in China.