Alibaba Group and Yunfeng Capital, the venture capital firm co-founded by Alibaba founder Jack Ma, have bought USD1.22 billion worth of shares in Chinese online video service Youku-Tudou.
Alibaba thus has had 16.5% stake in one of the largest online video platforms and Yunfeng holds 2%. Jonathan Lu (aka. Lu Zhaoxi), CEO of Alibaba Group, will join Youku-Tudou’s board.
Youku-Tudou reportedly was earlier in talks with other Chinese Internet giants including Tencent on similar investment deals. After a wave of consolidation in China’s online video market, the few existing ones, with a majority of content overlapped with each other and advertising as a major revenue source, now are figuring ways, such as producing original content, to differentiate from competitors or keep up growth rates. LeTV has become a well-known smart TV brand that hopefully will convert its online video users to smart device consumers, or vice versa. iQiyi has introduced investment from Chinese search giant Baidu who has been channeling search traffic to it. iQiyi bought a lot of exclusive content this year so that, as reported, metrics will look better when it launches the expected IPO. Youku-Tudou, although having been one of the leading players, doesn’t seem to have big edge over others. It is reported that Tencent offered up the access to WeChat users, but it turns out Youku chose cash instead.
Online video platform is one of the few Internet service categories Alibaba Group hasn’t tapped into. Over the past couple of years Alibaba has bought its way into various sectors outside e-commerce, having invested in microblogging service Sina Weibo, mapping service AutoNavi, digital content provider ChinaVision and a few others. The company has just established a mobile search company, as announced today, together with UC Web, a mobile browser and service provider Alibaba also has a stake in.