Alibaba is recording another milestone in the construction of their entertainment empire. China’s top video service Youku Tudou Inc. announced Tuesday that it has completed privatization after a six-year run on NYSE, which means the site has become a wholly-owned subsidiary of Alibaba according to a 3.5 billion USD buyout deal the companies announced last year.
Victor Koo, the chairman of board and the CEO of Youku Tudou, said the company plans to return to the A share market within 3 years, and the relevant procedures have started. Koo disclosed that the group is still discussing the re-listing, they did not exclude the possibilities of back door listing, restructuring, or transferring to a shareholding company, Tech Sina reports.
It is not difficult to understand the reasons for Youku Tudou’s privatization. The company’s market cap is around 4.57 billion USD, much lower than the 109.1 billion RMB (16.86 billion USD) valuation of a comparable A-share video site Letv.com. Iqiyi, another video sites backed by Baidu, also plans to list on the A share market.
Following the merger, the two companies will share resources in users, e-commerce, data, content and channels, Alibaba CEO Zhang Yong said.
Although Alibaba entered entertainment industry relatively late, the e-commerce behemoth has taken solid steps in building a digital entertainment ecosystem. Currently, Alibaba’s entertainment business has covered all major sectors include Ali Pictures, Ali Music, Ali Game and Ali Sports.
Tencent Interactive, the entertainment unit of Alibaba’s major rival Tencent, also launched a plan last month to create synergy effects among its entertainment-related businesses including Tencent Game, Tencent Literature, Tencent Animation and Tencent Films.
China’s online video scene is getting close to its peak development stage while leading players in the field like Youku Tudou, iQiyi, Tencent Video and Sohu Video are being considered as traditional video sites. More internet giants are supercharging their focus on setting up entertainment ecosystems, of which online video is an important, but not the sole part.
Aside from that, non-traditional video sites are rising in a big way, attracting the attention of both entrepreneurs and investors. AcFun, China’s top ACG associated video sharing site, has received 50 million USD from Youku Tudou. Another similar site Bilibili is recording a valuation of 1.7 billion RMB. Tencent led a 100 million USD investment in gameplay sharing service Douyu TV.