Chinese YouTubes

11:23, December 03, 2010      

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The nation's top two online video sites, Youku and Tudou, are set to make their Nasdaq trading debut over the next few months.With similar offerings and near identical business models, here are some questions and answers about the companies.Earlier this month, Tudou filed for an IPO of up to $120 million, while Youku said it will raise up to $169 million. YouKu and Tudou are both online video websites that stream video clips to millions of Chineseusers. Their main source of revenue is advertising. According to documents filed with the SEC, Youku's net revenue for the first nine months of the year was $35.1 million while Tudou's was $33.6 million.

Tudou's net revenues have grown an average of 317 percent over the past two years and for the first nine months of the year rose 230 percent compared to the same period a year ago. Youku averaged a net revenue growth rate of over 1,000 percent over the past two years and saw its revenues up 135 percent in the first nine months of the year over the previous year.

On the cost front, Youku's total operating expenses and cost of revenues collectively were about a third more than Tudou's in the first nine months of this year.

For online video sites, a large chunk of their cost of revenues goes to acquiring bandwidth.

In China's highly competitive and fragmented video space, Youku had a slight lead over Tudou in terms of market share by advertising revenue at 22.5 percent versus the latter's 18.5 percent in the third quarter, according to research firm Analysys International.

In the nine months ended September, Youku had a net loss of $25 million while Tudou had a net loss of $12.5 million.

Collectively, Tudou and Youku have raised over $200 million in private equity funding. Tudou is backed by Singapore's sovereign wealth fund Temasek Holdings, Granite Global Ventures and General Catalyst Partners. Youku is backed by Chengwei Ventures, Maverick Capital and Brookside Capital.

Different business models?

Hardly. China's online video sector is fragmented and highly competitive. Tudou, Youku and Ku6 all offer user-generated content, licensed productions and in-house productions. They rely on advertising for revenue although Tudou said it might adopt a subscription fee model similar to US online video firm Hulu further down the line.

Source: Global Times/Agencies


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