Feeds

China's online video giants shake hands on $1bn deal

Merger will create new SUPERCOMPANY

Build a business case: developing custom apps

Chinese online video giants Youku and Tudou have announced they are to merge in a billion dollar deal which should see the two finally put their well publicised courtroom battles behind them.

The all-stock deal, expected to close in the third quarter, will give birth to Youku Tudou Inc, reportedly to be headed up by Youku chairman and CEO Victor Koo with Tudou CEO Gary Wang on the board.

However, Tudou, which is the junior partner in the merger, will retain its brand identity and platform, according to the firms.

In a canned statement, Koo said the combined entity would be able to lead the next phase of online video development in China.

Youku Tudou Inc. will represent a differentiated leader in the online video market in China with the largest user base, most comprehensive content library, most advanced bandwidth infrastructure and strongest monetisation capability within the sector. Youku Tudou Inc. will have the reach and scale to bring our users high quality content at high speed.

This transaction would also lead to improvement in the industry structure and the underlying economics of the online video sector in China. We expect to see significant synergies across a number of areas including leveraging licensed content over a larger user base and realising efficiencies in bandwidth management and other common expenses.

With Youku and Tudou on market shares of approximately 22 and 14 per cent respectively, the entity will not be the all-conquering online video behemoth that YouTube is and for the time being at least will want to concentrate on a domestic market still split between a range of smaller players including Sohu and Qiyi.

Gartner analyst Sandy Shen told The Reg that the deal is all about scale and costs savings, in the short term at least.

“This will make it much harder for the competitors since online video is a scale business that requires heavy investment in user acquisition, copyrighted content and bandwidth,” she added.

“A few winners will take all, and the rest will be forced out of the market.”

Beijing-based Ovum analyst Jane Wang agreed, arguing that “other competitors will face pressure to challenge this big new company”.

“The new company’s business is currently focused on the Chinese market and will have little impact on YouTube’s business on the world stage,” she added.

Presumably the tie-up will also mean an end to the kind of acrimony which led to Youku filing an unfair competition law suit against Tudou last month.

In it, Youku reportedly alleged that remarks made by Tudou had caused its share price and ad revenues to fall, and ordered its rival to apologise and pay 4.8 million yuan (£480,000) in compensation.

However, with both firms reporting losses for last year, they have obviously realised they’d be better off together than facing each other across a court room. ®

Boost IT visibility and business value

More from The Register

next story
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.