Qiyi, Baidu’s Hulu Clone, Launches. Time For Consolidation in China’s Online Video Industry?
- Posted by bbishop
- on April 24th, 2010
I have written several posts about the China online video market. Consolidation is needed and may be coming. I have heard from several people that Sina has been actively talking to potential partners in the online video sector. There are not many good ones left. Among the Youtube clones, Youku is the best, Tudou is second, and 56.com is a distant third. Among the P2P video firms, PPStream and PPLive seem equally successful, and in classic Chinese competitive spirit PPLive is suing PPStream, accusing it of removing the PPLive software during a new PPStream upgrade install.
All of the above firms are growing but are still small, especially compared with state-owned players like CCTV’s CNTV and Shanghai media group and the huge, cash-rich listed firms like Tencent, Sina and Sohu.
Tencent, with a $35 B+ market capitalization and $1.2B+ cash in the bank (even after its $300 M investment in DST) could easily swallow Youku or Tudou. Youku is in a better position, as it recently closed a $40 M round and should have plenty of runway to get to profitability. Tudou has a great service, but they have not yet announced a new round of funding.
The most frequent version of the Sina rumor is that Sina will invest a large amount into Youku, which will then look to consolidate one or more of the remaining private Chinese video firms. I have not confirmed this, and it has not yet appeared in the Chinese press. But bankers are circling, such a deal would make sense, and the structure would fit with Sina’s history of joint ventures or investments as opposed to outright acquisitions.
True or not, there is now enough advertising revenue in online video that all the big players need to have a play in this space. Chinese Internet firms have historically tended to prefer building over buying, to the chagrin of many a Web 2.0 focused venture capitalist. Shanda’s Hurray did purchase Ku6, but at a very distressed price. In the case of Tencent, to which the market has gifted an awesome market cap, buying into an immediate, leading position for a tiny percentage of that market cap may make more sense than trying to build it themselves. If I were a banker, that is what I would be pitching.
Please tell me what you think in the comments.
If you use RSS you can subscribe to this blog’s feed here, and if you use Twitter you can follow my more frequent updates @niubi. You can also follow my blogging on more general China topics at Sinocism.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Bill Bishop is an American living in Beijing. He is bilingual and has experience working in both US and China. In 1997 he co-founded CBS MarketWatch and stayed until the sale in 2004 to Dow Jones. He was never a journalist, and instead worked in several business roles over the years, the last as head of the MarketWatch consumer Internet business. More »
- Sinocism China Newsletter For 08.30.12
- The Sinocism China Newsletter
- Today’s China Readings July 18, 2012
- Sina Sell-Side Still Searching For Muppets
- China Daily Readings
- Sina Admits It Has Not Complied With Weibo Real Name Registration Rules
- Groupon’s China Firesale
- Apologies For The Hiatus
- Tweeting The Sina Q4 2011 Earnings Call
- Quick Thoughts Ahead Of Sina Earnings
- August 2012
- July 2012
- May 2012
- April 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- Inside Sina Weibo
- Reuters: China VIE Company Structure Under Threat
- Authorities Removing Apple iPads From Chinese Store Shelves? (Updated)
- China's Internet: The Invisible Birdcage
- Is Tencent The Wrong Partner For Groupon In China?
- If Sina Is Cooking Its Books I'll Eat This Blog
- Jack Ma Talks To China Entrepreneur Magazine About The Alipay Case (UPDATED)
- Do You Know Where Your China Stock CFO Lives?
- New Report On China's Online Game Industry-$3.6B in 2009 Revenue, $9.2B By 2014
- China's MIIT Declares Most VoIP Services, Including Skype, Illegal
TagsAdvertising Alibaba Apple Baidu Beijing cctv Censorship china China Mobile Corruption Cyberwar DangDang eCommerce Facebook Fraud Gaming GFW Google Group Buying groupon Internet Investing IPO Media Mobile Music Netease PerfectWorld Piracy Policy Readings Regulations Search Shanda Sina SNS Social Games Tencent Twitter US-China Virtual Items Web Video Weibo WoW WVAS
- Group Buying
- Internet Security
- Listed Firms
- Online Games
- Online Memes
- Online Payments
- Online Trends
- Perfect World
- Public Relations
- Renewable Energy
- Social Gaming
- Traditional Chinese Medicine TCM
- Web Advertising
- Web Video
- World of Warcraft
StockTwits - All Updates