Two Largest Chinese Video Sites To Merge, Make Waves In America?

Two Largest Chinese Video Sites To Merge, Make Waves In America?

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After firing warning shots over the bows in terms of copyright infringement lawsuits, the two biggest Chinese online video firms Tudou and Youku have decided that they should merge, instead. Sound like big news? Well, Youku seems ready to spend something like $1 billion on Tudou’s stock.

It’s a pretty big deal in terms of money, but not really in terms of online video impact on these shores, yet. But let’s put some Mayan calendar spin on it shall we?

Could the Merger Impact US Video Market?

If the number one and number two online video companies in China merge, well, hold on, they both went public in the US and raised something like $375 million, they could really start making waves, even on this side of the Pacific.

Perhaps with them merging, they’ll both stop losing money as Youku dropped about $7.9 million in Q4 while Tudou lost $23.7 million. Combined they’ll have some 39.8% of the online video market there.

They have been moving in a Google-y fashion, away from user-created content and toward professional content from TV studios. They have a mix of ad-supported premium content as well as pay-per-view now and that’s a trend that’s likely to continue expanding.

With almost 40% of one of the world’s fastest growing online video markets, which grew 48% through Q4 2011 for a grand total of 139% for last year for revenue, there’s definitely money to be made from the look of things. Especially since they would start working together and pulling in the same direction instead of pushing in opposite directions.

The new company, Tudou Youku Inc, could definitely become the de facto site for seeing content from say, the west, meaning that lots of eyes here could be turning there in the near future to continue expanding revenue channels via online video, not to mention all the eyes in China alone that would be consuming content, in a more legal manner than many believe they do now.

Is this the new gold rush in a sort of weird historical reversal? You do recall that California is called “Gold Mountain” in Chinese, right? Though, Old Gold Mountain is more appropriate these days and the new Gold Mountain might just be, back at home, in China.


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