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November 18, 2011

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Ad boom narrows Youku's loss in Q3

CHINA'S largest online video website Youku posted a smaller loss in the third quarter as a boom in advertising income more than doubled its revenue.

Youku's net loss was US$7.4 million in the third quarter, 11 percent lower than the same period a year ago, the company said in a filing yesterday

The website didn't itemize its revenue but it's likely that the 129-percent annual surge in sales to US$41.2 million in the three months ended September 30 came mainly from advertising. The company estimated revenue to soar 90-100 percent year on year in the fourth quarter.

China's online video market jumped 138 percent in the third quarter to 1.5 billion yuan (US$231.3 million), according to research firm Analysys International. It estimated total advertising expenditure on domestic video websites may exceed 5 billion yuan this year, more than double the figure in 2010.

Despite the boom in ad sales domestic websites have long struggled to generate profits because they face higher costs to acquire high quality patented contents.

Earlier this week, the country's second largest video site Tudou also reported a net loss of US$8.7 million in the third quarter. Its sales expanded 52 percent from the same quarter a year ago to US$23.5 million.

Last month, Tudou signed a partnership deal with smaller video site LeTV to gain access to LeTV's domestic TV series in an attempt to reduce cost while bringing more content to its viewers.

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