Top video sites to form one firm
By Ding Yining |
March 13, 2012, Tuesday
|
Print Edition
Print Edition
China's top two video websites are to merge in a bid to become the dominant player in a fast-growing industry.
Youku, China' largest video site, said yesterday that it will join with Tudou to establish a new company, Youku Tudou Inc, based on a stock-for-stock transaction.
Youku will have a 71.5 percent stake in the new company and Tudou will take the rest.
The merger, which will require the approval of both companies' shareholders, is expected to be completed in the third quarter of this year.
Independent industry watcher Xie Wen said: "It is a clever move for both sides to reduce the cost of competition and further expand their advantages in the sector."
Victor Koo, founder, chairman and chief executive officer of Youku, said: "Youku Tudou Inc will establish a clear and dominant leadership position in China's online video sector and the combination will lead to improvement in the industry sector."
Koo will become chief executive officer and chairman of the new company, and Gary Wang, founder, chairman and chief executive officer of Tudou, will take a position on the board.
"Through sharing content and traffic as well as technology, the new entity is expected to bring additional revenue and a broader user base," Koo said.
The two sides have long engaged in conflicts over content.
At the end of last year, Tudou said it would be seeking 150 million yuan (US$23.6 million) compensation from its rival for infringing on its exclusive rights to air entertainment series "Kangxi Is Coming." Youku countersued, saying the accusation damaged its reputation.
The merger will be a blow to smaller competitors in the market, including Sohu and Tencent's video divisions.
At the end of last year, Youku had a 21.8 percent share of the market and Tudou 13.7 percent, Analysys International said.
Online video sites are still trying to turn a profit despite remarkable growth in advertising income. Both Youku and Tudou were still in the red as of the fourth quarter last year.
Youku, China' largest video site, said yesterday that it will join with Tudou to establish a new company, Youku Tudou Inc, based on a stock-for-stock transaction.
Youku will have a 71.5 percent stake in the new company and Tudou will take the rest.
The merger, which will require the approval of both companies' shareholders, is expected to be completed in the third quarter of this year.
Independent industry watcher Xie Wen said: "It is a clever move for both sides to reduce the cost of competition and further expand their advantages in the sector."
Victor Koo, founder, chairman and chief executive officer of Youku, said: "Youku Tudou Inc will establish a clear and dominant leadership position in China's online video sector and the combination will lead to improvement in the industry sector."
Koo will become chief executive officer and chairman of the new company, and Gary Wang, founder, chairman and chief executive officer of Tudou, will take a position on the board.
"Through sharing content and traffic as well as technology, the new entity is expected to bring additional revenue and a broader user base," Koo said.
The two sides have long engaged in conflicts over content.
At the end of last year, Tudou said it would be seeking 150 million yuan (US$23.6 million) compensation from its rival for infringing on its exclusive rights to air entertainment series "Kangxi Is Coming." Youku countersued, saying the accusation damaged its reputation.
The merger will be a blow to smaller competitors in the market, including Sohu and Tencent's video divisions.
At the end of last year, Youku had a 21.8 percent share of the market and Tudou 13.7 percent, Analysys International said.
Online video sites are still trying to turn a profit despite remarkable growth in advertising income. Both Youku and Tudou were still in the red as of the fourth quarter last year.
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