Two online video sites in China to merge, expanding reach and reducing expenses.
Online video site Youku will acquire rival site Tudou, creating one of the largest Internet properties in China. The all-stock deal is worth $1 billion, Reuters reported.
"We intend to lead the next phase of online video development in China," Youku CEO Victor Koo said in a statement. He said the combined company, which will be known as Youku Tudou, will possess the largest user base in the online video market, a comprehensive content library, advanced bandwidth infrastructure, and strong capability to generate revenue.
Youku was founded as an Internet television company for people to search, view, and share high-quality content across multiple devices; Tudou was established in 2005 as a user-generated content video-sharing site and expanded to include premium licensed content and original in-house productions.
"Together, we believe Youku Tudou Inc. will be able to provide the best-in-class experience for users interested in uploading, watching and sharing videos and to grow together with our advertisers, and our content and industry partners," Tudou CEO Gary Wang said in a statement.
In addition, the combined company expects to share licensed content across a larger user base and save money in bandwidth management and other common expenses.
Youku has 107.3 million unique visitors in Asia Pacific, while Tudou sites have 92.7 million, according to comScore data for January 2012. The combined companies have 139.3 million unduplicated unique visitors.
In contrast, YouTube is the top entertainment destination in Asia Pacific, with 144.2 million unique visitors, according to comScore. However, YouTube is blocked by censors in China.
Youku Tudou, if the deal goes through, will possess one-third of the online advertising marketing in China, according to the latimes.com. Combined, the companies would be stronger competitors to Baidu and Tencent.
In September 2010, Tudou announced an ambitious plan to transform its website into a fully operated media house on the back of a $50 million funding round from Singapore-based Temasek Holdings and other investors.
Top Five Entertainment Destinations in Asia Pacific
|Online Visitors Age 15+
|Total Internet: Total audience||597,569||100|
|Unduplicated visitors between
Youku and Tudou sites
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Anna Maria Virzi, ClickZ's executive editor from 2007 until 2012, covered Internet business and technology since 1996. She was on the launch team for Ziff Davis Media's Baseline and also worked at Forbes.com, Web Week, Internet World, and the Connecticut Post.
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