Hong Kong – Tudou, one of the largest online video sharing platforms in China, has 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 existing investors.
Its founder and CEO, Gary Wang said in a statement that the company is investing aggressively into expanding its advertising-supported web platform and developing mobile device video technology as key future growth drivers.
In the near term, Tudou aims to ramp up its “Orange Box” initiative to produce made-for-internet original programming to integrate with its current user-generated content archive of more than 38 million videos.
Anita Huang, VP of marketing and business development at Tudou, said its video site attracts more than 200 million unique users every month.
She explained that a key factor for the “Orange Box” initiative is to build a point of differentiation from other video sites by producing its own original content with the first Tudou drama series debuting this fall called “That Love Comes.”
Huang added the new initiative is part of the company’s move to experiment with a new revenue model.
Since its advertising platform launched in 2007, Tudou offers pre-roll, background, full screen wallpaper and other ad formats around its video streams, which attracts a portfolio of advertisers including Adidas, Ford, HP, KFC, Lenovo, Motorola, Nike, P&G, Samsung, and Unilever among others.
Now, Tudou hopes to deepen its level of monetization opportunities by launching “branded content” placement within the programs.
For “That Love Comes,” Tudou is currently finalizing a few major sponsors in the consumer goods, automobile and other categories, but she declined to provide names of specific brands that have signed up for the project.
“Being the creator and distributor of this series gives us the opportunity to work with advertisers in the areas of product placement, script placement and brand mentions that can be customized for the advertisers,” Huang said.
Rand Han, strategy director for Resonance China, a social media agency that aims to help brands connect and engage with customers through social communities in the country, applauded Tudou’s plans to build a full media house by creating content.
He said Tudou has been competing with its main rival Youku on the same level based on traffic and exposure, but the latest move will see Tudou catapult past Youku radically as it shifts to a different business model.
Perhaps what’s compelling for advertisers about Tudou’s move into content production is the ability to attract a core audience that is on average between 18 to 35 years old – 10 years younger than the average age of TV viewers in China. Tudou’s audience is also cosmopolitan with high disposable income.
Due to the lack of engaging content for the younger demographic in China, local TV stations often have to acquire content from Korea, Japan, or Taiwan to appeal to these younger viewers, Huang said. As a result, many young viewers turn to online video platforms for entertainment in the country.
While Tudou said the web will be its primary distribution platform for the first run of its inaugural drama series, it is already in talks with a few Chinese TV stations and new media owners for licensing opportunities. Media buyers from Singapore, Japan, and Taiwan have also shown interest.
To complement its webcasting, Huang said they plan to roll out mini versions of the series through mobile distribution and may potentially include an iPad app.
Programmatic is taking over the digital advertising world, and at an even faster rate than expected, according to eMarketer, which raised its forecast for programmatic ad spending in the U.S. on the back of growth in mobile and video programmatic buys.
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