Youku to Acquire Tudou in $1B Deal

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+
Home/Work Computer
Total unique
visitors
(000)
% reach
Total Internet: Total audience 597,569  100
Entertainment sites 495,210  82.9
YouTube 144,236  24.1
 Youku 107,312  18.0
 Xunlei  96,164  16.1
 Tudou sites  92,658  15.5
 CBS Interactive  90,684  15.2
     
Unduplicated visitors between
Youku and Tudou sites
 139,289  

 Source: comScore

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