Home / Biz updates
Youku Tudou Inc, China's most popular video-streaming website, will collaborate with US entertainment companies to produce original content after regulators capped the amount of imported shows on the site.
Youku, which already works with Korean film and television production houses to create programming for its 500 million users, is looking even farther abroad for original dramas and talk shows, the company's chairman, Victor Koo, said in an interview in Hong Kong on Monday.
The overseas push comes in addition to efforts to develop more homegrown programming.
"In terms of original content, it's content we developed in-house, as well as with our partners in China, but also globally," Koo says.
"Next year we see ourselves working with US and European partners," he says.
Youku needs content to fend off challenges from Baidu, Sohu and others in an online-video market that could grow to almost 40 billion yuan ($6.5 billion) by 2017, according to consulting firm IResearch.
Jack Ma, the billionaire chairman of major Youku shareholder Alibaba Group Holding Ltd, has been visiting Hollywood to secure studio stakes and the rights to distribute US movies and TV shows in China.
State approval
Koo's push for original programming comes in the wake of a Chinese government order requiring State approval to stream overseas movies and TV shows.
Video sites must register foreign programs by the end of March, according to a statement posted on the website of China's State Administration of Press, Publication, Radio, Film and Television.
Starting on April 1, streaming unregistered content will no longer be permitted.
Koo confirmed on Monday that foreign programs will be allowed to make up no more than 30 percent of a site's total content.
That excludes Chinese-South Korean coproductions, which are being treated as local content under an agreement reached between the two countries in July.
"The quota isn't a major issue for us," says Koo.
He said Youku was working with regulators to improve the approval process. "You can always increase your domestic offerings, especially that we do original programming ourselves."
Alibaba's stake
Youku is also joining with Alibaba to analyze user behavior and create new moneymaking products.
"We are developing new products for our partners in terms of how to market based on the data," Koo says.
In August, Alibaba and Ma's Yunfeng Capital completed the purchase of a $1.2 billion stake in the video site, according to data compiled by Bloomberg.
Alibaba and Yunfeng Capital hold 16.5 percent and 2 percent, respectively, of outstanding Youku shares. The company is not in talks with Alibaba or Ma about increasing their stakes, Koo says.
American depositary receipts in Youku fell 2 percent to close at $18.41 in New York trading on Oct 27. The stock has dropped 39 percent this year.
Mobile users
Youku has posted losses in each of the three years since its December 2010 listing in New York. Koo declines to give a timetable for turning a profit and says he was focused on drawing mobile users, who account for 60 percent of traffic and 30 percent of sales.
Youku's half a billion users each generate an average of 8 yuan annually, Koo says. Increasing that number requires expanding infrastructure and developing content.
"We are still in the investment mode," Koo says. "You need to invest first, make sure you have the audience base, the market share, and we're moving very quickly to get them."
