Business

Youku's NYSE listing closes well above IPO price

By Zhang Yuwei (China Daily)
Updated: 2010-12-09 11:26

Victor Koo is the founder of Youku.

NEW YORK - Youku, China's leading Internet television company, more than doubled its initial public offering (IPO) price on the New York Stock Exchange (NYSE) on Wednesday, opening at $27 and closing at $33.44 -160 percent above its IPO of $12.80.

Youku, "what's best, what's cool" in Chinese, was founded in December 2006 by Victor Koo, who worked at Sohu, China's leading Internet portal listed on Nasdaq. Within four years, it grew to become China's third largest website in terms of user time spent.

In 2006, Koo felt streaming videos will grow in the Chinese market when video streaming became viable.

"As more devices become Internet-enabled and broadband penetration increases, we see that as a big market opportunity in China," Koo told China Daily.

According to iResearch, the Beijing-based Youku attracts about 203 million unique visitors from homes and offices a month and 61 million from Internet cafes, and has a 40 percent share of total time spent viewing online videos among Chinese Internet users.

Koo said Youku has a very mainstream user profile, aged 18 to 40.

China's Internet Network Information Center said China had nearly 384 million Internet users last year.

Many compare Youku to Youtube, but Koo said the online video market in China is not quite "video sharing" like it is in the US.

"Actually the majority of our traffic comes from the professional media syndication," he said.

"So the comparison (of our model) is more like to Hulu and Netflix."

Youku posts most content for free and depends mostly on advertising for revenue. Many analysts say piracy is a challenge for companies such as Youku.

"We have adopted measures such as active monitoring and user feedback system to counter this problem," said Jean Shao, manager of international communications at Youku.

Koo, educated in Australia and the US but has lived in China since 1994, said Youku will continue to focus on its business in China. It grew 130 percent in the first nine months of 2010.

He said online video penetration within China's Internet users is a bit more than 75 percent and there is still room for growth. "We will make our services available across more Internet-enabled devices as well as continue to scale up business model through advertising and subscription."

Michael Yang, chief representative of NYSE's Beijing office, said that by the end of this year, there will be 22 Chinese companies (including two more next week) which price their IPO on NYSE, compared to five in 2009.

"China has the most IPOs on NYSE this year compared to other foreign countries," Yang said.