Chinas Biggest Online Video Co’s Merge

China’s online video market is set for strong growth – so much so that the leading services are merging to share the costs of expansion.
Youku executivesphoto: Youku

The top end of China’s emerging online video segment will now benefit from cost savings after the merger of leading pair Youku and Tudou was approved.
Shareholders of the companies voted in favour of March’s proposal this weekend. The companies, each of which are listed in New York, will survive on Wall Street as the unified Youku Tudou Inc.
Chinese online video is set to explode, but reviewing this pair’s recent performance shows why consolidation is necessary.
Tudou’s Q2 net loss doubled to RMB 154.7 million ($24.4 million) from last year. Youku’s Q1 net loss trebled to RMB 156.1 million ($24.8 million).
By merging, the duo aims to save $60 million on content licensing, bandwidth and other areas. As fast as Chinese online video appetite is growing, vendors are having to spend on intelligently delivering optimising distribution for patchy broadband networks. Just 20 percent of the country enjoys over 2Mbps, according to Akamai.
Youku had a leading 21.8 percent of Chinese online video revenue in Q1, ahead of Tudou with 13.7 percent, according to Analysys International.

They operate much like YouTube (NSDQ: GOOG), majoring on user-uploaded videos but doing an increasing number of deals with domestic TV show makers and global movie companies to host ad-supported and premium videos.
Competitors have been building and buying to stay in touch. The big Sina (NSDQ: SINA) portal had targeted video as its main investment area. It had bought up stakes in Tudou. Now it will end up without influence in Tudou and struggling to build its own capability. Tencent and Baidu (iQiyi) are well-placed to self-fund their own video expansion.


China’s Olympic Viewers Break Records

China’s state broadcaster CNTV clocked huge online audience numbers during the 2012 London Olympics, and a big chunk of it came from mobile devices: 610 million streams were served to phones, tablets and connected devices alone, according to numbers shared exclusively with GigaOM.
neulion cntv

The U.S. Olympic athletes may have won the most gold medals in London, but China is once again clocking the biggest online audience worldwide for an event like this one. 485 million users followed CNTV’s coverage of the games via PCs, mobile and connected devices, according to data the broadcaster shared exclusively with GigaOm.
Even more impressive: CNTV served a total of 610 million streams to mobile phones, tablets and connected devices alone. China’s online video viewing has traditionally been dominated by PC usage, and Internet-connected TVs and set-top boxes are still a rare sight. However, smart phone and tablet ownership is growing quickly. CNTV addressed this new audience with a dedicated premium offering for the 2012 Olympics that was facilitated by U.S. streaming platform provider Neulion.
Some other key metrics provided by CNTV include: CNTV’s website registered 580 million page views and around 35 million unique viewers per day on average during the games. Page views were about 255 percent higher than daily averages before the games, and uniques were up 134 percent. At peak, CNTV clocked 880 million daily page views, and 40 million uniques, which I’ve been told is a historical record for the broadcaster.
How do these numbers compare? NBC saw 159 million video streams during the Olympics across all devices, and clocked close to two billion page views for the entirety of the event, according to NBC. The BBC’s website saw 106 million total video views and 12 million mobile video views throughout the games.
CNTV’s Neulion partnership wasn’t the only way to view video of the games within China. The broadcaster also streamed video on its own site as well as through its CBOX P2P client, set-top boxes and connected devices. It also piped video to Sina, Sohu, Tencent and Netease in an effort that’s been called “one cloud, multiple screens.”

NBC Olympic coverage online 50% mobile

Almost half of the internet video NBC is serving this Olympics is going to mobiles and tablets. That’s a watershed for portable TV. But what happens when at-home internet TV becomes commonplace?

Nevermind “the first social media Olympics”. What’s really true is this – London’s is the first Summer Games when online video has been consumed in such high quantities and so avidly on portable devices.
Defending itself against this week’s “#NBCFail” criticism, NBC on Thursday revealed stats from its first five days online video streaming. NBC research president Alan Wurtzel told journalists:

  • “Nearly 28 million people have visited – eight percent higher compared to Beijing.”
  • 64 million total video streams served across all platforms – 182 percent increase over Beijing
  • Served 5.3m hours of live video – already “surpassed the total of all the games we streamed in Beijing”.

That website traffic growth is minimal for a four-year time advance. The biggest revelation is in mobile and video specifically…

  • 60 percent of video streams are happening “online” (ie. desktop web), “another 45 percent is (from) a combination of tablet and phones“, Wurtzel said.
  • “Nearly 4.6m people have gone to the mobile site – double the number from Beijing.
  • “Apps for mobile have consistently been among the top five apps in the app store since the games began, and have been downloaded more than six million times.”

Of course, not much of this is necessarily a surprise in growth terms. Some of these devices (ie. tablets) didn’t even exist four years ago; smartphones were around but are now commonplace, pushed in to many more owner’s hands by the Android boom and general adoption growth.
But the ratio of mobile viewing amongst the total is interesting.
“Sixty percent of Americans don’t even work in an office,” Wurtzel said. “A lot of those folks are going to be watching on mobile for the first time”.
That so many of the streams are viewed whilst portable – most likely during day time – may be a happy fact for NBC. A natural consequence of this may be to gather the largest audience on users’ best screen – their TV – during the evening.
There is one looming challenge. Right now, most internet streams are to dedicated mobile devices and to the web. In another four years, internet video to living room TVs will be commonplace. Internet-connected TVs present an opportunity to super-serve audiences with copious live coverage – but broadcasters may be disallowed from streaming to “TV” in this way by their cable partners.