Media

The Great Online Video Hype in China, Still Just Hype (YOKU, TUDO, SOHU, RENN)

The craze for online video is everywhere. Billions upon billions have been invested by great companies, yet the business model has proven that not all efforts have endless financial return. New data from Analysys International is putting the value of Chinese online video at a mere 1.48 billion yuan despite some 139% growth from a year earlier and despite 48% growth sequentially.

The report noted that Youku Inc. (NYSE: YOKU), Tudou Holdings Limited (NASDAQ: TUDO) and Sohu.com Inc. (NASDAQ: SOHU) Video still maintained the top three spots in the China online video market this quarter. Youku’s share raised by 2.2%, while the gap between Tudou and Sohu Video was cut down to 1.2%. Tudou increased the copyright purchase and made the first tie market more competitive.

Read Also: China Passes U.S. As Largest Smartphone Market

Also noted, “In the 2nd tie market, as a black horse Qiyi.com overtook Xunlei … Tencent started its original exclusive platform and it plans to increase differentiated content development and to join the online video market competition relying on its huge user volume.”

Another keynote is that Renren Inc. (NYSE: RENN), one of the worst IPOs of 2011, has announced its acquisition of video site 56.com for the equivalent of $80 million to increase its number of users and revenue volume.

To put this into a relative size, the translation is a market of about $235 million for the quarter when translated into dollar terms, even after 139% growth from a year earlier. The CIA World Factbook lists the estimated population of China as being 1.336 billion people. Is that really only a market worth a mere $0.175 per head in China?

This all assumes every company’s great Chinese accountants are counting the numbers properly as well.

JON C. OGG