Chinese Online Video Leader Youku Tudou Edges Towards Profitability

Online video giant confirms merger success, leads copyright action against Baidu

Victor Koo Youku Tudou
Spencer Platt/Getty Images

HONG KONG — Chinese online video market leader Youku Tudou said that it is near the end of its long march towards profitability.

The company, which got a major makeover last year when Youku acquired Tudou, reported a net loss of $35.7 million (RMB219 million) for the July to September period that makes up the third quarter of its financial year.

Revenues were $140 million (RMB858 million), an increase of 14% on the previous quarter.

It forecast that revenues in the next quarter could reach RMB900 million, with most of that coming from advertising, and said that it expects to “reach non-GAAP profitability” in the fourth quarter of 2013.

“We are happy that we grew the top line by a strong 14% quarter over quarter and our mobile traffic surged to over 300 million video views per day. We will continue to drive mobile monetization and ramp up revenue from local advertising clients, content marketing solutions and paid services,” said Victor Koo, chairman and CEO.

“We were able to control costs as we further leveraged the scale of our platform and in-house production capabilities. Our earlier decision to build an ecosystem for Original and User Generated Content (UGC) has continued to pay off,” said  Dele Liu, president.

Content acquisition and production costs in the quarter were RMB496.5 million (US$81.1 million) in the third quarter of 2013. 

Youku was one of several Chinese internet firms this week to take legal action against Chinese search engine Baidu and QVOD for copyright infringement on PC and mobile internet in China. Others plaintiffs included Sohu Video, Tencent Video, LeTV, MPA, the Motion Picture Association of America (MPAA), CODA, Wanda Films, Enlight Media, Letv Films. They are seeking RMB300 million of damages.

“At present, mainstream video sites through healthy competition and collaboration have established a stable ecosystem, including government regulators, investors, production teams, other interested parties, advertisers, users, etc. Among them, the respect of intellectual property and copyright has been a virtuous cycle to maintain the core of this ecosystem, especially in the mobile Internet era. We hope more people can join in, and together, with government, authorities and copyright holders to strengthen cooperation, enhance technical measures, fight against hotlink combat piracy , and jointly promote the process of genuine network,” said Youku’s Koo.