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Losses Mount at China’s Youku Tudou

Losses have deepened at Youku Tudou, one of China’s leading online video companies, as it continued to chase growth.

Net revenues grew by 33% to RMB4 billion ($649 million) in the year to December 2014. Net losses grew to RMB889 million ($143 million) last year from RMB581 million ($93.6 million) in 2013.

“With our large and growing multiscreen video user base underpinning our innovation efforts and growth strategy, we began to improve the monetization of our leading brand, traffic and content offerings, in addition to advertising,” said chairman-CEO Victor Koo.

Content and bandwidth costs remain the major variables for the company. It spent RMB1.8 billion ($298 million) on content, equivalent to a little-changed 46% of net revenues. Bandwidth accounted for an unchanged 23% of net revenues, standing at RMB917 million ($148 million) last year.

The company, which is listed on the New York Stock Exchange, revealed that the U.S.’s Securities and Exchange Commission has questioned a number of elements in its historical accounts that relate to when Youku Tudou recognizes certain incomes; how it presents the value of bartered content; and the value of licensed content in its books. The SEC has said that it regards Youku Tudou as similar to a traditional broadcaster.

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