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HK FilMart: Youku Tudou to Double Original Content Budget (EXCLUSIVE)

Youku Tudou is planning to double its spending on original content production this year. The move is intended to build audience loyalty, identify talent and increase the company’s intellectual property.

The Chinese online video giant last year spent an estimated RMB300 million ($49 million), and following the recent restructuring of its content functions, it will spend RMB600 million ($98 million) this year.

The company has set up a proactive system for seeking out and promoting promising filmmakers who access its platforms with 170,000 pieces of user-generated content per day.

Those talents whose short films or micro-movies track well in terms of metrics that span page views, comments, referrals and completions may be invited to work on professional content. Some may be offered three-year contracts, others co-production deals.

“We are finding that content produced by young people is playing better with the young than content produced by older generations of filmmakers,” says Luke Lu, VP for original content. “So our emphasis on original content is building loyalty. Youku Tudou was previously compared to the YouTube and Hulu models. Now we are increasingly like Netflix and HBO.”

The company has had some major successes. It was able to develop and release theatrical movie “Old Boys: Way of the Dragon” from a micro-film created by Xiao Yang and Wang Taili, aka the Chopsticks Brothers. The film grossed more than RMB200 million ($32.8 million) in its release last summer. The duo also created hit song “Little Apple,” which has been watched over 1.4 billion times online.

Another talent, Yi Xiaoxing (aka ‘The Beast,’ aka ‘Professor’), was filtered from the Tudou platform and put to worked on mini Web series for Youku under a three-year contract under which the company put up capital, professional services and marketing. Youku and the Beast share the profits. The Beast’s company UniMedia is now said to be worth $150 million, with his series “Surprise” having generated over 2 billion views and been relicensed under a series-to-book deal and also for adaptation as a game.

“Where once our revenues were all about advertising, original Web content is helping to diversify the company’s income through licensing and games royalties. Our online series ‘Hip Hop Quest’ has now been picked up for TV,” says Lu. “‘Hip Hop Quartet,” which was launched as a transactional VOD offering, and beat our feature movie ‘101 Proposals’, has also driven some viewers to become subscribers as they worked out that the subscription service is cheaper than buying each episode.”

Lu says his mission at this week’s FilMart is to try to change the lowly perceptions of the Internet held by some older filmmakers. For that he will be invoking the company’s Micro Movies With the Masters program, fifth generation directors such as Gu Changwei (“Peacock”), and a nascent relationship with the Busan film festival.

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