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China’s Sohu Cuts Full Year Losses As Video Costs Rise

Chinese online group Sohu.com reduced its losses in 2015 as revenues increased by 16% to $1.97 billion. But the outlook for its video operations are unclear.

The NASDAQ-listed group which spans portals, video streaming, search, and games, saw net losses attributable to shareholders of $50 million, compared with losses of $166 million in calendar 2014.

Revenues of Sohu Video were $213 million, up 21% compared with 2014. (Elsewhere in the earnings statement the company said: “For Sohu Video, its 2015 total revenues rose 33% from 2014 as non-advertising business gained encouraging traction.”) In the October to December quarter revenues of Sohu Video were $51 million, up 1% year-over-year and down 8% quarter-over-quarter.

“Sohu Video invested heavily in developing professionally-generated content, a more cost effective category, where the traffic almost doubled during the year in terms of video views,” said Charles Zhang, chairman and CEO. For the first quarter of 2016 the company forecasts “Sohu Video revenues to be between 31% and 33% of total brand advertising revenues.”

In its statement about risk factors the group specified the video division. “[Risk factors include] Sohu’s current and projected future losses due to increased spending by Sohu for video content.”

Chinese 0nline video is one of the fastest growing segments of the Middle Kingdom media industry. It remains highly competitive as rivals including Tencent, Baidu’s iQIYI, Le Eco and Alibaba’s Youku Tudou seek exclusive deals with content suppliers and to lock in viewers through subscription deals. It also remains open to regulatory risk, as censors seek to increasingly bring the sector into their orbit.

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