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Staying at home, what would you choose to have fun? The majority of people will choose to watch a movie or TV series online, which has been pervasive in modern life. In terms of this, YouTube has dominated the whole market. Nevertheless, it is banned in China. The famous and aggressive video website in China is Youku.

Market Background: Video Sharing Sites in China

The core concept of Youku is rapidity, the aim of which is to help customer search, share and post videos rapidly without any obstruction. Another important characteristic of Youku is that it welcomes all varieties of video sharers, no matter he is an amateur or a professional. It also provides all the users with a free and unlimited number to upload videos, initiating the rating systems in this area as well. In terms of fund, Youku has absorbed the investment from various sources, including Sutter Hill Ventures, Farallon Capital, and Chengwei Ventures. The investment has amounted to 100 million RMB, which happens rarely in China.

Youku and Youtube share features in common as well as differ from each other. Founded respectively by Chinese people and American, both video sites allow users to upload or download the videos as well as to share them. However, there are some differences between them. A year earlier founded, YouTube has occupied more than 40% share of the global market, ranking as the first throughout the world. In comparison, Youku lags far behind, occupying only 2% of the whole market. In terms of their access availability in China, the two websites can be easily distinguished from each other. Youku was approved by the Chinese government in 2006 since its foundation and was even allowed to produce its own videos in 2008. However, YouTube suffered from ban and barrier from the Chinese government. Since 2007, YouTube has been prohibited in China due to the country’s censorship and surveillance of the internet. Moreover, the companies that acquired Youku and YouTube are running differently. In 2006, Google acquired YouTube and ran it as a subsidiary corporation. In China, Alibaba acquired Youku and suggested that Victor Koo, the founder of Youku, remained the CEO of the video site.

Youku’s Position In Chinese Market

In the whole video market in China, Youku is a pioneer and is also unique in the market. This lack of competitors gives Youku some space to strengthen their business models.  The video market in China is blossoming, with a market scale of 23.9 billion RMB in 2014. It is estimated that the number will reach 90 billion RMB in 2018. In the whole market, other video websites, such as Aiqiyi and Tencent, have lagged far behind Youku. Youku ranks first with about 30 billion minutes of use every month, the daily broadcast quantity of which has tripled from 100 million in 2013 to 300 million in 2014. Indeed, a recent study made by Daxue Consulting has shown that the average Chinese user of online video, are watching the screen 4 hours a week such as movers, which is twice the time spent by users from the US.

Various factors influence Youku’s development. The event of Google’s acquisition of YouTube has influenced the video websites and brands in China. In the whole background, more and more people had gained access to the Internet and paid more attention to entertainment. In 2015, over 44% of Chinese have access to video websites. It is estimated that college students now visit video’s websites about 3 times every day on average, spending about 1-2.5 hours. As the result, advertising companies started shifting the focus from television to online video websites, since more people spend time on video websites rather than television. The industry chain of content providers, video platform, advertising agencies and service providers is being formed, offering more efficient and convenient service for the public. All those external factors are pushing Youku to move forward and prosper. Youku is indeed, the first online website that can tap the capital markets, with a strong brand identity, proposing easy-to-use interfaces and content libraries.

Youku’s Future Trend

In the future, Youku will carry out more competitive policies under Alibaba’s power. Youku has established a film company in 2015 to produce movies or TV series, which has got a hit in China. The TV series or movies produced by video websites can build a positive image in audiences as well as gain profits under relatively low costs. The focus on the online exclusive right of broadcasting will also surface in the market since other video websites, such as Hunan TV also called Mango TV, are competing for it. Besides, Youku will focus on transforming advertisements into products, thanks to its numerous collaboration with an advertising agency.

Youku’s growth with its 900 million views each day, has led other website videos to develop, with more competition and challenges. Some business model is still not clear, regarding the return on investment strategy, and the advertising revenue will undoubtedly grow. Although the Chinese government is closely monitoring what is shown on TV channels, it has so far been more flexible with online video, giving foreign-produced shows the opportunity to enter the market.

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