Youku turns to mobile, new content for profits

Online video firm hopes original programmes will lift company into the black

PUBLISHED : Tuesday, 30 April, 2013, 12:00am
UPDATED : Tuesday, 30 April, 2013, 4:28am

Youku Tudou, China's largest online video company, says original programming and a push into mobile content will help the company as it seeks to post its first profit since a 2010 initial public offering.

Viewership on mobile applications for smartphones and tablets like Apple's iPad rose by half this month than at the end of last year, Victor Koo, chairman and chief executive of Youku Tudou, said on the weekend.

Youku bought rival Tudou last year to cut costs for content and bandwidth.

Youku Tudou, which hasn't been profitable since it listed on the New York Stock Exchange, faces growing competition in the mainland's online video market. Baidu has expanded its video service with an acquisition as it seeks a greater share of advertising revenue that's projected to rise to 16.2 billion yuan (HK$20.2 billion) next year from 1.36 billion yuan in 2009, according to Shanghai-based iResearch.

"Online video advertisement is growing very fast, but not fast enough to support exciting profits," Ma Yuan, an analyst at Bocom International, said.

Youku Tudou's net loss more than doubled to 424 million yuan last year from 172 million yuan a year earlier. It is forecast to lose 419 million yuan this year, according to the average of eight analyst estimates compiled by Bloomberg.

Youku Tudou held about 76 per cent of the online video market last year, based on monthly average unique visitors, according to iResearch.

While Koo said the company was on a "clear path to profitability", he declined to project when that would happen. "The losses are narrowing on a sequential basis," Koo said.

Mobile traffic was increasing "very, very strongly", with 150 million daily video views at the start of this month compared with 100 million at the end of last year, Koo said. The company earned more than 90 per cent of revenue from advertising, although paid video services were growing at "high double-digit or triple digit rates," he said.