The history of the “Chinese YouTube”: Dailymotion for 9 years, became the largest video sharing website of China

On the Chinese Internet there are many sites that are analogues of the more popular world of services. This is largely due to the peculiarities of China as a country with a high level of censorship that restrict the entry of foreign content. Thats why local entrepreneurs are trying to fill the gaps at the expense of own products. Youku is intended to replace the Chinese government blocked YouTube.

This does the job, this video is so good that some of the indicators exceeded its established competitor. For example, every day in Youku “stream” more than 13 billion minutes, which is much more compared with YouTube, which has only 3 billion. Chinese video portal moved a huge number of sitcoms in the network, thus actually replacing national television. Finally, he could collect an audience of over 400 million people.

All this was the result of infinite faith in the project of one man, who in his homeland is called the strange businessman. At first glance, the founder of Youku, Victor Koo, was fairly standard for a Chinese entrepreneur path. Comes from a wealthy Beijing family, he achieved success in education and had the opportunity to finish my studies at the University of California and studied business at Stanford.

Having got acquainted in the USA with features of creating their own business, Victor has returned to Beijing and held a senior position in a large global consulting firm Bain & Company. Ranking the prospects that have opened up on the Chinese Internet after blocking popular global services, Ku, to the surprise of loved ones, left consulting and started working in the service Sohu. The young man with managerial experience and perfectly understood the it field while studying in the US, was a real find and quite quickly moved up the career ladder. It was at this time appeared YouTube, and a huge number of Chinese companies have attempted to create their own video hosting service, but nothing revolutionary to not come up.

At this point, Victor Koo, in his own assurances, the feeling that hes wasting his time. It takes to go from Sohu, taking along a few employees. Then begins the creation Youku. By the way, the name of the service literally means “brilliant”. The original version of the resource was functionally similar to YouTube.

But over time, the service has gone through many changes and improvements, becoming a standalone product. Broadcasts officially began work in late 2006. The first content to the service various commercials, music videos and viral videos. But Victor Koo decided to diversify the content of the service.

It was difficult to do, given the censorship of the government, which put strict limits to any it project. Here at Youku CEO had the idea to hold between the users of the original contest videos. Authors of the best works waiting for prizes, including monetary. The audience soon doubled.

Looking ahead, it is worth noting that the rankings of the best video so pleased to Chinese users that the competition winners were awarded during a special festival — “the Popular Internet-Oscar”. The growth of users has not gone unnoticed by investors and the company soon received its first investment (before money invested himself Ku) in the amount of $25 million. Money allowed Youku to improve some functions, and improve storage efficiency. The next step was the filling of the portal series.

Naturally, neither of which license the content of the question. The first series, which appeared on the website were pirated copies. Users Youku had the opportunity to be the first to see new series in the Chinese language, because the project Victor Koo had a network of native translators who provide quality voiceovers for a few hours. Despite the illegality of these actions, they had an effect, increasing the audience of the portal to 100 million users. However, long so could not continue.

In 2008, China blocked YouTube and Youkus leadership, it became clear that they are waiting for the same fate if the video on the website will continue to be pirated. In January 2009 the portal appeared the service responsible for the definition of copyright, which was to remove unlicensed content. The audience took a negative view of the changes on the website, and a flood of new users has decreased significantly. Part of the audience who prefer the pirated videos is of Chinese films, he moved to the resource Tudou, which was a serious competitor of Victor Ku.

Model Tudou remained the same. Huge streams of user-generated videos with different themes, and unlicensed content. Not difficult to guess that the outcome of this clash of two different cultures became a real war in which both services did not choose means. For example, a fairly effective method of struggle among competitors has led to the formal complaints on the content of each other.

The reluctance to get involved in a prolonged battle forced the management of Youku to find a new niche in the market. In order to understand how to work legally and thus to increase the number of viewers, Victor Koo drew attention to the American model of Netflix, which already showed tremendous growth of audience by TV series. Having adopted some key decisions, the CEO of Youku took into account the peculiarities of his own country, to guard against the possible blocking by the government. At first the site appeared the licensed version of the series, which in no way violated the censorship.

Primarily, this was related to the erotic scenes, as well as references to the PRC in negative wording. A significant portion of new content has been produced in China. A huge audience and the correct advertising has helped manufacturers series virtually bring all of your premieres on Youku and only after that to start shows on the TV. This approach ensured the permanent increase in the audience of the portal, but has not solved all its problems, because the resource was still unprofitable.

In fact, during the first three quarters of 2010 the company lost almost $30 million. In order to solve their financial problems, Youku, having a audience of 150 million users, in the same year made an IPO, which enabled her to raise $203 mln. $. In addition, according to Victor Koo, it gave the company the opportunity to declare itself on the international market and thereby to vary the content.

Bet quite true, and soon Youku has signed multiple deals with major video and television networks USA. The portal is not always bought American TV series or films, but received the rights to shooting their own versions of famous paintings. This approach allowed the service to be observed by the government that evaluated the impact of the resource on the development of film industry in China. In addition, the company was attracted to some of their projects, authors, top videos.

Such unusual move increased the traffic to the site, because everyone wants to feel like a movie star. Contracts with major American film companies and TV channels have helped substantially improve the profit level. Especially became noticeable advantages of this solution, when Youku was used as a platform for advertising blockbusters. Movie trailers from major studios Hollywood received up to 25 million hits a day. Huge audience of the site and comfortable functionality allowed a number of paintings to significantly increase fees.

The record for this indicator was the film “Jurassic World”, which is due to the promotion on Youku was able to raise over $300 million in China and became one of the highest grossing blockbusters in history. This fully applies to music. Many studios around the world, it became clear that to ensure the success of the album in China, you first have to place the clips on Youku. Naturally, this had a positive impact on the growth rate of the audience.

In addition to world fame 2010 has brought us a lot of different records. The service was ranked first by number of views in China. Youku became the official videoprovider Chinese version of Mozilla Firefox. In addition, a successful IPO allowed the company to finish a bad start from a financial point of view the year with a profit of 200 million yuan.

The desire to turn huge portal in the lucrative business has prompted the leadership of the service to reflect on the monetization strategy. The resulting model was in many ways similar to their international counterparts. Primarily this can be attributed to advertising. The user Youku forced to review the initial commercials in front of videos, while the percentage received by the company depends on the level of the advertiser.

Those wishing to watch TV shows service offers a month of free content, then begins to take the monthly fee of 15 yuan (about $2.5) per month. Those who have no desire to purchase a monthly subscription, have to pay 5 yuan for one show. The right approach to monetization and a successful IPO in the end allowed Youku to merge with its rival Tudou. In fact, the company of Victor Ku has acquired its longtime rival, saving him some semblance of autonomy.

Such a step would have significantly improved the position of the portal. The audience has grown to 300 million users. In addition, the total value of the newly-born company has reached $7 billion. It made Chinas domestic market to pay attention to Youku Tudou. Interest is mainly expressed Alibaba Group, seeking to outdo its competitors Baidu and Tencent.

Well-designed video sharing website with a large audience, a good system of monetization, and with a wide variety of content attracted the attention of the giant. So in 2014, Alibaba acquired a 16.2 percent stake in the company for $1.2 billion. Due to this, the company received a new platform for advertising, as the video service has uprockin its financial position. Thus the income of Youku Tudou by the end of 2014 reached $649,5 million that became a record company, who earn much less.

Help Alibaba predetermined the further development of the service. Since then, the company not only finally established in the market, but also continued its triumphal procession. From Dailymotion there are two main directions of development. The first relates to the mobile Internet, which in China is used by more than 800 million people. Winning this market is Youku, no doubt, will reach a final domination in China.

The second direction is to capture the Asian market. The first country where the company is planning to strengthen the service, became South Korea. Here the management of Youku Tudou uses his proven tactics, acquiring the rights to show series and provoking users to take videos. But yet much to gain a foothold in this market the hard service with frequent locks due to violation of the Korean censorship. Youku Tudou is still the only video service in China, which completely does not belong to any of the big companies.

In fact he is trying to become a strong player in the market. In his desire to succeed Victor Ku was able to make the almost incredible in leading the service iQiyi, owned by Baidu, the part of the audience, which in 2014 increased to 500 million users. Youku won the national television, forcing those who want to watch new episodes of your favorite series on video portal. All these victories were largely achieved the original approach and willingness to work meticulously to achieve the result.

Slightly hampered the companys unwillingness to make concessions and to submit to the stronger players. Refusal to be a pawn in the endless game between Alibaba and Baidu, caused, for example, buy the largest external shareholder of another Youku video portal, which immediately affected the companys share price. The assurances of Victor Koo, he knows where he wants to lead his own project. Thus, at this point, it does not aim at world domination, this prevents policy in the PRC.

A much more appropriate goal for an entrepreneur looks like Asia, where Youku is a great chance to become the dominant video hosting.


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