Alibaba spent a whopping $1.2 billion on a stake in the Chinese video service Youku. However, the investment could be less than one percent of Alibaba’s IPO valuation.
Not long ago, the only way to watch movies like Inception in China was to buy a pirated DVD. Youku.com wants to change that by offering Western blockbusters through VOD and Netflix-like subscriptions. Does the site have what it takes to become China’s Netflix?
Understanding online video in China from afar can be challenging. The role of user generated content, regulatory and copyright issues are in many cases very different than the landscape in the U.S., and the language barrier doesn’t really help either. That’s why we were very happy that Victor Koo, founder and CEO of Youku.com stopped by our offices yesterday to talk a little bit about his company and the Chinese online video landscape.
Youku.com is barely known in the U.S., but it’s an online video heavyweight in China, where it attracted more than 200 million visitors in November. Koo described the site as a mixture of Hulu and YouTube, with a slant towards long-form, licensed content. All differences aside, there are also some similarities between Youku and Youtube. Just like Google’s (s GOOG) video venture, Youku has started to stream more and more content in real time and to look beyond advertising to make money with online video.