Tudou’s Gap With Youku Narrows on Content, Microblogs

Tudou.com. CEO Gary Wang
Gary Wang, chief executive officer of Tudou.com. Photographer: Nelson Ching/Bloomberg

March 7 (Bloomberg) -- Tudou Holdings Ltd., China’s second-largest video website, is narrowing the gap with leader Youku Inc. after adding content and expanding ties with microblogs, Chief Executive Officer Gary Wang said.

Tudou’s share of video views rose to 13.8 percent in January, from 11.9 percent in December, according to data from ComScore Inc. supplied by Tudou’s Wang yesterday. Youku’s viewership dipped to 21.8 percent from 22 percent in the same period, the data shows.

“In the industry some other key players have been slowing down but we have been maintaining our momentum,” Wang said in a phone interview yesterday. “As long as the trend continues, the gap will continue to narrow. We are pleased that the momentum we have generated is sustainable.”

Tudou, which raised $174 million in its initial public offering in the U.S. on Aug. 16, is expanding viewer traffic by using that cash to invest in content such as Japanese animation and upgrades to its delivery network to improve speed and video quality. Wang is also building connections to social networking sites such as Sina Corp.’s Twitter-like Weibo microblog service.

Youku remains “the leading online video site, confirmed across the board, with a considerable gap,” Jean Shao, a spokeswoman for the Beijing-based company, said yesterday.

Tudou sank the most in five months in U.S. trading March 1 after reporting a net loss of 148.9 million yuan ($24 million) in the fourth quarter. That loss was caused by “one-time costs” such as the purchase of Japanese animation, Wang said. Shanghai-based Tudou forecast last month that sales will gain between 70 percent and 75 percent in the first quarter.

Tudou dropped 4.5 percent to $11.65 at 11:46 a.m. in New York trading on March 6. It has risen 6.1 percent this year.

“Going forward we are more optimistic about the revenue momentum,” Wang said. “With revenue growth, all this content spending and bandwidth costs can be contained.”

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net