China's top video streaming sites to merge

Top two video streaming sites in country, Youku and Tudou, announce plans to form one entity which will boast largest user base and most comprehensive library in China.

China's two largest video streaming sites, Youku and Tudou, are joining forces to form Youku Tudou--a new entity which both companies say will become the biggest video site in the country.

In a joint statement released Monday, Victor Koo, founder, chairman and CEO of Youku, said the new entity would have the "largest user base, most comprehensive content library, most advanced bandwidth infrastructure, and strongest monetization capability within the sector".

According to a report by EnfoDesk Analysys International released in early-March, the top 3 video sites in China were Youku, Tudou and Sohu, respectively.

The Youku-Tudou merger is expected to be completed in the third quarter of 2012, the companies said. Shareholders of Youku will hold the majority stake at 71.5 percent, while shareholders of Tudou will own 28.5 percent of the new company.

Gary Wang, founder, chairman and CEO of Tudou, said the new entity will be able to benefit his company's users, advertisers, as well as content and industry partners. "This transaction further strengthens our market position as Tudou brings its valuable brand, library of professional-licensed content, user-generated content platform, extensive user base, broad range of partnerships, and expertise in mobile video," Wang said.

According to Koo, Tudou would retain its brand and platform in the new company. "We expect to see significant synergies across a number of areas including leveraging licensed content over a larger user base, and realizing efficiencies in bandwidth management and other common expenses," he added.

Prior to today's announcement, relationships between the two companies had been rocky. In Dec. 2011, Youku and Tudou were embroiled in a feud which saw both companies accusing the other of pirating licensed content. A Taiwanese TV production company, which had licensed its shows to Tudou, accused Youku of pirating its content. In its response, Youku said Tudou's accusations were "mudslinging PR battles" and added that Tudou also had infringed its copyright in the past.

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