Search Blocking Wars Expand to Video 搜索屏蔽战蔓延至在线视频业

By newsdoug on January 13, 2012

Tudou, Sohu throw up stop sign for Youku searches The search-blocking wars that gripped the e-commerce sector in the second half of last year have spread to the online video space, where Tudou (Nasdaq: TUDO) and Sohu (Nasdaq: SOHU) video, the second and third largest operators, have blocked their content from a video search engine operated by top player Youku (NYSE: YOKU). (English article) Of course the biggest loser in this latest blockage battle will be the Chinese consumer, who will find it difficult to find the movies and TV shows he wants to view, which will also hurt the broader industry’s development. Let’s backtrack a moment and look at this latest development in a vibrant but perplexing industry where company behavior more often resembles children fighting in a sandlot than major corporations trying to do business. According to Chinese media reports citing a Tudou representative, Tudou and Sohu video, along with another major video site operator LeTV (Shenzhen: 300104), all decided to block their content from searches by Soku, an online video search engine operated by Yoku. The move comes as Tudou and Youku are embroiled in a series of lawsuits over copyright infringement (previous post), and just as the online video sector has started to sign a series of ground-breaking deals to legally license popular TV shows and movies as they try to wean themselves from the pirated content that was traditionally the main attraction on their sites. Youku announced the latest such deal just yesterday in a new tie-up with Twentieth Century Fox (Nasdaq: NWSA) (company announcement); but this latest spat will surely overshadow that news. In fact, moves like this could ultimately threaten future licensing deals, as this kind of blockage will ultimately make it more difficult for consumers to find the programs they want to watch online, putting a serious damper on the industry’s development. This latest development also comes as Chinese regulators consider restricting the amount of advertising that online video sites can put in their programs, potentially dealing another big blow. (previous post) From a broader perspective, these kind of developments don’t bode well for online video in 2012, and could even delay the money-losing industry’s march to long-term profitability.

Bottom line: A new search blocking war in the online video industry will hamper its development and, along with other negative developments, delay a transition to long-term profitability.

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