Bottom line: New moves against e-commerce and online video firms are extensions of a broader crackdown on rogue Internet practices, which will slow short-term growth at some companies but ultimately create a healthier business environment.
E-Commerce in China
Crackdowns widen on video, e-commerce
It seems like I write about the latest Internet crackdown far too often these days, as Beijing focuses on a wide range of industries where it wants to clean up what it sees as unhealthy business practices. Another 2 such crackdowns are in the headlines as we head into spring, one in the scandal-wracked e-commerce space and the other in online video. Both crackdowns actually began earlier, and these latest moves just show the regulators don’t feel that their job is finished yet.
Of course it’s a slight oversimplification to say this broader series of crackdowns is coming from a single source, since the commerce regulator has been the main driver behind the e-commerce crackdown and the broadcasting and publishing regulator is behind the video clean-up. But those 2 concurrent campaigns, along with other similar ones, probably underscore a recent resolve by central leaders in Beijing to clean up a Chinese business landscape that’s often riddled with corrupt and illegal practices. Read Full Post…
Bottom line: Youku Tudou’s big bet on original content development could pay dividends in the long term, but will push the company further into the loss column in the short term as it spends heavily on the business.
Original content in focus at Youku Tudou
When the history books are written, the story of China’s online video industry could well be called “A Tale of 2 Business Models”. The most common model is seeing a growing number of players invest big money on development of original content, which is what former leader Youku Tudou (NYSE: YOKU) is doing with a major new announcement in that direction. The other model is seeing players like LeTV (Shenzhen: 300104) focus equally or more on distribution by rolling out new products like smartphones and Internet TVs to deliver their content. Read Full Post…
Bottom line: Shares of Sina and Youku Tudou will continue to be laggards due to their cloudy outlooks, and Youku Tudou could face even greater pressure if it doesn’t sell itself to a larger buyer like Alibaba.
Sina’s Q3 results fail to excite
Today marks the high point of the third-quarter earnings season for Internet companies, with leading web portal Sina (Nasdaq: SINA) and top online video site Youku Tudou (NYSE: YOKU) posting results that didn’t impress investors too much. Both companies reported operating losses for the quarter, even though each managed to pare those losses from previous periods. But the bottom line for Sina was anemic growth in its core advertising revenue, while Youku Tudou’s biggest trouble sign came from ballooning costs. Youku Tudou isn’t being helped either by an ongoing government crackdown against online video operators. Read Full Post…
The year 2014 could well go down as the “Year of the Crackdown”, as evidenced by 2 more such crackdowns in the headlines as we head in autumn. The first and larger of the pair comes in the online video space, where media are reporting the broadcasting regulator is finalizing rules that would severely limit the amount of foreign content on online video sites. Meantime, a more mild crackdown is also coming in the e-commerce space, where separate reports are saying another regulator is rolling out rules that will punish companies that overstate their transaction volumes. Read Full Post…
Worrisome signs of a crackdown are growing in the online video sector, where a field of young private firms rolling out a new generation of TV-like products are facing strong resistance from traditional television stations. The latest signs of turmoil are coming from PPTV, a former industry leader that is slowly getting carved up among investors as it is forced to scrap some of its most promising new products. The former high-flyer is showing up in 2 separate headlines today, including one that has seen it shelve its TV set-top box product. The other headline has the company selling 10 percent of itself to Phoenix Publishing & Media (Shanghai: 601928), marking its third major stake sale in the last year as it slowly gets carved up among a group of diverse investors. Read Full Post…
Two major regulatory moves could have opposite effects for different areas of the Internet, providing relief for e-commerce firms while posing yet another new challenge for online video operators. In the former category, media are reporting the regulator that oversees e-commerce is talking with major players about modifying a controversial policy that gives consumers the right to unconditionally return most merchandise within a week of buying it. In the latter category, other media reports say the broadcasting regulator is continuing an ongoing campaign to rein in online video sites by limiting their ability to operate dedicated program channels similar to traditional TV. Read Full Post…
The web clean-up that began in April with a relatively innocuous-looking crackdown on Sina’s (Nasdaq: SINA) video sites is showing signs of becoming a major movement, with word that regulators in Beijing are investigating 52 website operators for violent and pornographic content, including giants Baidu (Nasdaq: BIDU) and Youku Tudou (NYSE: YOKU). News of this new clean-up comes after similar reports emerged last week that online game operators were coming under similar scrutiny, and indicates the current crackdown could last for the next few months. Read Full Post…
New York is firmly establishing a reputation as the preferred listing venue for China Internet IPOs, while Hong Kong is developing a taste for auto-related listings. That’s my quick assessment following reports that online video sharing site Xunlei has just joined a long queue of Chinese Internet firms filing to list in New York. At nearly the same time, car rental company China Auto Rental has filed to list in Hong Kong, reversing course from a previous plan to offer shares in New York. Read Full Post…
You know that things are bad when leading online video site Youku Tudou (NYSE: YOKU) doesn’t issue a press release trumpeting its recent receipt of simultaneous broadcast rights for the highly hyped return of the US television series “24”. That’s my conclusion after having to read about this relatively big win for Youku in the news headlines rather than a company press release. In fact, Youku Tudou may deliberately want to downplay this latest triumph to avoid attracting Beijing censors who have recently started banning some popular US television series from online video sites. Read Full Post…
Just a day after getting some extremely worrisome news that could see many of its most popular offerings censored, leading online video site Youku Tudou (NYSE: YOKU) has announced a more positive development in the form of a $1.22 billion investment led by e-commerce leader Alibaba. The move is part of Alibaba’s recent buying binge, which has already included a handful of investments of this size, as it tries to get into every area of the Internet imaginable. The tie-up does have some positive elements that could help Youku Tudou, and comes as a slight surprise since media were reporting just a month ago that the company was preparing to sell a similar stake to Alibaba rival Tencent (HKEx: 700). Read Full Post…
Xunlei and 55tuan have emerged as 2 of the biggest orphans in the rapidly consolidating online video and group buying spaces, respectively, putting pressure on both to find partners to boost their chances for long-term survival. The pair were in separate headlines this week in their search for new tie-ups, with Xunlei selling a major stake of itself to software maker Kingsoft (HKEx: 3888) and 55tuan reportedly in talks to sell some or all of itself to security software maker Qihoo 360 (NYSE: QIHU). Read Full Post…
