Alibaba To Buy Out Chinese Video Service Youku Tudou

Youku Tudou
Alibaba Group announced a few days ago a non-binding proposal to acquire all outstanding shares of Youku Tudou:

Alibaba is making the proposal with the support of the founding shareholders of Youku, including Victor Koo, Chengwei Capital and their affiliates.

Alibaba already owns 18.3% of Youku Tudou. Youku Tudou is the result of a 2012 merger of the two biggest video sites in China. Crunchbase:

According to iResearch, the number of monthly unique visitors to the site increased from approximately 182 million in December 2010 to about 227 million in May 2013, giving Youku Tudou, Inc. the advantage in terms of user base over its major rivals, Sohu, PPTV and iQiyi.

Youku Tudou is a mix of YouTube (user generated content) and Netflix (licensed premium content and in house productions).

Strategically Youku Tudou could become for Alibaba not only what YouTube is for Google but, more importantly, what Instant Video is for Amazon: An attractive, highly scalable (high fixed costs, low variable costs) business that Alibaba could use to bundle with other services.

Also of note: Besides the infrastructure that Youku Tudou has built for itself this is purely a home market play for Alibaba right now. Youku Tudou has no international foot print whatsoever.

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