China’s online-video market is the largest and most innovative in the world. The country has the largest number of online-video viewers: around 45 om, or nearly 80％ of the internet- connected population.
TV industry in China, in contrast, continues to lose viewers because of content range. It is really difficult for Chinese programs to get official approvals for broadcasting. In this way, online-video market gets popularity from TV industry.
Although Chinese online-video industry may be unique, its economics are not. Online video only gets profits from advertisements and ad-skipping, which are not enough to cover the high cost of buying bandwidth and copyrights.
Because of the funding pressure, Youku and Tudou, the country’s top online video provider have been merged. The merger may cause a fall in copyright purchase prices which will does good to the industry and increase prices of advertisements. Moreover, since one rival has gone, other players in the industry get benefit.
However, low profit margins must to be resolved because merger can only reduce the finance pressure in the short run. As more and more players will appear in the online-video industry and the more and more intense competition, funding pressure will be unbearable again.
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