China’s two biggest online video services have secured shareholder approval to merge their operations, creating a new market leader called Youku Tudou.
The agreement is expected to give the newly-combined company a market share of around 32% and cut content licensing and network costs by as much as US$ 60mn per year. Total customer base after the merger is complete will be in excess of 300mn users per week.
Youku led the Chinese online video market in terms of revenue by the end of the first quarter of this year with a 20.9% share, according to Analysys International, while Tudou placed second with 11.5%. In third place was Baidu’s iQiyi unit with 6.7%, followed by Tencent with 4.7%.
While China’s online video sector continues to grow fast, the country’s media regulator SARFT has become increasingly concerned about the dissemination of what it deems offensive material, and last month imposed prescreening obligations on all online video service providers.