The Pains of Chinese Online Video Sites Come from Imitation

It must be nothing short of foreordination. The imitators should pay for its imitation or copycat. This is not only the problem of Chinese online video services but also the problem of the whole Chinese internet industry, even the whole Chinese manufacturing industry.

In May there were two pieces of news about Chinese video sites worth concerning, one was the violent layoffs of ku6.com and another was the fund raising plan of youku.com.

Ku6.com and youku.com are two largest online video service providers in China. In the whole year of 2010 the losses of ku6.com reached as much as 51.5 million dollars, about 2.5 times of its revenue. And its largest shareholder becomes impatient with transfusing blood to ku6.com. The financial report of the heavily favored youku.com shows that it suffered about 46.9 million RMB in the first quarter of 2011.

We can’t tell now whether the recent enthusiasm of China concept stocks is the so-called bubble. It is the reality that the Chinese video sites haven’t got out of the trouble of burning money. In the near future those sites would still have to burn a large number of money and suffer great losses.

Chinese video sites are completely different from that of overseas. At first all Chinese video sites imitated the style of Youtube.com: user generated content, which corresponds to the developing tendency of the internet. When hulu.com became successful because of the clear profit model, Chinese video sites all imitated hulu.com. So they have to burden a large cost of operating.

Although youtube.com is still unprofitable, it hasn’t to face many competitors. However there are many sites in China that provide the similar video services. So they are in inferior position when buying the movies or TV plays copyright.

Imitation has many advantages such as low cost and less risk. But it also has one disadvantage of low entrance hurdle. Everyone can imitate the youtube.com. So when there is successful site in America so many similar sites would appear within Chinese market. There is only one portal site in America, Yahoo. But there are as many as four portal sites in China, not to mention the micro blogs.

Chinese internet industry has one advantage that it has the largest net citizen population.

We may have to imitate others at the beginning of the internet development. But we can’t depend on the imitation. Innovation is important. Without reform and innovation we only can follow the roads of America.

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