Alibaba buys stake in China's equivalent of YouTube

How much for Youku Tudou Inc? Try US$1.22 billion! Right now, it’s the third biggest media acquisition by the company

By Jonathan Toyad


Alibaba is on a huge buying spree. In the past eight months, it has invested US$50 million in app search engine Quixey, US$1.05 billion to take a 20 per cent stake in Wasu Media Holding Co., and US$804 million to acquire 60 per cent stake in ChinaVision Media Group Ltd.

The Hangzhou-based company recently bought a US$1.22 billion stake in Youku Tudou, which is China’s biggest online video provider. Think along the lines of Nico Nico Douga and YouTube, but in China. Alibaba, along with private equity firm Yunfeng Capital, is paying US$30.50 per American Depositary Receipt of Youku, or a 26.3 per cent premium over the last traded price.

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Both companies will co-own 18.5 per cent stake in the online video content service. Youku Tudou’s CEO Victor Koo said that the investment will strengthen the platform further on. Beijing-based tech advisory BDA‘s Chairman Duncan Clark commented that the move is meant to boost its consumer base with non e-commerce business. “I don’t know whether [Alibaba] can make money or not [from this]. As with YouTube, it never made Google much money but it did help them boost traffic. If Alibaba can try to find traffic in the media world that’s driving all the eyeballs and make a consumer play, that’s desirable.”

This deal further builds up on the rivalry between Alibaba and its rival Tencent. The latter teamed up with online retailer to take on the former to exploit its weakness in the mobile division. This led to getting a headline slot on Tencent’s WeChat app, which is basically the go-to messaging tool in the region.

  • YouTube
    YouTube United States of America YouTube is a video-sharing website created in February 2005 by three former PayPal employees: Chad Hurley, Steve Chen and Jawed Karim. Funding: Not specified Investors: Not specified
  • China is an online Chinese computer, communication, and consumer electronics retailer. It is the the largest online direct sales company in China in terms of transaction volume. Funding: Not specified Investors: Not specified
  • Youku Tudou
    Youku Tudou China Youku is a Chinese video-sharing website that enables users to search, view, and share high-quality video content across multiple devices. Funding: 1,200M Post IPO Equity Investors: Alibaba
  • Tencent
    Tencent China Founded in November, 1998, Tencent has grown into one of China's largest and most used Internet service portal. Funded Startups: Blink,