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

alibaba_youku

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.

Read Also: Tencent, JD.com come together to re-shape e-commerce in China

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 JD.com to take on the former to exploit its weakness in the mobile division. This led to JD.com getting a headline slot on Tencent’s WeChat app, which is basically the go-to messaging tool in the region.

Jonathan Toyad

If you want an elaborate answer on who would win in a fight between Ultraman and Godzilla, Jonathan Toyad is your man. A six-year veteran in the game journalism industry, he did words and videos for outlets such as GameSpot, GameAxis, IGN and Stuff.TV. Fears coyotes and scorched earths.

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