China's Online Video Site Sohu Narrows Losses in Third Quarter

Clifford Coonan

Sohu's online video business saw healthy growth

China's NASDAQ-listed online video site Sohu.com reported a lower-than-expected loss of $28 million in the third quarter, while revenues rose 17 percent year-on-year to $430 million.

Sohu.com, which includes online video and media, search, gaming, community and mobile services among its product offering, said last week it was going to buy the online video provider 56.com, the latest sign of growing diversification as competition in the sector intensifies.

Read more 'The Simpsons' Gets "First Official China-Based Home" in Sohu Deal

"Sohu Video maintained a healthy growth in users, driven by an impressive 40 percent sequential increase in mobile traffic," Charles Zhang, chairman and CEO of Sohu.com, said in a statement.

The online video business in China is booming, but the future of foreign shows being allowed to broadcast in the country is unclear.

Sohu said previously that it plans to invest twice as much this year as it did in 2013 in the self-produced content business as more and more people access content on their mobile phones and 4G starts to make an impact on the market.

China's online giants, including Baidu, Alibaba and Tencent, are launching a big push into the film business, but smaller players such as Sohu and Youku Tudou are also playing a major part.

Read more China's Alibaba, Youku Tudou Pact on Video Marketing

The State Administration of Press, Publication, Radio, Film and Television (SARPPFT) said this week that it had to vet all foreign TV shows and movies streamed online in China.

Sohu broadcasts several popular foreign shows, including Saturday Night Live, The Ellen DeGeneres Show, The Walking Dead and Masters of Sex.

The announced permit policy will see all foreign TV shows and movies reviewed by watchdogs before being made available for viewing online. The Big Bang Theory was banned in April, along with The Good Wife, NCIS and The Practice.

Sohu.com's total revenues were $430 million, up 17 percent year-on-year and 8 percent quarter-on-quarter. Total online advertising revenues, which include revenues from brand advertising and search and other businesses for the third quarter of 2014, were $247 million, up 40 percent year-on-year and 13 percent quarter-over-quarter.

Read more China Box Office to Top $4.9 Billion in 2014, Says Industry Body

Online game revenues were $150 million, down 7 percent on last year and 2 percent on last quarter. Zhang said the online game TLBB 3D, which was launched last month, has become the most popular mobile game on iPhone in China.

Zhang said that Tao Wang, CEO of Sohu's Changyou online game unit, had resigned for personal reasons and that Carol Yu, president and CFO of Sohu.com, and Dewen Chen, Changyou's president, would become co-CEOs.

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