Yahoo buys online video site

Move may lead to more competition with YouTube in Japan

BEIJING -- Yahoo Japan has purchased a controlling stake of struggling online video site GyaO from broadband content provider Usen Corp. in a move to compete with Google's YouTube.

The move signals possible further consolidation in Japan's loss-ridden online content industry, which has been battered by dwindling advertising revenue.

Yahoo Japan said it will pay ¥530 million ($5.3 million) for a 51% stake in GyaO, with which it will eventually merge.

"Through the integration, we will pursue (the creation of) Japan's No. 1 video content service," Yahoo Japan President Masahiro Inoue said at a press conference Tuesday, the Kyodo News service reported from Tokyo.

YouTube, the Google-owned video-sharing site, has been plagued by tension with the music industry over royalties and ad revenue splits.

Facing similar challenges, Usen spun off GyaO last October after losses at the online site helped drag its parent's net loss for the year down to ¥53.9 billion.

GyaO, which started its free online video streaming service for personal computers in April 2005, has about 22 million subscribers.

Yahoo Japan is 41% owned by Softbank Corp and 34.1% owned by Yahoo Inc.

Reuters contributed to this report.
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