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Youku Tudou CEO Talks Hulu, Opportunities Outside of China

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Victor Koo outlines plans for the newly merged Chinese online video giant as president Dele Liu predicts improving content cost trends.

Chinese online video giant Youku Tudou, formed by the recent combination of the country's top two players in the sector, expects more manageable content costs ahead and will for now mostly remain focused on its home market, top executives said Wednesday.

"At this point in time...the Chinese market will still be our primary focus, but going forward we may look at other countries as well," said chairman and CEO Victor Koo on the company's first conference call since the combination. He highlighted that there is a big overseas Chinese audience, but due to licensing arrangement, videos can often only be streamed in China.

"Similar to Hulu, a lot of traditional media companies' content...[is] geo-blocked," said Koo. "So there is still a combination of programs that are not available to overseas users."

Youku Tudou president Dele Liu, meanwhile, predicted that the merged entity's content costs would rise "much slower" next year than revenue. After higher prices for programming last year amid heated competition, "the market is getting rationalized after going through a bubble period last year," said Liu.

The president also addressed the fallout from piracy, saying that it is "diluting" traffic to the Youku and Tudou sites, which the company is continuing to operate separately given that the former is more broad-based and the latter skews younger. But amid a crackdown on piracy, sites offering pirated content "will not be viable," Liu said.

Youku and Tudou are China's top two online video platforms with a combined reach of as many as 310 million unique viewers per week. A recent report from Chinese research firm iResearch estimated that Youku Tudou serves 1.6 billion hours of video every month.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai