By Gordon Chu | Tuesday, January 12, 2010
In the past few weeks, we have seen a flurry of news articles about how online platforms are jumping on the bandwagon to invest in licensed content. First came the report of the new SARFT mandate to regulate and restrict P2P downloads of illegal content. Unfortunately for many online viewers, this ultimately means an abrupt goodbye to hit US shows like Heroes and Lost. However, these turn of events also means many online video sites need to radically change their business models – a balance between playing ‘right’ with SARFT and getting the content they need for the viewers.
Ku6 and Sohu came out of the woods first with their pledge to allocate a $10M fund to license content. Tudou upped the ante with a $40M raise at the end of December which they claim is to be utilized to also license programs. Now I will admit that when the cynical side of me first read these reports, I chalked them up as public relation pieces to ease investors that the platforms were playing by the rules. However, the biggest news this week switched my mind with Baidu, China’s top online search company, linking together with Providence Equity to invest a total of $70M to develop a video online channel to the likes of US site, Hulu by the first quarter of 2010.
I have one word to describe what this means to me: wow. Wow for Baidu championing themselves with Providence Equity (Note: although this was reportedly inked with Providence Equity in Hong Kong, Providence Equity was still involved with the original investment for Hulu). Wow for Baidu taking a leap of faith into online videos. And, most importantly, wow for content providers and brands looking at this as the ‘sign’ to enter into China.