Tudou's Future Lies In Its Acquisition
By Jiang Zhang:
In my article on
Tudou's (TUDO) flawed strategy
, I pointed out that Tudou’s core business model of providing user generated content to online viewers is unsustainable in China because Chinese viewers prefer professional produced content (PPC), such as movies and soap operas, over videos created by non-professionals.
To address this weakness, Tudou set out a strategy of content acquisition to defend its declining market share from market leading Youku (YOKU) and emerging threat Sohu (SOHU). However, such strategy is also flawed because Tudou lacks capital or the brand recognition to leverage when acquiring content. Furthermore, monetization of paid content through subscription-based model, such as that of Netflix (NFLX), is impossible due to abundance of pirated contents in China. The only viable way to monetize PPC is by delivering superior user experience and leveraging a company’s brand to attract viewers, but Tudou lacks both attributes.
Tudou’s shareholder value is uncertain atComplete Story »