The agreement marks the first time China Telecom has partnered with an online video site for 3G video services, but the deal is a coup for Youku, which is preparing for an IPO next year.
Since launching in December 2006, Youku has grown into China's third-largest website by user time spent on the site. According to iResearch, Youku attracts approximately 203 million monthly unique visitors from homes and offices, and 61 million monthly unique visitors from internet cafes. The site has a 40% share of total user time spent viewing online videos among Chinese internet users.
But the online video site--just like its arch-rival Tudou.com--is eager to expand into new revenue streams, move away from pirated content uploaded by users and focus on creating more content in-house.
China Telecom will launch a subscription-based "Original Content" channel on its 3G video service later this month. Youku will provide content and manage operations for the channel, which will include programming from Youku Originals, a unit set up earlier this year to produce online video content.
Subscribers will be able to pay over their mobile phones or the internet for video content that can be accessed on phones, iPads and computers.
In addition to being China's largest internet service provider, China Telecom is also a fast-growing 3G mobile operator, with 3G subscriber growth of 76.5%, or nearly 4 million, this year. It currently has about 9.2 million 3G subscribers. In May 2009, Youku became China's first online video site to make selections from its content library available to mobile users through its 3G portal (3g.youku.com). Since then, Youku has seen mobile traffic grow to two million page views per day.
Through its new partnership with China Telecom and its ongoing partnerships with China's other two major telecom operators, Youku is laying the groundwork for the future of internet television on the PC, says Youku's chief technology officer, Leo Yao Jian.
"Over the last year, we've been working to make Youku a part of people's daily lives, whether they're at their computers or commuting to work. We enjoy friendly working relationships with all three of China's 3G mobile operators, and we've seen explosive growth in the number of 3G users as a result of that," Mr. Yao said.
Youku is working to explore business models for mobile access, he added. "Mobile data fees are poised to become still cheaper next year and we expect to see even greater growth in mobile users, which will mean ever closer partnerships between Youku and mobile operators in the future."
On Nov. 30, Youku said its online video application for the Apple iPad, which ranked as the No. 1 free download on Apple's Chinese iTunes Store one week after its Nov. 16 release, had been downloaded roughly 120,000 times, an average of 9,200 downloads per day. Youku's iPad app is the No. 1 iPad entertainment app in the Chinese iTunes Store, and the related iPhone and iPod Touch app has been downloaded over 2.6 million times since its release last March.
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