Youku Raises Ad Rates in ‘Clear Path’ to Profitability, CEO Says
Feb. 23 (Bloomberg) -- Youku.com Inc., the largest online video site in China, has raised advertising rates this year, which will help the company move toward profitability, Chief Executive Officer Victor Koo said.
Youku increased advertising rates on its site by an average of about 15 percent to 20 percent for 2011, Koo said in a Bloomberg TV interview in Hong Kong today. He didn’t estimate when the company will turn profitable.
“We’re on a clear path to profitability because the revenue growth at the company is still in triple digits,” Koo said. “We’re still investing in content and technology so we see that as part of the business plan.”
Youku leads China’s online video market by viewership time, in an industry that has grown at a compound annual rate of 74 percent in the past three years and is set to more than double over the next two, according to Shanghai-based iResearch Consulting Group.
Youku, which hasn’t made a profit since it started in December 2006, is projected to continue reporting losses through the first quarter of 2012, at which point it would turn to profit and report a net income of $1.25 million for the full year, according to analysts’ estimates compiled by Bloomberg. Its net loss is projected to narrow to $17.97 million this year, from a loss of $21.72 million last year, according to the analysts’ estimates.
Fundraising
The Beijing-based Internet company raised $233.3 million in its U.S. initial public offering in December. The stock surged 161 percent on its first day in the biggest gain for a U.S. IPO since 2005, when Baidu Inc., the Beijing-based owner of China’s most-used Internet search engine, began trading.
Youku’s rivals are also raising funds. Tudou Holdings Ltd., the operator of China’s second-largest online video website, is seeking as much as $120 million in a U.S. IPO, the company said in a regulatory filing in November. Synacast Corp. received a $250 million investment this month for its China online video company PPLive from Japan’s Softbank Corp.
Koo said Youku has a "good relationship" with China’s regulators and has worked on technology and ways to monitor content since "pretty early days" of the site.
“As a leading Internet site in China we clearly want to be a good corporate citizen,” Koo said.
China, the world’s largest Internet market with 457 million users, censors content for politically sensitive topics and pornography. Google Inc.’s YouTube, the world’s most popular video-sharing site, is inaccessible in China.
To contact the editor responsible for this story: Young-Sam Cho at <mailto:ycho2@bloomberg.net> ycho2@bloomberg.net
