Youku and Mozilla Join Forces to Enrich Video Viewing Experience
Beijing, Nov. 18th, 2008 – Youku, the leading Chinese Internet video website, today announced it has become the sole online video provider embedded in the China Edition of Mozilla Firefox, a highly popular web browser with a 20% worldwide market share.
This is the first time Mozilla will cooperate with a Chinese Internet video website to provide Internet users with a smooth interface between the browser and video content. Through Live Margins, a new feature developed for the Firefox China Edition (available at g-fox.cn), users can discover relevant video clips in a sidebar area of the browser by simply highlighting and dragging a chunk of text in web pages. Video results returned by Live Margins will be provided through Youku’s application programming interface (API). Any Youku videos can be added to a video playlist for time-shifted consumption or for quick and easy bookmarking, and Live Margins allows users to view Youku videos in a sidebar area while they continue to browse.
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Youku FAQ
When did Youku launch?Youku launched in Beta on June 21, 2006. The official nationwide launch in China took place six months later, on December 21, 2006. The company was founded by Victor Koo, former president of leading Chinese Internet portal Sohu.com, where he served as COO, CFO, and president for about six years.
Is Youku just another “YouTube clone”? Or do you differ substantially from YouTube?No, we are not just a YouTube clone. The pure YouTube model of short-form, user-generated video content hasn’t worked so far in China. Youku is a platform offering both professional and user-generated online video content, which can be either short or long-form content. Our average time spent on a page view is 10 minutes, compared to only two to three minutes for Youtube.
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How does Youku differ from its major Chinese competitors?
First, in we stand apart in terms of our product. Since we are the only players with 100% self-developed technology and self-operated video content delivery network (CDN), we have superior streaming speed and better user experience than any of our competitors, as verified by Gomez studies in response speed, consistency and reliability. Secondly, we stand apart in terms of content. Youku is an online video platform for both professional and amateur content creators. We have the largest network of film, TV, and music partners – over 250 partners – as well as the most active user base of “paike.” Our “paike” users also differentiate Youku in terms of the hot topics and time-sensitive videos we have available.
What is Youku’s current headcount?
At the end of October 2008, Youku employed 185 people.
What is your monthly burn rate currently?
I’m afraid we don’t disclose this information. Everyone knows that bandwidth in China is quite expensive, but by optimal use of available technologies and a wise investment in our own content delivery network we’ve been able to reduce costs while delivering the best user experience of any video sharing site in China.
Right now, we feel that the priority is on remaining the market share leader in the sector, and Youku currently enjoys over a 50% market share, and we believe we’ll lengthen our lead over our competitors in the coming months. It’s Youku’s view that further consolidation in the sector is likely and desirable. A dominant player will be better positioned vis-à-vis advertisers, content providers, and telecom operators. Youku’s objective is to be that dominant leader in the video space in 2009 and beyond.
How are you trying to monetize your traffic?
Advertising is the main way that we’re monetizing. We work with top-flight Chinese and international brands to deliver cost-effective brand messaging through an increasingly popular media. With 3G telephony, we will also offer wireless valued added subscription services.
How is Youku’s revenue growth?
We grew revenue by150% from Q1 2008 to Q2 2008, and growth continues to be very robust..
Who are some of your major advertisers?
Key advertisers are branded clients from IT/electronics, including Samsung, Lenovo, HP, Dell, and Canon); fast-moving consumer goods (FMCG) including Nike, Adidas, Li-Ning, Anta, Pespi, Coke, Mengniu, and Wanglaoji, Automotive companies including Ford, MG Rover, Chang’an, and Audi; Internet service companies including Google, Yahoo, Alibaba, Taobao, and 51job; and Gaming companies; and gaming companies including Shanda, Perfect World, Giant Interactive, and Kingsoft.
What kind of advertisers are you pursuing? Are you focusing more on big brands, or on SMEs? More local, or more multinational?
We are currently mainly targeting name brand customers, both multinational and local. We have used Baidu key words on our video display pages to serve SME customers on a contextual basis.
Is ad spend on Internet video media coming mainly out of TVC budgets, or from online budgets?
At the moment, it’s coming mainly out of online budgets. But we expect to cut into the clients’ broadcast budgets in 2009. We believe that among Internet sites, video platforms like Youku are in the best position to court advertisers who want the creative freedom and impact of television advertising with the measurability that the Internet affords.
How does Youku report metrics for advertisers—in video views? Page views? Or some other measure?
We report in terms of user time spent, video views (VV), page views (PV) and reach metrics such as monthly unique visitors (UV). Youku is, by a comfortable margin, the leading video website in China by all these metrics. In terms of user time spent, Youku has over 50% market share in the video-sharing sector. Neilsen/NetRatings completed a third party site census of Youku at the end of 2007 and verified that Youku had over 100 million daily video views at that point. By mid-2008 we had reached over 150 million daily video views. Youku is still the only video website in China with third-party, audited traffic that shows over 100 million daily video views.
What types of ad formats do you currently support?
We currently support both video ads and in-video ads. Video ad formats we support include pre-roll, post-roll, and seed ads. In-video ads include in-video banner, overlay ads, and pause ads. Besides in-video ads, we also have display ads and contextual ads such as Baidu key words.
What kind of advertisements are most customers buying?
Mainly in-video ads and display ads.
What kind of click-through rates are you typically seeing?
We are seeing anywhere from 2% to 8% CTR, depending on different the ad format. These rates are much higher than traditional display ads.
How many videos are submitted to Youku daily?
We have literally tens of thousands of videos submitted on a daily basis – both user-generated videos and professionally-produced content.
How much has this increased in the last two years, since you started operations?
We had a low base of less than 2000 daily uploads after the beta period ended, but have grown very steadily since.
How many videos are viewed per day?
As of mid-2008, over 150 million videos were being viewed each day.
What’s the average time that a user spends on the site per session?
Youku users are spending an average of 35 minutes per session, and 60 minutes per user per day on the site.
How many registered users do you have?
Youku now has well over 10 million registered, but we feel this isn’t a truly important metric, as registration isn’t common among video website users.
How many “Paike” are actively uploading?
Hardcore citizen video uploaders to Youku number in the thousands, and growing!
How is Youku financed?
Youku is backed by a group of first-rate U.S.- and China-based venture capital funds, including Chengwei Ventures, Farallon Capital, Sutter Hill Ventures, Brookside/Bain Capital, and Maverick Capital. We also secured a venture loan from Western Technology Investment, which also provided venture debt to companies like Google and Facebook during their rapid expansion periods as well.
What’s the difference between venture equity and venture debt?
A venture loan is a debt instrument which charges a fixed interest rate, while venture equity has a claim of partial ownership of the company. Venture debt is no different from a commercial bank loan except that it normally charges higher interest rate due to the risk level and it also requires a small portion of compensation by equity, usually in the form of warrant.
Why did you take a venture loan?
A venture loan is a cheaper way of financing compared with equity financing given rapid growth by the company taking the loan. The capital cost of venture loan is primarily the interest rate of the loan, and it saves the dilution cost of shareholder equity (up to the size of the loan). At the current stage of the company, the dilution cost would obviously have been much higher than the interest rate charged by the venture loan.
How would you describe the demographic makeup of your viewership?
Online video sites are generally designed for “busy” users as users can search and view videos on demand at any time. Based on an AC Nielsen study done at the end of 2007, online video users in China are generally older, better educated and have higher income than the average Chinese Internet user. Youku, because of its premium positioning and healthy content, also attracts older, better educated, and higher-income users than the average Chinese online video user. This has been verified by an AC Nielsen November 2007 study. Specifically, 40% of our users are between 26 and 35. About 13% are between 35 and 45, and those below 25 account for 43% (Ac Nielsen, CNNIC).
Do you see P2P streaming or video on demand sites as competitors?
Broadcast and on-demand video content delivery are themselves different, suitable for different content. You can see very different user behavior between these models. Video websites such as Youku reach 4 to 5 times as many users as the P2P streaming websites, according to iResearch. From the perspective advertisers who focus on attention and viewership in the broad sense, the two categories are indirect competitors.
How would you describe the company culture of Youku?
We operate in a highly competitive environment, so we’re very serious when it comes to going head-to-head with our rivals in this market. But in order to do that – in order to win – we know that we need to foster a genuine spirit of unity and teamwork within the company. So internally, we encourage honesty and generosity, team spirit, and a culture reciprocity in giving and sharing. We encourage everyone to attack what they do with honest passion, and we strive to really recognize and celebrate achievement.
Are many of your employees avid “paike” themselves?
Absolutely, yes. Some of our employees certainly are – particularly those working in content team – are very enthusiastic about “citizen video.”
What are you planning to do about copyright protected content on the site?
Our policy is that we will take down all copyrighted content immediately on receipt of complaint from copyright holders. We are developing a fingerprint content recognition technology so that in the future the system can automatically shut out infringing contents. In the meanwhile, we’re working on a legitimization program to sign up licensing and cooperation agreement with content partners.
We can and do assure advertisers that we will only show their ads against content to which we have official rights.
What are some of the more significant content companies that have signed licensing agreements with Youku?
Our content partners include TV stations such Beijing TV, Jiangsu TV, and many other provincial or municipal television stations; branded content producers such as TVB; online copyright distributors such as Net Movie, 51.TV; and all major music companies including Warner Music, EMI, Universal and so on.
Are you doing anything different technologically from your domestic competitors?
Unlike any of our domestic competitors, we’ve built a nationwide CDN network in-house. This accounts for much of the reason that Youku gets consistently higher marks than leading competitors in user experience and streaming speed.
Are you doing anything technologically different from Youtube?
One important technological difference is that we don’t impose a limit on the length of video uploads, or on their total size.
Do you make use of any P2P technology?
Not yet, though all options are being explored.
How do you manage such fast streaming speed?
Much of this is a trade secret. Suffice to say that we have developed all of our technology to date in-house, and we manage 100% of our own video delivery network. This allows us to have both faster streaming speed and a lower cost structure.
What plans do you have to repurpose your content for delivery to mobile platforms?
Right now we have an iPhone version already available. We will develop services for 3G handsets in 2009.
Will Youku be offering any high-definition content?
Yes, we will. Look for it soon!
Are you experimenting with any contextual text-link ads, as Google’s YouTube is doing?
It’s not intuitive to us that in-video text links are a good model for the sort of brand advertisers we’re currently focusing on. When we start targeting small and medium enterprises, we will consider this and other formats. For now, we’re happy to have Google/Youtube serve as guinea pigs.
What kind of segmentation of users can you offer to advertisers looking to reach a particular type of viewer?
Youku’s internal ad delivery targeting system can serve ads based on content category, sub-category (for example, Korean serial dramas known to be popular with a particular demographic), by tags supplied by uploaders, by geographic location, and by time of day.
Do you do any revenue sharing with content producers?
Yes, we do.
Didn’t the SARFT regulations require that licensed companies be majority state-owned? How was Youku issued a license?
“Decree 56”, jointly promulgated by SARFT and MII in December 2007 required that licensed companies be majority state-owned. However, at a subsequent Q&A session, the two ministries commented that the SOE ownership criterion only apply to companies formed after Jan 31, 2008, the effective date of the regulation, and that all legally existing companies can re-apply for an online video license. Youku submitted its application in April to Beijing SARFT, which was later transferred to Central SARFT. Youku obtained its online video license on July 7, 2008.
What is the difference between the two licenses that you were issued?
The online video license allows us to operate a video sharing website where Internet users can uploaded, view and download videos. The video broadcasting production and operation license enables us to make all kind of video programs (excluding movie and television serials) in-house, and distribute through the Internet all manner of video content made by professional content producers.
How do you know what you can’t allow to be uploaded? What’s the process by which you are informed of what is not acceptable?
SARFT maintains a database and State News Bureau constantly issue guidelines. Internally we don’t accept anything pornographic – including so-called “soft porn” – or any politically sensitive content. We are in daily communication with different regulators to know what is acceptable: what’s black and white, what is grey and what’s okay.
What is the process for vetting submitted uploads?
We automatically filter and block content containing prohibited words and unacceptable recorded content through content recognition technology. Then, part-time editors on duty around the clock will screen all uploads one by one. Full time editors will monitor all content during office hours. We have also been developing technology toward content screening over the last two years, including video (MD5 fingerprinting) and picture- and text content-recognition technology. These technologies help us to screen out inappropriate content and prioritize potential risk levels for all content. Based on this input, our team of reviewers, working 24 hours a day, 7 days a week in 3 shifts, will screen all content before it appears on Youku.
cunt from Youku/Mozilla
“Firefox China Edition is built specifically for the vast number of China internet users who, compared with users in the rest of the world, have a markedly different set of expectations, preferences, and behavioral patterns. The China Edition provides quick access to frequently used browser and desktop functions, one touch convenience to change display fonts and sizes, as well as the innovative Live Margin design that literally gives users more browsing space so that they can find relevant information more quickly, create, communicate, and multitask more effectively and efficiently,” said Li Gong, Chairman and CEO of Mozilla Online Ltd., the Beijing-based subsidiary of Mozilla Corporation.
“We are very pleased to have worked with our technology partner Linkool International, and content partners such as Youku, Baidu, and Sina Music, to bring this product to life,” said Mozilla’s Mr. Gong, “Youku’s rich, high-performance, and easy-to-use APIs, together with an extensive video database, allow Firefox to quickly deliver highly relevant video content to users.”
“Youku has invested significant resources to create a variety of user experiences for Chinese Internet video viewers,” said Youku’s Mr. Koo. “With Youku’s iPhone web app and mobile applications made for Chinese 3G mobile phones on the TD-SCDMA network, users can watch more than 161 million videos on Youku anytime and anywhere they want.”
About Youku
Youku (www.youku.com) is China’s leading Internet video website and premier online video brand. It is the top destination for Chinese Internet users around the globe to watch and share videos.
In addition to user-generated content, Youku.com also works with more than 280 professional media partners to distribute online videos in China.
Youku.com was officially launched in December 2006, and now delivers more than 160 million video clips a day. Youku’s users spend more than 40 billion minutes per month on the website.
About Mozilla Online Ltd.
Mozilla is a global community dedicated to building free, open source products and technologies that improve the online experience for people everywhere. Mozilla works in the open with a highly disciplined, transparent and cooperative development process, under the umbrella of the non-profit Mozilla Foundation.
Mozilla Online Ltd., based in Beijing, is guided by the Mozilla Manifesto and is focused on supporting the Mozilla and Firefox communities in China as well as developing innovative technologies and products for the China market and beyond.
For additional information, please contact:
Steven Lin
Manager of International Public Relations
Youku.com
Tel: +8610 5885-1881 x 7128
E-mail: steven@youku.com
Cathy Zhou
Mozilla Online Ltd.
Tel: +86 10 8215-8689
Email: czhou@mozilla.com
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