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Youku Tudou Online Video Mobile Monetization Yet to TakeOff – Strategy in Place

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YouKu Tudou Mobile Monetization Wait Gets LongerYoku Tudou, Online Video Sharing Giant from China has initiated mobile ad experiments with leading brand customers from auto and cosmetics, with mobile ad rev contributing still low single-digit of total rev in 2Q. Mobile monetization for the company is still in very early stage and another 9~12mth delay is expected.

YouKu Mobile Videos User Behavior and Analytics
Youku Tudou has seen encouraging growth of mobile traffic in the past six months. Daily VV (video viewed) by June-end reached 200m, more than double the figure at the start of 2013, implying a sizable potential ad inventory. The company is leading the industry in terms of mobile traffic growth.

Mobile Youku Tudou users watch an average of 70 minutes videos on a daily basis, which is longer than 50 minutes on the PC front. The mgmt also shared a trend that video consumption is less concentrated in terms of time periods of a day. More users watch mobile videos all through the day, compared with high concentration at night in the past.

Many of the company’s in-house production, such as Youku Talent Show and Tudou Show Box had gained wallet share from premium head contents. Meanwhile, the co is actively cultivating UGC partners through rev sharing model and other initiatives (with UGC contents contributing ~30% of total traffic). We expect less reliance on head contents, growing library and a shift towards in-house production/UGC to alleviate content investment pressure in long term but near term remains cumbersome due to intensifying competition.

Youku is pressing its advantages in the mobile due to its 1) second to- none brand awareness in China’s online video industry 2) width and depth of its content library, consisting of both professional produced contents and the leading UGC / original in-house offerings.

Challenges in Mobile Video Segment
The highly fragmented smartphone market, in terms of both hardware model specs (such as screen size ) and Android based operating systems variations, which creates significant obstacles for video providers to display standardized ads across all the devices.

Mobile ads could seriously spoil user experience on a much smaller screen, which in turn drives away traffic, and extended
curve of client education as most advertisers are skeptical of mobile video ads ROI due to difficulty in tracking performance.

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