Video sharing sites going down the Youtube?

A recent article by Reuters journalist Sophie Taylor looks at China’s video-sharing websites and concludes that their prospects are not good:

Investors leaving China’s video-sharing sites

…Investors, spurred on by the Google-YouTube deal, have made big bets on China, the world’s second-largest Internet market after the United States with about 137 million Web users.

Last year, 11 online video firms received a combined $52.7 million in venture capital funding, up almost 40 percent over 2005, according to the data firm iResearch.

Revenue from online video in China totaled about 500 million yuan, or $64.7 million, in 2006 and is expected to rise to 3.4 billion yuan by 2010, it added.

But while there have been some successful video-sharing projects in China – such as the bandana-wearing Back Dorm Boys, who became famous via video sites – about 90 percent of the 400 to 500 online video firms in China are expected to wither away as they struggle to turn traffic into cash, analysts said.

All of the points raised above make sense. Like Youtube, none of China’s video sharing sites have a clue how they are going to make money off their users, but unlike Youtube, China’s video sharing sites have to deal with a nasty regulatory environment and an advertising market that is extremely conservative.

However, there is something about China’s video sharing sites that makes them much more interesting than their American counterparts: broadcast TV in China is really boring.

There is no HBO, no Fox, no CNN. China’s MTV is lame, and so is

Star TV. Young Chinese people can have a lot more fun on Tudou.com than they can by watching any broadcast TV channel. As long as China’s video sharing sites have the cash to keep going, they will eventually find ways to make money off their audience — brand advertisers in China will need some time to get on board, but when they do, they will follow the young people who no longer watch the idiot box.

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