Alibaba’s Tudou.com Joins Internet Video Craze

(Beijing) — China’s e-commerce giant Alibaba is set to jump into the booming market for short original videos via its video-streaming subsidiary Tudou.com, announcing a 2 billion yuan pot of money to attract filmmakers to the site.

Tudou said on Friday that it will pay 2,000 producers a cash sum each month plus a share of the advertising revenue each film earns, in an attempt to lure video makers away from rival sites.

Alibaba Group Holding Ltd., run by billionaire Jack Ma, is known primarily for its online shopping platforms, notably Taobao and Tmall, which account for around 80% of its revenue. But the group has been branching out into other areas such as third-party payment platform Zhifubao and financial services such as microlending.

Alibaba bought Tudou.com in April 2016 for $4.2 billion, four years after the company was formed through the merger of video hosting rivals Youku and Tudou to create the country’s primary video streaming site. But Tudou has been losing ground as newer forms of entertainment, including short videos of under three minutes, have gained popularity amid a huge shift in consumers’ preference for watching on mobile devices.

But Alibaba and Tudou are coming late to a market currently dominated by Yixia.com, a short-video and live-streaming internet platform that’s been instrumental in reviving the fortunes of Nasdaq-listed Sina Weibo. The Chinese social media and microblogging platform saw its popularity start to drop in 2014 partly as mobile users switched to WeChat, a social networking and messaging app developed by Tencent Holdings Ltd. that’s broadened into payment services, video conferencing and gaming and news sharing.

But it has managed to drive traffic back to its platform helped by Yixia.com’s Yizhibao, a live-streaming service that includes exclusive contracts with celebrities who share advertising revenue with the social networking platform. Weibo has invested some $190 million in Yixia’s parent Yixia Technology.

Personalized news and information aggregation app Toutiao, which is backed by Weibo and private equity group Sequoia Capital, has also joined the frenzy. The app launched a video channel in 2015 and in September last year announced it would offer up to 1 billion yuan in subsidies to makers of high-quality original short videos.

“Short videos have surpassed text and images to become the most important form of information on Toutiao,” Chief Executive Zhang Yiming said when the announcement was made.

Tencent Holdings Ltd. is also muscling in on the short-video market. In March, it led a $350 million investment in Kuaishou, a photo- and video-sharing app popular with rural communities and migrant workers. Kuaishou, which secured funding from Chinese internet-search giant Baidu Inc. last year, is aiming to list in the U.S. this year according to media reports.

Contact reporter April Ma (fangjingma@caixin.com)