Japan’s Softbank has purchased a 35 percent stake in the Chinese video venture Synacast for a total of $250 million, NewTeeVee has learned. Synacast is better known under the name of its popular peer-to-peer video platform PPLive. Softbank announced the deal earlier today without disclosing specifics, but PPLive CEO Vintent Tao confirmed the actual amount during a phone interview, saying that “this capital will really help us to be more competitive in China.”
PPLive is one of the biggest players in the growing Chinese video market. The company distributes client software that allows its end users to access live TV programming and video-on-demand movies, and it claims to have an install base of 200 million, with 105 million active users per month. Users watch an average of 2.5 hours of PPLive programming per session.
Tao said that PPLive wants to use the money to build out its platform across devices like TV set-top boxes and mobile phones, as well as invest in its infrastructure. The company uses a mix of P2P and edge content delivery to stream to end users, utilizing 60 data centers across China. Even so, about 90 percent of its bandwidth on average is P2P-based.
The reliance on P2P has as much to do with the state of the Chinese Internet infrastructure as its emphasis on linear and live video content, according to Tao. “Traditional CDN technology can not support one million concurrent users,” he explained.
PPLive also wants to use some of the money to build out its content offering, but Tao explained that his company is taking a different approach toward content acquisition. Instead of simply licensing all of its content, PPLive has opened up its platform to content owners who want to reach PPLive’s large user base.
Tao told me that the company is still experimenting with different business models, including revenue-share agreements, advertising and e-commerce, which now accounts for about 25 percent of PPLive’s revenue. He didn’t disclose any totals, but said that revenue grew 300 percent last year and that PPLive is now close to being profitable. It currently employs 350 people, but Tao expects this number to go up significantly after the Softbank investment. PPLive may also revisit its international ambitions following the investment.
Does that mean we’ll soon all use a Chinese P2P client to watch our TV programming online? Probably not. Still, this is huge news. In fact, it is the single largest investment in a video service since the acquisition of YouTube by Google in 2006. The fact that it didn’t happen in the U.S. goes to show that there’s still a lot of potential in the international online video market. Companies in other countries may end up leapfrogging the U.S. online video industry with own technologies.
Tao was quick to point out that U.S. audiences haven’t been able to get live TV from Netflix and Hulu, but he also acknowledged that PPLive still has some challenges ahead on its way into the living room — one being the fact that Chinese authorities require different kinds of licenses from service operators that stream to set-top-boxes. “There is still a lot of work to do,” he said.
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