Summary:

A war between two of China’s leading web operators is playing out on the Nasdaq through two of its main video sites.

Tudou, which raised $1…

Wall Street Bull
photo: Corbis / James Leynse

A war between two of China’s leading web operators is playing out on the Nasdaq through two of its main video sites.

Tudou, which raised $174 million when it floated in New York last week, has now seen about four percent of its equity bought by the Sina (NSDQ: SINA) portal by up to $40 million, according to multiple reports including Reuters‘.

“Perhaps, Sina has felt pressure to react to rumours that Tencent has its eyes set upon the leading video site, Youku,” Technode speculates. “It is believed that Tudou will remain independent but it is speculated that Tudou will eventually operate Sina’s video platform since video makes up a small portion of Sina’s business.”

Youku raised $202.85 million from its Nasdaq float back in December. But, post-IPO Youku’s stock has shed a third of its value. Tudou stock, too, dropped by 7.5 percent on its first day last week.

For Sina and Tencent, video is the next big online product to join their line-ups after social their Weibo microblog services.

In December, Sina said video was its main investment area and disclosed concerns over its position, pointing to competition from the likes of Youku and Tudou…

“We have recently experienced significant fee increases from some of our content providers in the areas of sports and entertainment video content and other professionally produced content. Competition for quality content for online advertising is intense in China. We are seeing well-capitalized competitors, both private and newly listed companies, who operate on a net-loss basis. If we are unable to secure a large portfolio of quality content due to prohibitive cost, or if we are unable to manage our content acquisition costs effectively and generate sufficient revenues to outpace the increase in content spending, our financial condition and results of operation may be adversely affected.”

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