China Central Television (CCTV), the national State-run TV broadcaster, is expected to enter the country's lucrative online video market next week, raising concerns that the move may hurt domestic Youtube-like websites that were heavily fund by foreign venture capital.
CCTV will launch a national Internet TV station next Monday, according to a source from CCTV.com, the online subsidiary of CCTV.
The new website, which reportedly received a 200 million yuan government investment, will provide programming from CCTV, one of China's largest video content makers, and make it available on the Internet.
The move is expected to generate stiff competition for some popular sites.
"If CCTV allows its own video website to stream its contents exclusively, it would have a great impact on websites like Tudou.com and Youku.com," said Edward Yu, CEO of Analysys International, a domestic research firm.
He said CCTV's entry will create an online platform similar to Hulu, a website in the United States that is funded by US networks such as NBC, Fox and ABC that offer commercially-supported streaming video of TV shows and movies.
Youku.com and Tudou.com are the two biggest video-sharing websites in China. But both sites have long been accused of providing pirated content uploaded by their users, like unlicensed TV shows and films.
Victor Koo, founder and CEO of youku.com, said CCTV's entry will not significantly impact his company. He said although CCTV has a great advantage in news and sports programs, Youku also has its own advantage in entertainment programs. "We plan to expand our partnership (with CCTV) next year," he said.
CCTV's move came shortly after the Chinese government launched a crackdown earlier this year and closed more than 500 file-sharing and video sharing websites, which the government claims provided pirated content and porn.
The crackdown follows a new regulation issued by the State Administration of Radio, Film and Television and the Ministry of Information Industry in December last year, requiring video websites in China to obtain a government license. The applicants must be either State-owned or State-controlled companies.
CCTV will also launch a client software that optimizes video streaming for both computer users and mobile users, according to the source.
Although it is unclear how the government-backed video website will make its debut next week, there are signs that many domestic video websites have taken steps to mitigate the impact.
Ku6.com, one of the market's biggest video websites, announced earlier this month it would be purchased by Shanda Interactive Entertainment for $44 million, after years of following the market leader Youku and Tudou.
Youku, which expects revenue this year to surpass 200 million yuan, also announced on Monday it raised $40 million in new funding from a group of foreign capital firms. Reports also indicate Tudou is looking for additional backing from venture capital firms.
During the first half of the year, there were 222.4 million users of video-sharing websites in China, accounting for 65.8 percent of the total online population, according to figures from the China Internet Network Information Center.