If it’s not broken, don’t fix it: Fragmentation- the secret to the Chinese Media Market.

Early 20th Century U.S media market techniques help China’s entertainment market flourish, according to Victor Koo, CEO of Youku.com, the largest Chinese video site. In the 1940’s the U.S media market was fragmented, with no media giants dominating the market and leaving the little guys to fend for them selves. Today the U.S has just a few big players that account for the majority of the market, such as TimeWarner and Comcast, and this is where the U.S and China differ.

Unlike the current practices of the U.S media market, China’s market is still fragmented which has worked to the advantage of the market as a whole. According to Bloomberg BusinessWeek, China currently has about 300 TV broadcast companies running thousands of channels, with some only being offered in certain cities and provinces. The open market leaves room for the small companies to experience to make a name for them selves and experience just as much success as any other company.

The fragmentation has proved to be beneficial for the Chinese video site, Youku.com, which has made its way to the top as China’s largest video site. At 270 million monthly unique visitors, Youku.com has used traditional advertising and branded content to monetize the site. With 70% of content being licensed and professionally produced, and only 30% being user generated content, Youku.com has differentiated itself from sites such as Youtube, to which it is often being compared. Youku.com’s partnership with WarnerBros (TWX) and Disney (DIS) has allowed it to expand its’ offerings to include movies and TV shows for a small fee and subscription services similar to Hulu.

Although the site isn’t profitable yet, CEO Victor Koo is proud of its’ growth and seems to know the value of delayed gratification. In a market where there is an even playing field for companies such as Youku.com, the opportunities are endless, and they can control their own fate.

About cyndreab

Cyndrea Brown was born in Los Angeles, California, raised in Seattle, Washington and received her Bachelor's Degree in Communication from Washington State University. She is currently pursuing her Masters of Communication Management at the University of Southern California.
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