Bill Bishop, an investor and consultant based in Beijing, joined me via Skype to talk about this white-hot Chinese Interent IPO market, that’s even welcoming unprofitable companies into the Nasdaq. “It’s been a crazy couple months, and it looks like it will be crazier through Christmas,” he says. “The goldrush is back.”
One of the most interesting corners of that goldrush is online video. Between dozens of competitors, soaring bandwidth costs, piracy issues and government crackdowns, this has been one of the harder areas for Chinese upstarts to succeed and more than a dozen have died. A lot of Silicon Valley money has died with them. But left standing are YouKu and Tudou and both have filed paperwork to go public.
They are frequently called the “YouTubes of China,” but both are actually becoming the home of more premium and even original scripted content. These companies may have started with a user generated content bent but are more like a Hulu than a YouTube now, or even an HBO or AMC. It seems UGC is hard to monetize everywhere.
With hundreds of millions of uniques per month– they are sucking up insane amounts of bandwidth. The two leading companies Tudou and YouKu have raised more than $300 million between them and only Tudou is close to profitable. Some IPO cash would help them dramatically, as would the marketing event that goes along with a successful IPO.
But with two companies with roughly the same user base and roughly the same revenues both getting ready to file– which one should investors buy? Bishop helps us make sense of the market.