The Darwinian law of video sites

It will be a grim reality for the Chinese video site that a handful of people are dying alive.

With YouTube's popularity in the US, Chinese entrepreneurs produced hundreds of Chinese versions of YouTube almost overnight in 2006. Among them are the inertia of Chinese internet entrepreneurs replicating the US internet and the irrational push of venture capitalists. However, this malformed video bubble is likely to be officially dashed in 2007.

"I think most video sites will be out of the industry by the end of the year," he said. In the past, entrepreneurs and venture capitalists in this industry have been somewhat irrational. "This is Tencent boss Ma's interpretation of the video industry."

The high cost and no profit model are the basis of the above judgment of Ma Teng.

The cost of the video site is mainly reflected in the server cost. Especially, with the increase of the number of users, the server cost of video web site is growing at a geometric level almost. However, the cost of Chinese servers is too high for ordinary people to imagine. According to Ma, the cost of Chinese servers is 10 times times the cost of U.S. servers in comparison to the same purchasing power. "Now the video sites are burning the money for venture capital. Ma said rudely.

More frightening than burning money is the video site at present there is no mature profit model. Theoretically, the video site should occupy some of the advertising share of the TV station, but in fact the video site can divert the number of TV stations is very small.

This has created a terrible vicious circle: In order to stand out in many video sites, each company must desperately increase its number of users and traffic, but the cost of traffic is the cost of video sites at the speed of growth, and video sites do not have any profitability to make up for the cost of the gap.

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