Chinese video websites in court as industry grows

BEIJING (AP) - China’s two biggest video websites are fighting in court over accusations they are misusing each other’s programming as rivalry heats up in an industry that is luring viewers from bland state TV.

The conflict between Youku.com Inc. and Tudou Inc. is part of a struggle for dominance in an online market with nearly 400 million viewers and dozens of privately owned outlets that might represent the future of China’s video watching and a lucrative advertising stream.

“Everybody is shooting for that golden demographic _ the young people who are just out of school, have a lot of disposable income and that watch online video instead of television,” said David Wolf, a marketing consultant in Beijing.

China’s video websites started out imitating YouTube, relying on users to upload cat videos and other free material. But to lock in affluent viewers, the most ambitious started to imitate TV stations, paying to import foreign programs or create their own.

Still more viewers might be driven to video websites by a new government campaign to clean up China’s airwaves and promote “socialist core values.”

Rules that took effect Sunday strike at a hugely popular market segment for China’s ambitious local broadcasters by slashing the number of reality, talent and dating shows they can show on satellite channels. State media say the number of prime-time entertainment shows plunged from 126 in December to just 38 this week.

That hurts local stations just as rising revenues allow online rivals to produce even more content, highlighted by the court fight between Youku and Tudou.

In a Dec. 16 lawsuit, Youku accused Tudou of stealing 60 of its programs including serials called “The Emperor’s Harem,” “Hip-Hop Office Quartet” and “Miss Puff.”

Tudou says it has filed suit in Shanghai and Beijing accusing Youku of showing a Taiwanese series, “Kangxi Has Come,” after Tudou obtained rights to it. The company claims Youku showed Japanese cartoons without the owner’s permission.

The companies, both of which have shares traded on U.S. exchanges, accuse each other of trying to use legal claims to gain a competitive edge.

“Youku think they can live on free traffic without paying for the content,” said Tudou CEO Gary Wang in a statement, “and they are trying to hide the fact that they are actually not as competitive as they pretend to be.”

Both companies reject the accusations in the lawsuits.

“Tudou is playing games,” said a Youku spokeswoman, Jean Shao.

Beijing has allowed such private companies to flourish with fewer of the controls imposed on China’s entirely state-owned newspapers, TV and radio, possibly to avoid stifling what is seen as a promising high-tech industry.

Their surging popularity threatens to erode viewership for state TV, which Beijing sees as a tool to mold public opinion. That raises the threat communist leaders might tighten controls to protect their media presence.

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