Degree of rivalry: high
YOKU is operating in a relatively competitive market. With the acquisition with Tudou completed in August 2012, it captures the largest market in Chinese online video market (over 1/3). However, it still faces competition from other video websites like iQiyi.com, and also integrated web portal with video services like Baidu (NASDAQ:BIDU), Sina Corp. (NASDAQ:SINA), Tencent (HKG:0700) and Sohu.com (NASDAQ:SOHU). The competition is for both users and advertisers. The lack of content innovation makes users easily diverted to other video websites. Also, the single profit model relying on advertising adds to the competitiveness of the industry. Unless YOKU Tudou (NYSE:YOKU) manages to differentiate itself in content and diversifies its profit channel, competition remains fierce in the market.