Alibaba Group Holding Ltd. And Youku Tudou Inc. Illustrations As Alibaba Makes Offer For The Rest of Youku Video Site...The Youku Tudou Inc. app shows video clip thumbnails on a Apple Inc. iPhone 6 smartphone in this arranged photograph in Hong Kong, China, on Friday, Oct. 16, 2015. Alibaba Group Holding Ltd. offered to buy the rest of Youku Tudou as billionaire Jack Ma seeks to stream more video content to Chinese Internet users through control of the YouTube-like site. Photographer: Xaume Olleros/Bloomberg
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Youku Tudou, Alibaba’s YouTube-style video site, is losing out to rivals as luxury advertisers turn to shorter videos on platforms like Weibo to sell their handbags, watches and designer clothing.

Chinese viewers “still spend a tremendous amount of time — more than anyone else in the world — viewing online videos”, said Danielle Bailey, head of Asia Pacific research at digital agency L2. “But livestreaming is dominating, as well as short Vine-like videos where people and brands can produce content.”

The shift of luxury advertising dollars reflects the broader trend but also comes as Alibaba is losing ground to rivals in other fields, in particular online payments, where Tencent is narrowing Alibaba’s lead.

Data from iResearch show that users in China spent an average of close to four hours per month watching short videos, more than double the 1.8 hours spent on live streaming, as of the end of March, according to Jefferies.

L2’s figures show that, of the 75 global luxury brands it has tracked since 2014, just 69 per cent maintain an active official brand channel on Youku Tudou, down from 85 per cent a year ago — and more than 10 percentage points below Tencent’s WeChat and Weibo, which is 31 per cent-owned by Alibaba.

China’s tech companies are all rushing to monetise their huge subscriber bases, but face a fickle audience and shifting advertising budgets. So far, the drive has focused on acquiring top content — pushing up the cost of movies, soap dramas and sports — and weighing up subscription versus ad-based models.

While some videos feature ads at the beginning and end, as on YouTube, content such as livestreamed fashion shows or celebrity-focused short clips are hugely popular. “China has been very sophisticated about connecting commerce. The end of all their digital roads lead to commerce in a way that does not happen in the west,” said Ms Bailey.

Weibo had 340m monthly active users in March compared with an estimated 500m for Youku Tudou.

Alibaba acquired Youku Tudou, the country’s top online video site, in two tranches in 2015 and 2016.

Alibaba does not split out figures for Youku Tudou but its overall digital media and entertainment unit — dominated by Youku Tudou — raked in revenues of Rmb3,927m last year but lost Rmb1.7bn before interest, tax and amortisation.

However, Jefferies internet analyst Karen Chan pointed to the broader trend of long-form online video increasingly shifting to a paid subscription model, which cannibalises some ad slots.

Alibaba said Youku Tudou had seen no decline in either ad revenues or the number of accounts on its platform.

The move towards shorter content has boosted one-time minnows, such as Miaopai, run by Beijing-based Yixia. That contrasts with trends in the US, where Vine was put to death by Twitter last year.

“Miaopai’s advantage over Youku is clear . . . 73,700 more views per video,” L2 noted, comparing like-for-like brands’ videos posted from December 2016 through April 2017.

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