Youku Adds More Pressure to Netflix Race
In a reminder to investors that Netflix (NASDAQ:NFLX) is facing a long and competitive fight, Chinese internet TV companyYouku Inc. (NYSE:YOKU) signed a deal today with Twentieth Century Fox Home Entertainment (NASDAQ:NWSA) under which Youku will license 250 titles of new release and library films. The titles will appear on Youku’s on-demand platform, Youku Premium.
Youku Premium has received more than a million orders for service since its debut in beta a year ago. Additionally, the number of pay-per-view purchases on Youku Premium increased more than threefold between Q2 and Q3 of 2011. As of November, an increasing percentage — 13.5 percent — of Youku Premium customers paid for premium content more than once a month.
This is, of course, all bad news for Netflix. The streaming video company will ultimately want to expand into Asia, but Youku is clearly getting a major head start. Other on-demand content providers such as Time Warner (NYSE:TWC), DirecTV (NASDAQ:DTV), Dish Network (NASDAQ:DISH), and Comcast (NASDAQ:CMCSA) are a glimpse of what Youku will likely continue building in China.
Here’s how Youku and News Corp shares are reacting to the news:
Youku.com Inc (ADR) (NYSE:YOKU): YOKU shares recently traded at $17.78, up $0.88, or 5.21%. They have traded in a 52-week range of $13.76 to $69.95. Volume today was 1,965,861 shares versus a 3-month average volume of 2,346,200 shares. The company’s trailing earnings are $-0.27 per share.
News Corp. (NASDAQ:NWSA): NWSA shares recently traded at $18.70, up $0.05, or 0.27%. They have traded in a 52-week range of $13.38 to $18.84. Volume today was 4,141,362 shares versus a 3-month average volume of 19,182,000 shares. The company’s trailing P/E is 18.35, while trailing earnings are $1.02 per share.