Sohu IT, 12/15/11
Deng Wei, VP of Chinese online video site LeTV (Leshi) (300104.SZ), said today that the site's first round of copyright licensing deals had been able in most cases to recoup 80% of the site's rights acquisition costs.
The majority of copyright licensing deals LeTV has signed with rights holders are exclusive and range in length from five to seven years. The deals generally allow LeTV to license the rights to other buyers for one to two years for viewing on PC terminals, but do not permit licensing of standalone IPTV or mobile video broadcasting rights. Where two years ago LeTV might have paid RMB 1,000 per episode of a popular TV drama, it will now charge considerably higher per-episode rates for licensees of the series.
Deng said that under the model LeTV uses for rights acquisitions, the site involves itself during the pre-production stages, when producers are choosing scripts, satellite TV broadcast partners, and directors and actors. LeTV began stockpiling rights to titles in 2004, and has since amassed one of the industry's largest library of licensed film and television titles, with rights to more than 4,000 films and over 50,000 episodes of television programming - some of which it will license to others. The company predicts that it will begin seeing a return on its investment through licensing deals over the next one to two years.
Deng said that LeTV had an average of 700,000 active paying users per month in Q3 2011, and had seen a sharp increase following its partnership with online video site operator Tudou (Nasdaq: TUDO). LeTV's leading ad clients are in the fast-moving consumer goods (FMCG), automotive, and e-commerce industries.
Editor's Note: For more information on this topic, please see "LeTV, Tudou to Establish JV," MD 10/18/11 issue.