However, the company hasn't broken even, suffering a net loss of 46.9 million yuan in the third quarter in 2011. This is common among the country's online video companies, whose expenses on copyrights, bandwidth and daily operations have exceeded the revenues they get from advertising.
Victor Koo, Youku's chairman and chief executive officer, said increasing its market share, instead of breaking even, is the focus of the company.
Faced with rising copyright prices for popular TV series and movies, some companies have started to put more emphasis on other kinds of content, such as animation and variety shows, for which prices are relatively cheaper. They also diversify portfolios through this.
Iqiyi.com, the online video arm of search engine Baidu Inc, for example, said animation has become an important part of its content purchases.
Animation is the second largest traffic driver of Iqiyi, coming behind TV series and movies. Animations of more than 400,000 minutes have been bought, said Sarah Zhang, senior director of the business development department.
Xu Weifeng, president of PPStream Inc, an online video service provider, said the company is also increasing the offering of animations even though movie and TV series are still its main focus. Meanwhile, the price of animation is increasing, he added. The price of one minute of animation has risen from eight to 10 yuan to 100 yuan, he said.
Another strategy of major online video websites is to produce their own programs and drama series amid increasingly fierce competition and rising copyright prices.
Tudou, for example, will provide two idol dramas, a variety show section and seven entertainment programs, all of them self-made, in the next three months, said Liu Siming, general manager of Tudou's Original Programming Center in December. The company set up a channel especially for its self-made programs and content for which it owns exclusive copyright. The two elements will form the backbone of Tudou's competitiveness, Liu said.
About 394 million people watch videos online in China last year, compared with the United States' 158 million. The number is expected to reach 445 million this year, according to industry figures.
He Wei contributed to this story.