By Yang Yang, Duan Yinyan, Yin Xiankai
Published: 2008-01-16

Awaiting More Details
In response, some companies have begun searching for cooperative opportunities with state-owned institutions, especially those in the broadcasting and television industry, says an investor of one online video company.

When asked whether itv.ifeng.com is continuing its operation after January 31st, Liu Shuang, the president, refused to comment. Some sites have said that the Provisions don't allow enough time for applying for the certificate.

What related companies can do now is to continue work as usual while waiting for detailed regulations, which will be released at some still uncertain time—some say by the end of January, others say in two to three months.

If all the rules in the Regulations are to be 100 percent implemented, the deepest concern for these companies would be the purchasing price.

Venture capital investors say that most existing video sharing websites are funded by venture capital, and will bear great losses during the partnership process. This is because state-owned enterprises allowed by SARFT wouldn't offer a high price. For another, the time limit—before January 31st--has a negative effect on further negotiations. But no matter how low the price must be, these sites have to be sold, as they have no other way to survive.

This investor further reveals to the EO that those have invested in the industry are now panicking, as there have been such examples before: after similar policies came into effect, a mobile video content provider was once sold to a company under CCTV at what they called a "horribly low price".

Meanwhile, the industry has been searching for ways to "satisfy" the regulatory bodies.

Gui Wei, in public relations department of Sina.com, tells the EO that early last May, the company allied itself with China Telecom, with its video sharing site having been undertaken in cooperation with the latter. And a source at Sohu.com, China's biggest portal, also says the company has already worked in cooperation with CCTV. For them, it's only a procedural question to meet the new requirements.

Sites will work out the problem, says Yang Mei, chief public relations officer of Chinabb.tv. The new rules are more likely to be looser than have been anticipated, since it's unrealistic to require a state-holding background of all the video sharing sites. "Whenever there's a rule, there's a countermeasure. We'll find a way when the implementing details are published," says one experienced venture investor.

The new policy might be good news to those already in the industry, as it adds a new barrier to entry, says Gu.

"Those who haven't invested are being even more prudent. Online video business fever has been swept the country these past two years, now the new policy is making people cautious," says one investor, adding that most investors in the industry are waiting until after January 31st before making any more moves.

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