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Baidu Video Unit Tops Alibaba, Becomes China’s Mobile Video Leader

Baidu ( BIDU ) video unit iQiyi has vaulted past Alibaba Group ( BABA )-backed Youku/Tudou as the new leader in China’s ultra-competitive online video space, an analyst said Wednesday. Baidu stock was up a fraction in afternoon trading in the stock market today , near 190. Alibaba stock was up 1%, near 79. Shares of China gaming firm  Sohu ( SOHU ) were up a fraction Wednesday afternoon, while  Tencent Holdings ( TCEHY ) was down a fraction. Baidu’s iQiyi “demonstrated strong growth momentum over the second half of 2015, overtaking Youku/Tudou as the leader in the mobile video market in mobile app penetration and mobile usage,” wrote ITG Investment Research analyst Henry Guo in an industry note Wednesday. “Our data suggests that, while iQiyi leads the space, Tencent Video has maintained its solid position, but Youku/Tudou has lost market share. “In contrast, Sohu Video is increasingly becoming a marginal player in the market, due mainly to its conservative content acquisition strategy over the last several quarters.” IQiyi and Baidu video service PPS together have “gained 8.1 percentage points in installation penetration” during the past year, Guo said. He says Youku/Tudou fell by 6.3 percentage points, and Sohu Video fell 3.9 percentage points, to 8.7%. In monthly active users, iQiyi and PPS together have gained 3.6 percentage points over the past 12 months, said Guo, while Tencent, Youku/Tudou and Sohu Video all saw declines. Viewer traffic from search leader Baidu, big spending to produce hit dramas, and iQiyi’s “aggressive content acquisition” strategies all contributed to growth, he said. In early December 2015, iQiyi disclosed that its paying subscribers nearly doubled to 10 million in six months. After recent shareholder approval, Youku/Tudou will become the online video segment of Alibaba and no longer will be listed on the NYSE as of early April. Guo says Youku/Tudou will be helped by Big Data sharing with Alibaba. Guo says that while iQiyi’s revenue doubled in both 2014 and 2015, “rapidly increasing costs of content and bandwidth significantly pressured the company’s profitability.” Tencent Video’s 2015 revenue also doubled, said Guo. Comcast ( CMCSA )-owned Universal Pictures late last year provided Baidu’s online video platform iQiyi with more ammunition in its battle against Alibaba and Tencent for streaming supremacy in China. Expanding an existing agreement, Universal last month signed a multiyear deal with iQiyi, which will handle Universal’s new film releases and library titles. Los Gatos, Calif.-based streaming media company Netflix ( NFLX ) has announced intentions to move into China.

Why Netflix Might Be Able To Redeem Itself In Q1

Netflix ( NFLX ) shares are now starting to make a comeback after the news that its fourth-quarter U.S. subscriber growth missed expectations. The stock fell as much as 22% in the weeks following the news, despite strong overall subscriber additions. But with a new Baird survey  pointing to “solid” U.S. subscriber results in Q1, Netflix may be able to redeem itself come its next quarterly report in about two weeks. Baird said that the strong Q1 U.S. subscriber numbers can be attributed to the recent launch of new seasons of successful Netflix originals including “House of Cards” and “Daredevil.” Shares are climbing 3% in volume that’s tracking a little lighter than average Tuesday. The stock retook its downward-sloping 50-day line earlier this month and is now approaching the 200-day line. Netflix dropped below that level in the wake of the report of its weak Q4 subscriber growth. For Q1, analysts expect earnings to fall 20% amid rising costs, while revenue jumps 25%. Netflix is seen as the leader in video streaming, with an expanded global rollout announced in January. But it’s facing increasing competition as others start to take advantage of the cord-cutting trend. Competitor Hulu, a joint venture among Disney ( DIS ), Comcast ( CMCSA ) and 21 st  Century Fox ( FOXA ), is starting to create its own original content. Hulu and Netflix have both recently launched virtual reality apps that work with Samsung Gear VR, powered by Facebook ( FB )-owned Oculus. The high-end Oculus Rift headset began shipments this week. Disney was up 0.2% Tuesday, Comcast added 0.9%, and Fox was essentially flat. Facebook climbed 2.1%.

Facebook’s Oculus Rift: Reviews Mixed, As Content Still Lags

What’s clear from the swath of reviews of the Facebook ( FB )-owned Oculus Rift virtual-reality headset is that the technology has most certainly arrived, but for the most part, the content still needs to follow. From the reviews and my own experience with the Rift, it’s hard to argue that — at the very least — new types of video games are right around the corner. The Rift is a solid piece of technology that works reasonably well under most circumstances, and video game reviewers  mostly agree . Hardware-wise, the main gripe among the reviews was that the Rift didn’t ship with motion sensitive controllers that Oculus demonstrated this month at the Game Developers Conference in San Francisco. The Rift shipped with a Microsoft ( MSFT ) Xbox One controller. Such controllers would allow anyone donning the headset to make gestures and manipulate VR content in a more life-like fashion. The motion-sensitive controllers are coming later this year, Facebook says. But as IBD reported from GDC on March 17, the hardware is here (or within a whisker), but the content has yet to come. It’s not clear whether the software shipped with the VR headset will match the impressive hardware. Of the titles I tried at GDC, none were too compelling, though I sampled a mere seven games. Reviewers at the  New York Times , the  Wall Street Journal  Digits blog (but not the newspaper itself ), and gaming website IGN  (among others) agree with my assessment. The Rift debuted with 30 titles, ranging from $10 to $60. The majority of the reviews that IBD looked at for this post were in gaming publications, and reviewers acknowledged little out there yet in the way of worthwhile non-gaming VR content, such as VR movies that video-streaming companies such as  Netflix ( NFLX ) are exploring. The Rift headset’s $600 cost was cited in many reviews as a deterrent to all but the most dedicated of gamers — especially considering the headset requires a PC with advanced graphics hardware that runs about $1,000. And it doesn’t yet work with Apple’s OS X. Many reviews of this first-generation Rift, such as the review by the New York Times, said reviewers eagerly await better content and future generations of the device. And Facebook will soon have company. HTC plans to launch its VR headset, Vive, in April. It will retail for about $800 and feature hardware similar to that of Facebook’s Rift. Sony ( SNE ) also has a VR offering coming for its PlayStation console, likely to hit stores in Q3 or Q4.