Internet & Tech

Death of a sales team

Shanda’s video-sharing site fires staff and loses market share

Death of a sales team

Watch out: Ku6 lags rivals like Tudou and Youku

As if being made redundant wasn’t wounding enough, workers at Ku6, a video-sharing site, are complaining that they were then beaten up before they could pack their things and leave the building.

It isn’t clear how the fight broke out but disgruntled employees told local press that Ku6 “hired thugs” to kick them out of the office, says Nanfang Daily.

Vice president Hao Zhizhong, a senior executive at Ku6 among those laid off, quickly took to his weibo (China’s Twitter-equivalent), lambasting the company as “foolish, mean and cold-blooded”.

Half an hour later, he wrote another message: “United we stand! I don’t understand what you are trying to do because what you are doing is destroying the company… Now is the time to fight. The sales team of Ku6 is not afraid to fight!”

As it turns out, Ku6, which is listed on Nasdaq, says it is changing its approach, by giving the bulk of its advertising sales to third-party agencies. That’s why it fired Hao and his sales team (it also told the Global Times that it is going to take Hao to court for defamation).

Ku6 is losing money. First quarter results announced last week saw net losses increase to $10.9 million, up 9.9% on the same period last year and the company, which was acquired by online gaming giant Shanda in 2009 (see WiC45), has struggled to compete against its bigger rivals. It now trails Youku and Tudou by some distance and even late entrants like web portal Sohu’s video-sharing site are generating more traffic, leading to Ku6 dropping from third to fifth place in market share terms, says research firm Enfodesk.

“Even though the company was the first one to enter the market, when it comes to financing and content, Ku6 is showing that it is no match to rivals like Tudou, Youku and other new platforms,” agrees Wang Fang, an analyst at iResearch.

Ku6 employees say Shanda has done little to develop its acquisition. Tech blogger Liu Xingliang reckons Shanda has become reluctant to invest more in the money-losing company. And since Kevin Li, Ku6’s founder, resigned earlier this year the company has lacked leadership, staff told China Enterprise News.

Ku6 isn’t the only Shanda-owned firm shedding staff. The head of Shanda’s joint venture with Hunan Television was sacked in January; and Hurray, a mobile content provider acquired in 2009 for $46.2 million, has seen 40% of staff shown the door by its new owner. Perhaps Ku6 should consider itself lucky for not suffering a worse fate.

Shanda, with a long-held ambitions to become “China’s Disney,” has expanded its online entertainment empire aggressively in the last few years (see WiC49). But it is now experiencing “the pain of overeating”, says China Enterprise News, having focused too much on deal-making and not enough on the integration of its new businesses.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.