VC's planning to leave video sharing

Silicon Hutong points at this Reuters' article on the upcoming collapse of video sharing in China. I have been writing about the upcoming problems earlier this year, but now we seem to see a clear "abandon ship".

"If video-sharing sites rely on their own resources and capabilities, I don't see much prospect for profit," said Liu Bin, chief analyst at the Beijing research firm BDA China.

While the loses are still relatively small for the VC's, the lack of money-earning capabilities has been one of the weak points of the industry anyway. Reuters mentions a study by data firm iResearch trying to make us believe the industry can generate 3.4 billion Rmb by 2010, but that seems an extreme form of wishful thinking. An overwhelming majority of the now close to 500 video sharing ventures seem unable to make any substantial money.

Established Web companies like Tom Online, SINA, Sohu.com and Netease.com, which market watchers believe are considering expansion into video sharing, have a
bigger chance of success in the online video business, as they already command a high level of traffic and have deeper pockets, analysts said.

And Tencent of course.