Youku Tudou and other Chinese web video firms turn back on piracy

The website of China's biggest internet video company, Youku Tudou, was once a haven for illicit Hollywood blockbusters and hit South Korean soap operas - until it realised that piracy doesn't pay.

Now the company that controls almost a third of China's booming online video market forks over more than a billion yuan (HK$1.27 billion) a year on licences so it can legally distribute movies and shows such as The Walking Dead. It's a strategy that is now expected to buoy the company to its first-ever quarterly net profit.

To protect this market share, Youku Tudou employs a dozen sleuths who scour the web for pirated content, highlighting how China's online video industry is courting higher advertising revenues and better relations with foreign media firms by cracking down on illegal content.

"The biggest challenge is that there are more new ways to pirate video as the technology develops," says Lu Changjun, the head of Youku Tudou's internet police squad.

In the past, China's video websites were rife with pirated films and TV programmes, often added by users.