It's a metaphor.
Ku6, a streaming video site that’s been struggling to gain a foothold in China’s extremely competitive online video market, posted losses of over $21 million, nearly 40 percent worse than the $15.5 million in losses they sustained in Q2 2010.
To be fair to Ku6, content costs in China have risen exponentially over the past few years, to the point that some smaller sites are considering tacitly endorsing piracy because the legal costs may be cheaper than buying the online broadcast rights to copyrighted shows. Prices have risen because of the sharp competition in the internet video sector, with video sites occasionally engaging in bidding wars that drive up the prices of the most desirable video content.
However, despite rising content costs, Youku and other leading sites have been able to reduce their losses recently, though no online video company in China is yet making a profit. Ku6’s losses are perhaps partially the result of its minimal market share (see the chart below) and partially the result of Shanda’s mistakes in advertising, according to corporate leadership. Either way, it’s difficult to imagine Shanda holding on to Ku6 if it continues to make such a large dent in their bottom line without being able to increase its market share significantly.
(PS: Bonus points to the intrepid commenter who can spot which anchor we used in the image above. It’s from a famous ship. No googling.)
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