According to the report on China's Internet video market for the fourth quarter of 2008 released by the market research firm Analysys International, China's Internet video sector generated CNY130.7 million in revenue during the three months, an increase of 0.5% compared with the third quarter of 2008.

Analysys International says in the report that in the fourth quarter of 2008, China's Internet video market mainly had three characteristics: P2P services were weakened; copyright protections became more important; and traditional media companies starting moving into this sector.

For the first characteristic, the dominant position of P2P live service providers has been weakened and the market concentration has decreased. PPStream and PPLive, two major Chinese P2P live service providers, owned market share of 12.9% and 12.1%, respectively. The reasons for the decrease of market concentration are because the value of video websites has further gained the recognition of advertisers after the 2008 Beijing Olympic Games. In addition, these video websites enhanced their marketing and sales, which helped them shorten the distance to the P2P live service providers, who started earlier in the online advertising sector.

Second, video websites attached more importance to copyright purchases than the video sharing model and enhanced their establishment of an authentic movie and TV products sharing platform. These high costs brought great pressure to video websites, and to turn their traffic to revenue as soon as possible, the video websites started to shift to authorized content to gain the recognition of advertisers. In the fourth quarter of 2008, Youku.com and Ku6.com topped the Chinese video website market with the market share of 8.6% and 8.5%, respectively.

Finally, traditional movie and TV media and organizations entered the online video channels in China. For example, Beijing Television Station has launched its own online TV channel and China Film Group Corporation has launched online broadcasting of short films. As the function of online video gained the recognition of traditional movie and TV makers, these companies realized that cooperation would bring more benefits than competing with online video websites. Taking online video as a new revenue channel, traditional movie and TV makers can not only expand their channels, but also can realize the value of their products for the second time.