Rumor has it 56 simply burned through their funding and is using the government as a nice excuse to close shop. Someone wise once said something to the effect of: Don't attribute to malice what can be attributed to stupidity.
I have some brief contact with the VC industry China, and almost anyone with money that I've met is basically just thrusting it at whatever seems hot overseas. The focus is on bringing companies to market (quickly) rather than trying to build sustainable businesses with competitive advantage in their field.
Losing cash on deals like this is great if it forces the VC industry to look for non me-too investments that actually deliver value. I'd prefer not to have the field cluttered with investors who don't know the difference between ren and ru. Will waste less of my time when/if I ever need funding.
I did some searching today and it appears that Chinese advertising market is third biggest in the World ($60Billion https://hackernews.hn/item?id=238595 ) so they should have been able to bring some revenue in. And if they disappeared and never told their investors because they ran out of money, they could have went back to them and asked for more... so that theory doesn't make much sense to me.
While the ad markets globally are quite big, the number of videos ads are a tiny portion of that due to lack of inventory, content providers not having the tools to create video ads, different websites requiring different formats & sizes of video ads, and hence a lot of content is not monetizable.
The IAB recently introduced standard for video ads, that with an understanding of how lucrative video ads in terms of CPM's, and with measurable analytics and tools, the video ad market should increase substantially.
User generated ads currently have very low CPM's compared to content show by the ABC's, NBC's, Hulu, etc.
Do the Chinese video surfers click more ads than the YouTube audience? With all the talk lately about YT having trouble making money, or rather Google having trouble making /enough/ money with YT, how is it that all these clones are getting so much VC?
Is the speculation wrong or is the market different in the far east?
I can't answer your direct question, but if you're trying to infer whether the Chinese video sites are profitable or not, I can say that I've heard they are all losing money at the moment and the general strategy seems to be a war of attrition.
I have closely monitored the Chinese Cyber laws from past couple of years.I agree with you.They want every thing go as per their benefit and as per their wish.
