The size of the Chinese online video market is still miniscule. iResearch said the market grew from $78 million in 2006 to $413 million last year. This is a CAGR of 74%. Between now and 2013, iResearch expects the online video market in China to quadruple, with revenues from it growing at an even faster pace. Youku has grown its advertising-based revenues from $272,000 in 2007 (its first full year of operation) to $35 million in the first nine months of this year. The company plans to roll out wireless and Web-based subscription services to supplement that core revenue stream. China is planning on instituting policies that allow for TV/video viewing over all mobile networks by 2013, which will be a boon for Youku and Tudou. Although the Chinese government can always step into an industry and change the rules -- and indeed they have done this before in the online video space -- it's very unlikely that they will do anything that will stop either Youku or Tudou from being the leaders. Therefore, the network effects of being the top dog in this space means that Youku will likely continue to be for the foreseeable future as the space ramps up in size and profitability. Additionally, the company is being brought public by Goldman Sachs ( GS) which has a good reputation both in China and the U.S. for Internet deals it brings out. Some observers have complained that the company will continue to have to spend money acquiring content and it will also have to continue to shell out for necessary back-end infrastructure to keep up with demand. However, just in the last year, Youku increased its revenues by 130%, while its total operating expenses went up by 77%. Those are eye-catching increased operating expenses, sure, but the point is that this is company that's growing its top-line faster. And, of course, as the quarters and years roll by, these operating expenses will drop off significantly as a percentage of the size of the business. Although the recent IPO filing failed to disclose specific streaming stats for Youku, we know that Google is getting 2 billion monetized views of YouTube each week per its last earnings call. We don't know how much it's getting for each ad run next to or before these streams (although it did say total display ad revenues which include DoubleClick and YouTube were now providing $2.5 billion on an annual run rate). It's obvious that these numbers are large -- and growing. They're also completely ad-supported, without subscription revenues, unlike what Youku plans.