56.com closes?
June 23, 2008
A leading Chinese online-video site backed by several high-profile foreign investors has been closed, raising questions about the future of the once-promising industry in China. 56.com suspended operations more than two weeks ago, replacing its user-generated YouTube-like video offerings with a message saying that a server upgrade was to blame for the disruption. Such operations usually take hours, or at most days, however, and 56.com executives have refused to explain the delay.
The outage is widely believed to mean the site has fallen foul of regulators. The site’s problems also illustrate the risks overshadowing the country’s online-video sector, even for top companies backed by savvy investors.
The 56.com site — the Chinese words for 56 sound similar to the Chinese words for “I’m happy” — has raised at least $30 million from investors including Sequoia Capital and Steamboat Ventures, a fund backed Walt Disney Co.