Chinese video companies Youku and Tudou recently announced that they are merging together to become one giant company. The merger cost $1 billion and now they’re called Youku-Tudou Inc. with Tudou being delisted from the Nasdaq exchange. This big merger was also announced way back in March, but expected to finish around this time of the year. After suffering losses last quarter, the two companies are expected to save $60 million in content licensing. Pictured above are Youku’s CEO Victor Koo (right) and Tudou’s founder CEO Gary Wang (left) after the merger was approved by their shareholders. Wang, however, announced his retirement from Tudou by posting it on his Sina Weibo account since they are now a subsidiary of Youku. His retirement was not that much of a surprise according to Chinese media since Koo has been taking a more prominent role with the company compared to Wang. Wang will continue to be a board member of the merged company for about another year, but he is done with day-to-day operations. There are rumors he might start something new, but nothing is set in stone in yet.

While the merger is big for the Chinese online video market, competitors such as Sohu, Baidu, Tencent, and iQiyi have been joining forces to keep up against Youku Toudu in terms of content costs since the price of content significantly rose. As of the fourth quarter of 2011, Youku-Tudou owns about 36% of the online video market share. The competitors were aware of how much of a threat the merged company is based on that number alone, but at least it is not a dominating number compared to other markets. Now that the Youku-Toudu merger is complete, we will see in the coming quarters if things remain the same for the market. Maybe we will see their competitors officially merge together rather than join forces if things go that way.