An investor of 56.com says that with the approval of its board of directors, 56.com, the former Chinese video website, will shift to social networking services.
This news from the unnamed investor was posted on Sohu.com's IT channel and is the the second piece of news that says 56.com will shift its business focus since the website stopped service for over a month because of complications with its online video licensing. Early reports said that the website will shift to providing widgets, but the rumor was debunked by the company.
According to the investor, the shutdown of 56.com is the direct cause for the website's transition. At the same time, the severe competition among Chinese video websites and the lack of a profitable business model in this sector are also the reasons for 56.com's giving up of its video sharing business. After withdrawing from the video website sector, 56.com will shift its focus to animated photo albums, which is one of the earliest services of 56.com.
On June 3, 2008, 56.com stopped working for a so-called equipment room wiring error according to a notice released by the company. However, industry insiders said that the website was warned by relevant government departments over its "irregular" video contents. Its website returned to normal operation on July 11, but the one-month closure greatly impacted the website's reputation.
Staring from the end of 2007, China's State Administration of Radio Film and Television launches a new licensing system, according to which, only video websites with licenses have the right to operate online videos. At present, many video websites, including Tudou.com, Youku.com and Ku6.com, have gained their licenses, but 56.com is still unauthorized to operate in this way.