Online video firms face tough times

China's online-video industry may require a facelift as domestic technology giants and government-backed media groups enter the fragmented but potentially lucrative market.

Market entry by these mammoths casts a dark cloud over the future of domestic Youtube-like websites, such as Youku.com and Tudou.com, which are funded heavily by foreign venture-capital firms.

"We are dancing with a group of elephants," said Gary Wang, chief executive of Tudou.com, one of China's largest video-sharing websites. "If we don't dance carefully, we could easily get crushed."