China’s three major online video companies – Tencent Holdings, Sohu Video and Baidu-owned – are to establish an alliance of “Video Content Cooperation” (VCC) to jointly purchase or negotiate content for their platforms.

The three companies issued a joint email to the Chinese press saying the cooperation will help restore “rational pricing”.

Besides purchasing, the three companies will cooperate on the possibility of joint broadcasting of the films and programming that they previously purchased. This is to promote healthy competition among online video companies, also to maintain a sustainable cooperation between the online distributors and film or TV production companies, the companies said in the statement.

It is understood that currently the three companies will collaborate on 12 programmes that are already acquired or in the licensing process.

Video companies in the last two years had been competing in buying contents including TV dramas and films, causing a hike of prices in the past one year.  The soaring prices had stopped some video websites from purchasing TV content for a period of time earlier this year. The price for TV dramas’ went up to RMB1million ($160,000) per episode.

The alliance is also a reaction in the video website industry against the merger of China’s two largest video websites and

“The online video industry may be entering a new era where a new giant will be competing with the industry leader – the combined Youku Tudou company,” Ruan Jingwen, president of market research company iResearch told local media.