Gong Yu, chief executive of Chinese-language Qiyi.com, said the new website plans to take advantage of Baidu's video search service, which played a big role in generating traffic for Chinese video websites.

"We are hoping to chart a new course in China's booming online video market," said Gong, a former executive of Sohu.com.

Aiming to copy the success of Hulu.com in the United States, Baidu announced in January plans to establish an independent video website that streams authorized videos online for free.

Hulu.com is a US video website jointly owned by NBC Universal, Fox Entertainment Group and ABC Inc, and creates revenue from online advertising. Providence Equity Partners, one of Hulu's investors, also invested in Qiyi.com.

"Hulu only accounted for 1 percent of the total traffic in the online video market but it attracts 33 percent of the advertising revenue," Gong said. He expects Qiyi.com, which has been under beta testing for months, to officially launch on Thursday, and turn a profit in the next five years.

According to figures from the China Internet Network Information Center (CNNIC), the State network information center of China, China's online video users topped 240 million, triple the figure from three years ago. Of that group about 40 million claim they do not watch television at all.

Gong said Chinese Internet users like to watch films and soap operas online rather than user-generated content, which is widely available on websites like Youtube, Youku and Tudou.

He said the new website will also be favored by advertisers, who are wary of seeing their brands appearing in homemade videos and pirated films.

Edward Yu, president of domestic research firm Analysys International, said websites such as Youku.com and Tudou.com may need to shift their focus to specific market sectors such as entertainment programming or user-generated content to counter increased pressure from new competitors.

During the past few months, three State-run media groups, China Central Television, Hunan Satellite TV and Shanghai Media Group, have already launched their own video websites over the past several months.

Nasdaq-listed Shanda Interactive Entertainment Limited also expanded its industry presence by acquiring Ku6.com, one of China's biggest video websites, last November.

Gong said on Wednesday that Qiyi.com plans to increase its staff numbers from the current 150 to 350 by the end of this year.