YOUKU Tudou Inc, China's leading online video company, reported narrower losses in the first quarter as the merger between the country's two leading online TV sites showed progress.

Losses in the three months eased to 232.5 million yuan (US$37.5 million) from 265.5 million yuan the in same period a year ago.

The firm's quarterly revenue surged 20 percent from a year ago to 516 million yuan in the first three months, according to a stock exchange filing yesterday.

Advertising made up most of its revenue, providing 429 million yuan.

"We are in the final phase of the merger integration process with Tudou and have completed the restructuring of our sales team in the first quarter," Victor Koo, chairman and CEO of Youku Tudou, said in the statement.

The company expects income of 720 million yuan to 770 million yuan in the second quarter.

China's overall online video market soared 39.5 percent from a year ago to 2.4 billion yuan, research firm iResearch Inc said in a recent report.

Both US-listed Youku and Tudou merged in a US$1.04-billion share swap in early 2012.