BEIJING -- Tencent, China's largest instant messaging service provider, announced Monday that its video advertising revenues surged 70 percent quarter-on-quarter in the fourth quarter of 2011.

The company said the value of its video advertising increased after it succeeded in strengthening user loyalty to its products, which include microblogs, its flagship website qq.com and Qzone social networking website.

The market value of China's online video industry is expected to top 10 billion yuan ($1.6 billion) this year, according to a report by IResearch, a Beijing-based IT consulting firm.

Last week, Youku.com, China's largest online video company, announced a merger deal with its longtime rival Tudou Holdings Ltd in an unexpected move that the company claimed will allow it to become an industry leader in the world's largest online marketplace.