Three of China's leading internet companies will forge an online video partnership to buy licensed video content amid soaring costs of copyrighted videos and TV series.

Tencent Holdings Ltd. (0700.HK), Sohu.com Inc. (NASDAQ:SOHU) and Baidu Inc.'s (NASDAQ:BIDU) iQiyi.com will joint hands in sharing online video contents and broadcasts, according to a joint statement e-mailed by the three companies late on Tuesday.

"We hope the partnership could leverage each other's advantages and push the industry forward towards healthy competition," said Deng Ye, chief executive officer of Sohu video and vice president of Sohu.

The tripartite partnership is currently the largest such alliance in the industry

Last month, Youku Inc. (NYSE:YOKU) agreed to buy Tudou Holdings Ltd. (NASDAQ:TUDO) to boost its number of online users and help strengthen its pricing power over purchase of content.

The two firms accounted for more than one-third of China's internet video advertising revenue in the fourth quarter of last year, according to Analysys International.

According to Analysys, Sohu and iQiyi had a 13.3 percent and 6.9 percent share of China’s online video market in Q4, respectively, making them the No. 3 and No. 4 operators.

Industry watchers said the alliance is a trend-setting move in China's video industry, and will challenge the collaboration between Youku and Tudou.

It is still unclear as to how much Tencent, Sohu and Baidu will invest in their new partnership.