CHINA'S largest search engine Baidu has acquired online video service provider PPS Net TV for US$370 million to merge with its video arm iQiyi to fend off strong rivals and strengthen its mobile business.
Baidu has been playing catch-up with rivals including Tencent in the online video streaming business. PPS, which has a large mobile application user base, could complement Baidu's existing video streaming site to better challenge market leader Youku Tudou Inc.
"Merging with PPS will give us a really big scale to cover a wide audience and the mobile video application sector still has a large growth potential in the future," Gong Yu, founder and CEO of iQiyi, said yesterday.
The combined new entity may become China's largest online video platform by number of mobile device users and overall video viewing time.
Shanghai-based PPS, operator of the online streaming site PPS.tv as well as personal computer and mobile device-based video apps, will become a sub-brand of iQiyi and its team will stay after the completion of the acquisition.
The two companies said the merger of the technical team and hardware resources is expected within 30 days and the transaction is set to close in the second quarter of this year.
Pang Yiming, a researcher at Internet consultancy Analysys International, said: "The merger of PPS will boost Baidu's position in the online video sector but how to deliver good synergies of the two units will be a challenge for Baidu."
Baidu is expected to support the merged entity strongly in funding and advertising.
Xu Weifeng, president of PPS, said its mobile app on both Apple's iOS and Google's Android operating systems now has an average of 13 million users daily, and is adding 400,000 new users every day.