Baidu, the largest search engine in China, has acquired PPStream, the Shanghai-based online video platform, for $370 million, the company confirmed this week following weeks of rumors on the deal.
PPS will be merged into iQiyi, Baidu’s video platform, to become China’s largest video platform according to viewing time and number of mobile users. The deal is expected to close in the second quarter of 2013.
PPStream is a leading online streamer of video content in China under the popular PPS.tv domain. It provides content to mobile apps and desktops.
The deal helps solidify Baidu’s position in China’s splintered video market, giving it better content and more flexible advertising options to compete against Youku Tudou, China’s largest Internet television provider formed last August following the merger of Youku Inc. and Tudou Holdings.
“The merger of iQiyi and PPS’s online video business is a major step toward consolidation in the industry and will contribute to the development of China’s Internet video industry. The merger will generate significant synergies, and will provide for an improved user experience as well as more and better content. It will also deliver better marketing value and a wider range of options for advertisers,” said iQiyi CEO Gong Yu in a statement.
Baidu’s latest acquisition is an evident sign of the increasing importance of video for web companies as more viewers shift to watching content online instead of traditional TV. The sale follows shortly after Alibaba, a major ecommerce channel in China, announced buying an 18 percent stake in Weibo, China’s version of Twitter, for $586 million. In Europe, Yahoo offered $200 million for a majority stake in Dailymotion, known as the YouTube of France, but was denied by the French government over concerns of a US company taking a controlling interest in a French entity.