China’s largest internet provider Baidu has acquired a local video on-demand platform for US$370 million, a move that makes it the territory’s largest VOD player by some counts.
The acquisition of the online video business of Shanghai-based PPS will place Baidu in deeper competition with the current market leader, Youku-Tuduo.
Baidu will merge PPS with its own video platform iQiyi – a move that makes it the largest VOD player in terms of mobile users and video viewing time. PPS will continue to operate as a sub-brand of iQiyi.
Baidu expects the deal to close in the second quarter of this year, after which PPS’s financial statements will be merged into those of Baidu.
iQiyi CEO Gong Yu said: “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.
Following the deal, Gong Yu will remain as iQiyi CEO, while PPS founder and chairman Zhang Hongyu and president Xu Weifeng will serve as co-presidents at iQiyi, and will be in charge of the PPS sub-brand and new business development.
“As a leading Chinese online video brand with an eight year history, PPS has the opportunity to join with iQiyi in opening up future markets, and we are excited to be working together to reshape the industry,” said Hongyu. “We will strive to maximise the value of our combined resources and integrated teams, and we will jointly contribute to the progress and maturation of China’s video industry.”