CHINA'S largest search engine Baidu said today it has bought online video firm PPS Net TV for US$370 million to merge it with its online video unit, iQiyi, to compete with big rivals and strengthen its mobile business.
Baidu is lagging behind rivals like Tencent in terms of online video streaming business. PPS, which has a large user base, can boost iQiyi's market share and take on challenge from Youku Tudou Inc, a market leader.
Baidu's combined new entity is expected to become China's largest online video platform by number of users and overall video viewing time.
PPS will remain a sub-brand of iQiyi and its operating team will remain unchanged after the buyout.
Shanghai-based PPS operates the online streaming site PPS.tv as well as PC and mobile device-based video software.
The two companies said they're expected to complete the merger of technical teams and hardware resources within 30 days and the whole transaction will close in the second quarter of this year.
"Merging with PPS will enable us to reach more audiences and the mobile video application sector still has huge potentials for growth," said Gong Yu, founder and chief executive officer of iQiyi.
Xu Weifeng, president of PPS, said its mobile applications have 13 million users per day on average, and the number is growing by 400,000 every day.
Youku Tudou became China's largest video website after the two sites completed a merger early last year.
Iqiyi's parent Baidu is expected to provide strong support in funding and advertising. Its search tool will also lead users to iQiyi and PPS.
Market watchers predict that the acquisition of PPS would boost Baidu's position in online video business, but to achieve good synergy is a challenge for Baidu.