Search giant Baidu has agreed to buy Joyy Inc’s livestreaming and video social media platform for China, YY Live, in what will be the search engine’s biggest push into the rapidly expanding sector.
The purchase marks Baidu’s attempt to transform its business model from an era of desktop search to one more suited to mobile. Once the outright leader in search, the company has steadily lost ground to rivals such as TikTok-owner ByteDance.
Taking over Joyy’s streaming network will give Baidu access to a $1.8 billion business with over four million paying users who spend money on virtual gifts to reward their favourite performers.
The deal, reports Caixin, is expected to be completed in the first half of next year, and will include the YY mobile app, YY.com website, and PC YY.
To compete for users and advertisers, says Bloomberg, Baidu’s search app is morphing into a platform that hosts a wide variety of content from articles to videos, and is not dissimilar to Tencent’s WeChat.
Baidu has in the past ventured into online services ranging from music to mobile phone games and food delivery, Bloomberg reports, only to abandon these amid fierce competition. As YY’s core earnings come from virtual gifting by users, of which the company takes a cut, this could help Baidu become acquainted with consumer spending as a revenue stream.
“Baidu is always very late. Like three to five years after the market is already there, it will start to make its entrance,” Raymond Feng, a Shanghai-based analyst with Pacific Epoch told Bloomberg. “Looks like that hasn’t changed much, and that’s not great for a Chinese internet company.”
Baidu’s CFO, Herman Yu, said that “with the acquisition of YY Live, non-advertising will become a meaningful piece of mobile ecosystem, and our legacy business, which has been dragging our mobile ecosystem’s growth, will become an even smaller part of our business”.
Baidu released its third-quarter results this week, which showed it achieved growth in membership revenue from its video streaming service iQiyi, along with a pick-up in non-online marketing revenue. Its total quarterly revenue, however, was little changed from a year ago, Caixin reports.
Sourced from Caixin, Bloomberg, Baidu
