Search giant Baidu is reportedly nearing a deal to acquire US-listed Chinese video-streaming social platform Joyy’s China operations in an attempt to boost its livestream business.
Why it matters: Baidu’s expansion to the red-hot livestream sector is a move to diversify its revenue streams as its core advertising business loses ground to rivals like Bytedance.
- Baidu, along with Alibaba and Tencent, was known as “BAT,” the three biggest tech companies in China. But the company has seen the gap between its market valuation and those of its two peers widen as tech upstarts like Bytedance and Meituan catch up.
- Baidu’s current $46 billion market capitalization has fallen far short of Alibaba’s $860 billion and Tencent’s $734 billion valuations.
Details: Baidu is nearing a deal to acquire Joyy’s Chinese operations for a deal worth $3 billion to $4 billion, local media Jiemian reported citing people with knowledge of the matter.
- Baidu will take over Yy, the entertainment show livestream app targeting Chinese audiences, the app’s content operations, technology, and team after the deal, according to the report.
- China operations play a much lesser role for Joyy, which is increasingly focused on the global market. Overseas users represent 91% of the company’s 457.1 million monthly active users, according to the company’s second quarter earnings report.
- The deal could be a win-win cooperation for both companies. Joyy’s livestream business provides Baidu the necessary technologies and user base to start with and Joyy can narrow its focus on global expansion.
Context: Baidu began testing out the livestream space this year. In April, it began recruiting livestream hosts and merchants in preparation for the launch of an live-stream e-commerce platform. At the same time, it added live-stream features to its main search app, its video-streaming app Haokan, and communication platform Baidu Tieba.
- Baidu’s ad revenue shrank 8% in the second quarter of this year compared with the same quarter a year earlier.
- Joyy sold its controlling interest in game-streaming platform Huya to Tencent in August. Tencent merged Huya with its rival Douyu to form a single dominating player in the e-sports market.