China’s largest Internet search company Baidu Inc. -- often referred to as the Chinese Google -- is acquiring Shanghai-based streaming video firm, PPS Net TV, for between $350-$400 million, according to a report published by China Business News on Thursday.
The acquisition will reportedly be made by Baidu’s online video unit, iQiyi, which launched in 2010 as an alternative streaming video service offering high-quality copyrighted content, earning it the nickname, “China’s Hulu.”
The company’s legal content model was groundbreaking at the time, but many online video firms have since pivoted toward legitimate video hosting since a crackdown in 2012 by the Chinese government on user-generated content deemed “inappropriate” and signals of waning tolerance for rampant piracy.
The new deal marks the latest major consolidation in China’s wildly competitive Internet video space. In March of last year, online video giant Youku acquired rival Toudu in an all-stock deal worth more than $1 billion. Youku Toudu has since forged a series of bold content agreements, including a partnership with Hong Kong-based TVB for rights to all of the broadcaster's new and classic titles. And in March, Youku Toudu announced that it had acquired 33 U.S. TV series to add to its library of online licensed content, including such shows as Modern Family, 2 Broke Girls, Cougar Town, The Vampire Diaries, and more.
An acquisition of PPS Net TV would significantly bolster Baidu’s position in online video. The company dominates search in China, with an estimated 80 percent market share, but lags behind Youku Tudou and Sohu in share of streaming video. According to late 2012 estimates by research company Analysys International, Youku Tudou commands about 32.4 percent of China’s online video market, Sohu has 10.9 percent, iQiyi 6.7 percent and Tencent 4.7 percent.
Consolidation of the two platforms, along with the heightened visibility from Baidu’s search prowess, would likely be the company’s bid for a more competitive footing against Youku Toudu.
A spokesperson from Baidu declined to comment when reached by The Hollywood Reporter.
But a statement from Youku Tudou president Dele Liu seemed to confirm the deal.
“After the success and synergy created by the Youku Tudou merger, increasing consolidation was inevitable throughout the video industry,” Liu said. “We are happy to see this purchase go forward, we expect this acquisition will further rationalize the industry and help reduce piracy in the sector.”
The unconfirmed news comes at a sensitive time for Baidu. The company is due to announce its first quarter earnings Thursday morning in New York.