Baidu Inc. announced that it will pay $370 million to acquire the online video unit of PPStream Inc., a popular streaming television service in China.
Baidu would integrate the service into its iQiyi online video unit, making it one of the most significant players in online video in China. Unlike many other parts of the Chinese Internet, there remains a high level of parity in the online video market, with a number of Internet companies including Sohu.com Inc., Tencent Holdings Ltd. and Youku Tudou Inc. all vying to attract users.
The acquisition comes on the heels of a move last week by Alibaba Group Holding Ltd. to purchase a stake in Sina Corp.’s Twitter-like service Weibo as China’s largest Internet companies continue to spend to grab a wider swath of users.
In recent years, Chinese online Internet companies have spent heavily to purchase original content, leading to poor margins. But many believe in the long term online video will become highly profitable because of the high demand to run video ads that target specific segments of viewers who watch varying online shows.