Baidu, a Chinese multinational technology company, announced that it is acquiring Joyy’s live streaming service, YY Live in China for USD 3.6 billion in an all-cash deal.
YY today is only selling its China business to Baidu. The closing of the deal is subject to some conditions and is expected to likely take place in the first half of 2021.
Baidu’s acquisition will include YY mobile app, the YY.com website, and PC YY. After the deal, YY Live will have access to Baidu’s traffic and mobile ecosystems.
Baidu made the announcement on the sidelines of its quarterly earnings. This move is Baidu’s biggest foray into the growing market of video streaming. It comes at a time when the company has been struggling to fight competitors such as ByteDance, which has been eating away its online advertising dominance as Chinese users allocate more attention to algorithm-driven content recommendation apps.
The sale allows Joyy to further focus on overseas growth as its home market becomes saturated with video giants like Kuaishou and Douyin. Joyy, regarded as the pioneer in China’s live streaming industry, has amassed more than 4 million paying subscribers who watch influencers perform and sell a range of items on the video app.
Baidu faces uphill competition in China’s video streaming market. Both Kuaishou and Douyin, are known to be China’s leading players in short videos. They have both made live streaming an integral part of their user experience to enhance monetization through virtual gifting and user engagement.
Kuaishou reached 300 million daily active users in June and Douyin crossed 400 million DAUs in January. In comparison, Baidu’s app had about 200 million DAUs until September. YY saw about 40 million live streaming monthly active users in the third quarter.
Joyy last year completed a buyout worth USD 1.45 billion of Bigo, a project started by its own founder on the side to test the overseas market. Bigo runs streaming app Bigo Live and short video app Likee.
Robin Li, co-founder and chief executive of Baidu said, “This transaction will help enhance Baidu into a leading platform for live streaming and diversify our revenue source.”
He further added, “YY Live will benefit from Baidu’s large traffic and thriving mobile ecosystem, while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as an enviable creator network that will further strengthen Baidu’s massive content provider network.”
In the last year, Baidu aided the growth of its non-advertising revenues by enhancing log-in users and adding social engagement to their platform. It also expanded its non-advertising offerings like membership, livestreaming, and online games.
The development as Tencent acquires 30 billion class B shares of Joyy’s Twitch-like service Huya in a USD 810 million deal in August and became Huya’s biggest shareholder. Later, Huya acquired its rival Douyu and was reported to create a new game-streaming giant valued at over USD 11 billion.
The Chinese tech giant also announced it has generated USD 4.16 billion in revenue for Q3 2020, with its online market revenue from Baidu Core taking up USD 2.72 billion. It also collected USD 2.02 billion in net income that’s attributable to Baidu during the period.