Awhile back, Chinese online video providers Youku and Tudou merged to form Youku-Tudou in a billion-dollar merger, and thus became the largest in the country. Now, Baidu is purchasing PPS for $370 million. PPS will now be merged into Baidu’s video platform iQiyi, making it number one in online video for mobile viewing and viewing time. That’s a very specific thing to lead in, but we’re so used to YouTube being the number one video…anything…here in the U.S. Speaking of which, YouTube still isn’t a thing in China, so it’s cleared the way for these companies to battle each other in merging wars.
So Why A Merger?
When you’re small and you don’t have as much reach as you’d like, then the big advertisers tend to avoid your service because of cost-versus-reach. When two smaller companies competing against each other merge to form one big company, then that newly-minted business looks more attractive. Finding advertisers had to have been especially hard in the wake of Youku-Tudou demolishing the competition.
As Baidu’s chief executive of video, Gong Yu, said in a statement (from The New York Times):
The merger of iQiyi and PPS’s online video business is a major step toward consolidation in the industry. Combining the two under Baidu’s ownership will provide better content to users and offer more options to advertisers.
So there you have it. There are now two giant online video providers in China. Now how long before those two giant companies merge and become China’s YouTube?