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Baidu Inc. (NASDAQ: BIDU) set to take over Joyy Inc. (NASDAQ: YY) in a bid to enter video streaming space

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Baidu Inc. (NASDAQ: BIDU) takes yet another step to diversify into its core search company and play catch-up in video entertainment, as the Chinese tech giant revealed it is set to take over Joyy Inc. (NASDAQ: YY) live-streaming service YY Live in China for $3.6 billion in an all-cash transaction.

The report Baidu Inc. (NASDAQ: BIDU)shared along with its quarterly earnings is probably the best breakthrough into video streaming for the Chinese company. In this deal, YY is only selling its Chinese business to Baidu. The Company confirmed that the completion of the deal is subject to some constraints and is actually scheduled to take effect in the first half of 2021.

The acquisition comes at a time when the search giant has been trying to battle rivals such as ByteDance, who have eaten away their online advertisement supremacy as Chinese consumers pay more attention to content recommendation apps driven by algorithms.

Meanwhile, as its home market is saturated with video giants such as Kuaishou and TikTok’s sister Douyin, the sale enables Joyy to further emphasis on overseas expansion. Joyy has accrued more than 4 million paying viewers who watch influencers entertain and sell a variety of products on the video platform, deemed the leader in China’s live streaming industry.

Last year, Joyy Inc. ( YY)completed a $1.45 billion buyout of Bigo, a project initiated by its own promoter to test the overseas market. Bigo runs the Bigo Live streaming service and the quick video app Likee, both of which have huge follow-ups outside China, but were recently suspended by the Indian government as border tensions flared up between India and China.

“This acquisition would propel Baidu into a dominant live streaming network and augment our source of revenue,” Baidu’s co-founder and chief executive, Robin Li, said in a statement.

In China’s video streaming industry, Baidu faces an enormous challenge. Kuaishou and Douyin, regarded as the top names in short videos in the region, have made live streaming an integral part of their user interface to increase monetization and user interaction (through the likes of virtual gifting).

In June, Kuaishou hit 300 million active users daily, and in January, Douyin surpassed 400 million DAUs. In contrast, as of September, Baidu Inc. (NASDAQ: BIDU)flagship app had around 200 million DAUs. YY had about 40 million monthly concurrent users online live in the third quarter.

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