Baidu buys live-streaming service YY as it seeks to catch rivals such as ByteDance and Tencent in new online ad channels

Che Pan
·3-min read

Chinese search engine giant Baidu is buying streaming platform YY Live from social media firm JOYY Inc for about US$3.6 billion as it continues to broaden beyond its traditional search engine business and catch up with competitors such as ByteDance and Tencent Holdings in new online advertising channels.

“The addition of YY Live will enable us to gain platform and operating experience in large-scale video social media,” said Baidu CEO Robin Li on Tuesday, adding that combined with Baidu’s existing short video platforms such as Haokan, money from live-streaming will play a key part in diversifying its revenue sources going forward.

Founded in 2005, JOYY enables users to interact with each other in real-time through online live media and offers users an “immersive entertainment experience”, according to information on its website. JOYY’s products include YY Live, Bigo Live, Likee, imo and Hago. The sale also includes the YY mobile app and YY.com website.

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In its Monday earnings announcement in the US, Li said revenue growth “had turned positive in the third quarter with many advertising verticals turning around”. Online marketing revenue from what the company calls “Baidu Core” was 18.4 billion yuan, which was basically flat from last year.

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Advertising was pressured in China at the beginning of the year due to the pandemic but it has since recovered in line with an economy that rebounded from a record contraction of 6.8 per cent in the first quarter to 4.9 per cent growth in the third.

As one of the original members of China’s BAT triumvirate, which also includes Alibaba and Tencent, Beijing-based Baidu has however struggled to keep up with the ever-changing dynamics of China’s internet industry in recent times, and has been making a deeper push into a variety of artificial intelligence businesses.

Despite boasting an ecosystem with 544 million monthly active users as of September 2020, Baidu’s ad revenue has failed to match the pace of growth at short video-based platforms such as ByteDance’s Douyin and Tencent-backed Kuaishou, which have become popular among Chinese netizens for their immersive and engaging content.

In May, Baidu said it was investing a further 500 million yuan to boost its live-streaming services, aiming to cultivate 1,000 star content creators amid a surge in online users during the coronavirus pandemic. While live-streaming has been around for years, the coronavirus pandemic has seen a spike in the popularity of such services in China, with everything from lipsticks to high-end luxury goods now being sold through the medium.

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Some analysts were not optimistic about the acquisition.

“I think this is destined to be a failed acquisition,” said Zhang Dingding, an independent internet industry commentator. “Baidu is already doing e-commerce live-streaming and has its own system set up ... Now it acquires Joyy’s live-streaming business [for China], which is a product on a declining road.”

Zhang said players such as Alibaba’s Taobao Live, ByteDance’s Douyin and Kuaishou have already stolen a march in the live-streaming industry, whereas traditional operators like YY Live have faded, and are no longer at the forefront of innovation.

Meanwhile, during the earnings briefing, Baidu’s Li said its autonomous driving (AD) business Apollo would continue to focus on selling its technologies to carmakers and helping local governments to build infrastructure for smart traffic systems and robotaxi services - an industry that has government support.

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