China’s Baidu said it would buy social media platform Joyy’s video-based live-streaming business in China for about US$3.6 billion, after reporting third-quarter revenue above market expectations.
The company said the deal will help it diversify its revenue source, the bulk of which currently comes from ad sales on its core search-engine platform.
Baidu’s vibrant mobile ecosystem enables the fast growth of its non-advertising revenue by increasing log-in users and expanding offerings like membership, live streaming and online games, CEO Robin Li said in a statement.
The company benefited from higher paid subscribers on Baidu’s video-streaming service iQIYI and a recovery in ad spending by businesses on its core search engine platform in the quarter.
As China’s economy gradually emerges out of the Covid-19 slump, ad spending by businesses have also picked up from their lows during the peak of the pandemic. In September, China’s industrial output rose faster than expected and retail sales gained.
The company said it expects current-quarter revenue to be between US$4.3 billion and $4.75 billion compared with estimates of $4.4 billion.
Subscribers for iQIYI touched 104.8 million in September and membership revenue rose 7 per cent from a year earlier, the company said.
Baidu’s Netflix-like service is in the middle of a probe by the US Securities and Exchange Commission related to accusations of inflating user numbers, revenue and the prices it pays for content by short-seller firm Wolfpack Research.
The company’s total revenue rose 1 per cent to $4.29 billion in the quarter ended September 30. Analysts on average had expected revenue of $4.17 billion, according to IBES data from Refinitiv.