China’s online search giant Baidu has seen over $155 million (RMB1 billion) of fresh capital raised by new unit Baidu Video.
The unit is an affiliate, rather than a subsidiary, and operates separately from iQIYI one of the market leaders in China’s streaming sector.
The new Baidu Video unit is understood to be an expansion of Baidu’s Xiaodu Interactive Entertainment and Technology.
Funding of RMB500 million came from Shanghai New Media Culture fund, a firm listed on the Shenzhen Stock Exchange’s second tier market, which took a share stake of 17-22%. Other cash came from venture capital fund SAIF Partners.
The company said that Baidu Video will focus on movies and professionally-made TV content. Hu Hao, an existing Baidu executive, is set at its CEO. It will also launch a $77 million (RMB500 million) content fund.
China’s online video sector is expanding and evolving rapidly, as companies compete for content acquisitions and invest heavily in production. That has pushed many of them into loss, even as they claim hundreds of millions of monthly users. Youku Tudou, which disputes market leadership with iQIYI, was recently acquired by Alibaba and will delist from the New York Stock Exchange
Baidu currently owns the majority of loss-making iQIYI, though there is a proposal fronted by Baidu founder Robin Li and iQIYI founder Gong Yu, to take it private for some $2.8 billion. It is widely expected that iQIYI will be given an IPO once it becomes profitable.
China is the only major country in the world where Netflix has not launched. It remains stymied by regulatory controls.