Embracing The Turning Point: Baidu'S Third Quarter Financial Report Surpasses Expectations In Acquiring YY Live Broadcast

The boots finally landed.

On November 17, at the same time of publishing the third quarter report for 2020, baidu officially announced the news that it would wholly acquire the domestic live broadcasting business of huanju group (i.e. "YY live broadcast") with a total of US $3.6 billion. It is said that Baidu has signed a final binding agreement with huanju group, and the transaction may be completed in the first half of 2021. The target of this acquisition is YY live broadcast, including YY mobile app, yy.com website and PC YY, etc.

It is understood that after the acquisition, YY content and technology will be synchronized to Baidu, and YY's domestic live broadcast team will also be assigned to Baidu.

According to the financial report, baidu achieved 28.2 billion yuan in revenue in the third quarter of 2020, compared with 28.1 billion yuan in the same period last year. The net profit belonging to Baidu reached 13.7 billion yuan, which turned losses back on a year-on-year basis, with a net loss of 6.4 billion yuan in the same period last year.

"Baidu has built a dynamic mobile ecosystem in the past few years to enable our non advertising revenue to grow rapidly," said Robin Li, founder and CEO of Baidu, referring to the acquisition announced today. "This deal will make Baidu a leading real-time streaming platform and diversify our revenue sources."

Boost diversified liquidity

According to the latest financial data, non advertising revenue has become a bright spot in Baidu's growth.

Specifically, Baidu's core rebound was significant in this quarter, with revenue of 21.4 billion yuan, which was the main force driving Baidu's revenue growth. Among them, Baidu's core online advertising revenue was 18.4 billion yuan, which was the same as last year; thanks to the rise of Intelligent Cloud business revenue, Baidu's core non online advertising revenue was 2.9 billion yuan, up 14% year-on-year.

The reason why it can achieve the growth of non online advertising revenue is closely related to Baidu's strategy of continuously consolidating mobile ecological services. In the third quarter, baidu mobile ecology continued to upgrade the integrated infrastructure of content and service, forming a unique closed-loop service ecosystem from search to social interaction, and then to transaction consumption.

Baidu pointed out that the rising user participation and user scale have created great potential for the diversified realization of Baidu mobile ecology, and the non online advertising revenue such as live broadcast and member payment will become an important driving force for Baidu's revenue growth in the future.

In fact, YY live broadcast has rich live content of talent, games, tourism, sports, etc., which can provide rich content supply for Baidu mobile ecology, so as to better meet the needs of users' entertainment scenes.

"Baidu's acquisition of YY, in fact, is still in the construction of the underlying platform capabilities, so as to further expand Baidu mobile ecological user service scenarios." Some analysts pointed out that "the core direction of Baidu mobile ecology is to improve its services and diversified liquidity, so as to meet more scenes and needs of users, and at the same time, realize the" one fish eat more "of mobile ecology

According to the data, in September this year, the number of active users of Baidu app reached 206 million yuan per day, and 544 million yuan per month. Behind the huge number of users, there are increasingly diversified and personalized needs. This is also the sword of Baidu ecology. At present, the number of smart apps in Baidu is nearly three times that of the same period last year. The number of smart apps on Baidu app has reached 355 million, an increase of 22% over the same period last year. More and more popular applications such as e-commerce, travel, express delivery and e-government access Baidu to provide users with rich service experience.

"The acquisition of YY will bring more opportunities for the two sides to cooperate with Baidu in terms of both sides' knowledge and services." Some analysts believe that.

Information map.

Welcome more benefits

For both sides, the acquisition will undoubtedly achieve a win-win situation.

For YY, with the arrival of a new round of integration in the live broadcasting industry, YY needs to look for "backing" in the great changes of the industry pattern. With the flow, technology and ecology of Baidu company, with the latter flow pool and strong capital injection, YY's imagination space is not the same.

At the same time, the past show mode is simple and crude, which is only the primary stage of live interaction. After reaching the upper limit of scale, it will inevitably move to the stage of deeply cultivating users. However, the conditions for its realization are better technical services. This is where Baidu's strengths lie. After the acquisition, it is expected to consolidate YY's leading position in the live broadcast platform.

"The most important problem in YY's domestic market is that there is no flow, and it is a cash flow business. If you have the support of Baidu's flow, it is not impossible for YY's revenue plate to be doubled or even several times larger," an analyst said.

It should be noted that although the growth of YY live broadcasting users has slowed down significantly, the user payment rate is still higher than that of Betta and tiger teeth due to its advantages in the field of live show broadcasting. Some data show that, although YY's live daily life is ten times lower than that of the tremor express, the difference in revenue is only two or three times.

"This means that YY's liquidity efficiency is very high. After the acquisition is completed, with the super flow brought by Baidu, YY will break through the bottleneck of growth rapidly in the future, and at the same time, it will also bring considerable cash income to its new owner Baidu. " According to the analysis.

For Baidu, which strengthens the content ecology and the live broadcast ability, it is no different from a multiple profit. On the one hand, YY's domestic business can expand Baidu's business boundary, enrich Baidu's search content orientation, and at the same time, it can also help Baidu to supplement the content form beyond graphics and short video, and improve the user experience and user stickiness of search information flow service.

On the other hand, the acquisition of YY can also achieve strategic synergy from Baidu mobile ecology. It is understood that Baidu ecology has users such as post bar, novel, video and so on, which are consistent with the show live broadcast, which will bring about scale effect after YY integration. At the same time, the ability of Baidu mobile ecological service users' cultural and entertainment information is enhanced, and the corresponding entertainment vertical advertising is also expected to get collaborative growth.

In addition, the acquisition of YY live can not only meet Baidu's diversified cash flow needs, but also provide Baidu with additional cash flow to support the development of other capital intensive businesses, such as AI, long video, etc.

"This acquisition is actually the result that both Baidu and the happy gathering era want," said Pan Helin, executive director of the Digital Economy Research Institute of Central South University of Finance and law. "Baidu is currently committed to building a content service ecosystem, because the ultimate purpose of user search is to obtain content. If there is more layout in the content industry, it can complement and complement the search business. For its short-term video, Baidu can help expand its business in the future. "

New space of imagination

Its future live broadcast is full of possibilities.

This is related to the imagination space of the live broadcasting industry itself. AI media consulting believes that due to the pan entertainment features of live broadcasting, the refinement and quality development of content, and the continuous improvement of the development of e-commerce live broadcasting technology, consumers will have a better shopping experience.

In other words, live broadcasting can be described as a collection of the advantages of bat. It is not only the entrance of demand flow (Baidu), but also the carrier of transaction service (ALI), and also carries the possibility of games and social interaction (Tencent). From this level, the layout of live broadcast business can not only consolidate the core business competitiveness of platform enterprises, but also further expand the competitive boundary of enterprises.

According to the forecast of AI media consulting, it is estimated that by the end of 2020, China's online live broadcasting users will reach 526 million, and the market scale of China's live broadcasting e-commerce will reach 961 billion yuan. In the first three quarters of 2020, nearly 25000 enterprises related to live broadcasting will be added, with a year-on-year increase of 565.32%. In the third quarter, 11000 related enterprises were added, up 11.75% month on month.

"In the second half of the live broadcast, the refined development of the subdivision field has become the focus of the major live broadcast platforms. With the transformation of the live broadcast platform, as well as the continuous improvement of the diversity of live broadcast content and interactive effect, there is still great potential in the live broadcast market. " AI media consultation said.

Analysis shows that after Baidu's acquisition of YY live broadcast, a new round of live broadcasting war will continue to fight, but the leading role will evolve into Tencent, Baidu, Ali and other domestic giants. This also means that live broadcasting has officially entered the era of "killing the Three Kingdoms".

Among them, Baidu focuses on the positioning of live broadcasting of knowledge and YY's accumulation in the live broadcast of the show. The combination of the two may lead to a new way of playing live e-commerce, realize differentiated positioning and gain unique market space. "Baidu chose to increase the live broadcast at this time and win the leading live broadcast target in the domestic market. Its ecological value and strategic value are immeasurable."