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Baidu Strikes Deal with Viki

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China’s largest search engine, Baidu, Inc. (BIDU), recently announced an online video deal with Viki Inc. to expand its video service by offering movies and television shows to its users.

Viki Inc., bought by Rakuten in September for $200 million, is the biggest Japanese e-Commerce company. The company specializes in licensing TV shows, movies and content in more than 160 languages and boasts over 26 million monthly viewers.

Per the deal, Viki will offer licensed content from all over the world to Baidu Video. The content will include full-length movies, dramas, Cartoon Network shows and a science fiction series produced by Steven Spielberg namely Falling Skies, a very popular show in China. All shows will be translated in both Chinese and English for the viewers. Though the ratio is not known, the advertising revenues derived from the videos will be shared among Viki and Baidu.

The company is looking beyond text search to boost its revenues in the world’s largest Internet market and beyond. The Viki deal will help Baidu to expand its user base, thus increasing its advertising revenues, going forward.

Nowadays, online video streaming service has become one of the fastest-growing segments of the media sector. As per reports by iResearch, China has the largest online viewers of around 450 million and the figure is expected to reach 700 million by 2016.

Given the surge in demand for online video streaming, Baidu has been investing funds in its video business. The company has announced five deals for a total value of at least $2.43 billion in 2013, according to Bloomberg. Additionally, in May, Baidu acquired the online video business of the Shanghai-based PPS for $370 million to become China’s largest online video platform by the number of mobile users and video viewing time.

Baidu, Inc. provides Internet search services in Chinese. It also offers a Chinese language search platform for businesses to reach their customers. Baidu earned 3.25 billion yuan in advertising in the third quarter and is estimated to generate 16.2 billion yuan in sales next year.

Currently, Baidu has a Zacks Rank #2 (Buy). Other better-ranked stocks that offer attractive investment options this season are AOL Inc. (AOL), Blucora, Inc. (BCOR) and LivePerson Inc. (LPSN). All these stocks sport a Zacks Rank #1 (Strong Buy).

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