China's leading search engine wants a bigger role in the clip-culture revolution.
PaidContent.org is confirming that the joint venture is in the final stages of negotiations, though an official announcement is likely several weeks away.
Let's not get too excited here. If monetizing video sites that serve up low-paying display ads to offset chunky bandwidth costs is a challenge domestically, one can only imagine the difficulties in China.
Baidu is an amazingly profitable company, but only because its bread-and-butter business consists of generating leads through lucrative paid-search ads via China's leading platform. Folks don't consume video clips because they're searching for something to buy. They just want to be entertained.
Those obstacles aren't stopping China's brightest dot-com stars from upping the ante on eye candy. Shanda
Like stateside actors, it seems Chinese dot-commers all want to direct.
Baidu investors must hope that video ventures don't eat into the company's profits, as its foray into Japan has over the past two years. Baidu has managed to rise above that sinkhole, thankfully. Revenue and earnings rose 39% and 42%, respectively, in its latest quarter, despite a $0.17-a-share hit in Japan.
Providing a sticky destination -- even if it's profitless in the near-term -- would also be a sound decision if it keeps Chinese Internet users closer to Baidu, instead of letting them wander off to competing search portals such as Google
In the end, Baidu's move is all about the big picture -- even if it's streaming on a small screen.
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Longtime Fool contributor Rick Munarriz has only been to China once, but he relishes admiring its dot-com revolution from afar. He does not own shares in any of the stocks in this article. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.