Chinese internet giant Tencent has bought 27.8 million shares (amounting to a 4.6% stake) in TV producer Huayi Brothers Media for around 450 million RMB ($69.2 million). In an official release, Tencent said this investment was made for strategic reasons.
Tencent provides users with access to multiple services via a single QQ login. However its video product Tencent Video, which launched in 24 March this year, has much catching up to do compared to sites like Youku, Tudou, and Qiyi. If there’s any room to differentiate within the crowded online video market in China, original content looks like the way to go. That’s certainly the trend that we have been seeing among other big players in recent months. This new relationship with Huayi Brothers Media should prove useful in its video content strategy. With its massive user base, Tencent could potentially be a powerful distribution channel for original content online.
While all sounds exciting, the outcome depends on the depth of partnership between Tencent and Huayi Brothers Media. “The strategic investment in Huayi is the first step of cooperation between two parties,” said Tencent president Martin Lau. Tencent did not elaborate on how it plans to integrate the two media.
Update: A Tencent staff pointed to us a conversation between Martin Lau and Brenda from Huayi on Tencent Weibo. The translated conversation below:
Thanks Huayi for their trust in us, and thanks to Gu Ming [of Huayi] for making this strategy possible. In this investment, we can see four important points which Huiyi is really good at: (1) Management, (2) strategic development, (3) execution track record and (4) future synergy. It makes the investment an easy choice.
After the Tencent-Huayi news was released, we received a lot of blessings. A lot of people are curious how Tencent and Huayi would work together. In my opinion, it is like how a male and female would meet on QQ, watch Huayi Movies, play games together and eventually give birth to another a little penguin star and live happily ever after. (The last sentence is just my personal view and does not represent Huayi’s position. hehe!)
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