Motivation and Enlightenment of Internet Enterprises' M&A of Live Streaming Platforms

Abstract

In 2019, the number of online live streaming users in China exceeded 500 million, and live stream has gradually evolved into a national product, becoming a standard feature for brands, businesses and even individuals. Under the tendency, live streaming platforms sprung up correspondingly, resulting in fierce competition. Hence, live streaming companies began to actively seek investment from Internet enterprises, raise funds and go public, improve profitability, and achieve diversified transformation. Meanwhile, Internet enterprises find business opportunities in the live streaming industry. In order to compete for more market shares and gain excess investment returns, the number of cooperation between two sides is increasing. M&A and investment events also appear one after another between two sides. This paper will discuss the motivation and enlightenment of Internet enterprises' M&A of live streaming platforms based on Baidu's M&A of YY Live, a financial analysis of Baidu after M&A is also included. According to the analysis, Baidu's profitability, growth, solvency, and operating capacity have all been improved after the M&A. These results shed light on Baidu’s M&A of YY Live is successful from financial aspect. Furthermore, the paper will also provide achievable and practical suggestions for the Internet enterprises which want to enter the live streaming industry through M&A, aiming at helping Internet enterprises to achieve diversified transformation.