|A Suning Commerce Group Co store in Changzhou, Jiangsu province. The company will invest $250 million in PPTV.com, taking 44 percent of the website and becoming its largest shareholder. (Photo source:chinadaily)|
Suning Commerce Group Co, the country's largest electronics retailer, and private-equity firm Hony Capital Ltd will invest $420 million in video website PPTV.com, a move that will help transform Suning into an Internet retailer and accelerate the reshuffle of the video website industry.
Suning will invest $250 million, taking 44 percent of PPTV.com and becoming its largest shareholder. The deal is the retailer's largest single investment, and it will be "strategic", said Sun Weimin, vice-chairman of Suning.
He said the combination of Internet retailing and an intelligent video website will facilitate Suning's goal of building up a cloud business model that integrates all distribution channels, product lines and customer bases.
Sun said that the two sides will provide platforms and content for upstream electronics manufacturers and content suppliers, building up a chain for over-the-top content. That refers to a system for the broadband Internet delivery of video and audio content, without a multiple system operator being involved in the control or distribution of the content.
The retailer's massive sales volume of more than 10 million television sets a year will also boost the business development, he said.
PPTV, founded in 2005, covers Internet terminals including websites, computers, mobile phones and iPads. It has more than 340 million active users, and it's the third-largest video application. On a daily basis, PPTV reaches 30.9 million viewers, according to IT consultancy iResearch.
"The online-and-offline merger is set to be a trend for the Internet industry, which is gradually moving from virtual services to real-life activities," said Vincent Tao, PPTV's chief executive officer, at a news conference on Monday.
PPTV may benefit from the collaboration by leveraging Suning's extensive offline presence and its leading position in the electronic appliances sector, as well as Hony's solid capital resources, according to a company statement.
Tao said the investment from Suning will expand the user database from online to physical stores and enhance the company's knowledge of its customers while keeping users staying longer on its platforms.
The PPTV application held a strong position in Apple Inc's App store last year, leading the popularity stakes among video-sharing applications. Seventy-seven percent of iPhone and iPad users have installed PPTV's application on their devices.
In 2011, PPTV received funding of $250 million from Japan's SoftBank Corp to bolster its fast-expanding business.
The online viewer exhibited its ambition in cloud-enabled technologies in May, when it announced the launch of its Internet-enabled set-top box called PPBOX. The device allows Digital Living Network Alliance/Airplay interactive apps, video calling and a host of downloadable and online games.
Hong Bo, a Beijing IT expert and founder of consultancy company IT5G, took an optimistic view of the collaboration, saying that PPTV is "essentially a content-generator, rather than simply a channel".
He added: "PPTV is likely to benefit a lot from the new investment, in terms of both finance and market exposure.
"However, the online video industry will not experience a sea change after several reshuffles in the past two years," he said.