Analysys International, a leading Internet-based provider of business information about technology, media and telecom (TMT) industries in China, says Baidu's setting foot in the IPTV business is to seek for new business platform and improve its competency in the market.

News Background:
On June 19, Baidu.com announced that is has formed a strategic cooperation with BesTV, an IPTV operator under Shanghai Media Group (SMG). Under the memorandum of understanding (MoU) they signed, the two companies will work together to promote the IPTV business in China through joint marketing programs. The two parties will integrate Baidu's interactive search platform "Baidu Zhidao" (which is similar to Yahoo's "Answer"), on the IPTV platform of BesTV. Baidu will also make use of its Chinese search technologies to design and develop more content search services especially for the IPTV platform of BesTV.

Quick Analysis:
As an emerging business in China, IPTV has drawn wide attention in the industrial community. Analysys International says Baidu's intention to transplant its Internet contents to the IPTV platform is to occupy the market with first chance and to occupy user and channel resources of the new market. On the one hand, it is helpful to avoid the fierce competition in the Internet search engine market; and on the other hand, under the IPTV business model, it can also shift its business terminal from PC to the sitting room, which is closer to consumers.

In the report "TMT Industry Investment Value Rating Report: IPTV 2005" released by Analysys International, Analysys International has forecasted that by the year 2008, China's IPTV subscriber base will reach 12.60 million, and the market size will reach RMB 10.1 billion, with compound annual growth rate of 121% and 223% respectively in the coming three years. After 2008, China's IPTV market will maintain rapid development momentum.

With the rapid development of IPTV and wireless value-added services and the coming of 3G era, Internet business extending to other platforms will become the industrial development trend. Baidu's setting foot in the IPTV business will help it cultivate users' habits in the early stage, and secure mature channel cooperation model.

At present, competition in China's Internet search engine market is becoming more fierce. International giants including Google, Yahoo! and Microsoft have posed challenges to Baidu's market share. Therefore, it is a necessary choice for Baidu to seek for new business platforms to improve its competitiveness.

IPTV has bright prospects in China, which is widely recognized in the community. Baidu's extending its business into this field is a necessary choice to its business development. The new business platform will be complementary to its Internet business, which helps it improve competency in the market.