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On Tuesday, China's online search leader Baidu announced it will pay 370 million U.S. dollars to buy the online video business, PPS.
The move is the company's latest attempt to grab market share in the highly competitive industry.
Baidu will integrate the PPS online video business into its own video platform, iQiyi.
The combined entity is set to become China's biggest online video platform by number of mobile users and viewing time.
The deal is expected to close in the second quarter.
The acquisition is Baidu's latest step to diversify beyond its core search sector.
Many of China's online video companies struggle to turn a profit, due to the high cost of content.
But eyeing long-term advertising revenues in the booming mobile Internet sector, major players are stepping up efforts to grow their mobile users.
The latest deal would make iQiyi more competitive with industry leader, Youku Tudou, which was created last year through the merger of video giants, Youku and Tudou.
Other major online video players in China include Internet giant Sohu's video unit, PPTV... along with Letv and Funshion.
