Kuaishou, China’s most popular short video and live streaming app, has fully acquired the beleaguered anime streaming site AcFun, as confirmed by Kuaishou to China’s biztech media and KrASIA’s parent company 36Kr.

The acquisition comes as part of Kuaishou’s plan to solidify its market position amid the increasingly fierce competition with Toutiao’s addictive short video streaming app Douyin, whose daily active users, according to 36Kr’s source, have topped 150 million in May. At the same time, Kuaishou claims it has around 100 million DAUs according to the recently released Mary Meeker internet trends report 2018.

 

What’s in the deal for Kuaishou

Through the acquisition, Kuaishou could tap into AcFun’s niche audience whose interests are in ACGN (animation, comic, game and novel). Both AcFun and its US-listed rival Bilibili tend to boast highly of its engaged community and large Generation Z user base. That would add to Kuaishou’s current user base.

Meantime, AcFun could diversify Kuaishou’s current revenue stream. The short video streaming app is relying on live streaming and in-feed advertisements for revenue and could tap into the mobile gaming market after the acquisition, as Bilibili has proven with mobile games being the key driver for its revenue growth. In Q1 this year, mobile games accounted for 79% of Bilibili’s US$138.4 million worth of revenue mix.

Kuaishou, which counts Tencent as a backer, is reportedly eyeing an IPO this year on the HKEX. This acquisition could potentially lift its valuation. Bilibili was valued at over US$3 billion when it floated on Nasdaq in March.

 

Beleaguered and once famous AcFun

Founded in 2007, AcFun is one of the first anime-streaming websites in China and Bilibili was founded in 2009 by an ex-AcFun user XU Yi.

In stark contrast to Bilibili, AcFun was struggling to land a life-saving investment before the acquisition. Yunfeng Fund, a PE firm initiated by Jack Ma, as well as Toutiao, were rumored to be mulling over investing in the troubled anime streaming platform, but both deals eventually went sour.

Last year, AcFun’s DAUs dropped 80% to 1.6 million in November, people familiar with the matter told 36Kr. In Q1 2018, Bilibili reported an MAU of 77.5 million, up 35% compared with the same period in 2017.

Editor: Jason Zheng