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China Tech News reported that Baidu has not yet revealed the name of the new company or how the company would be capitalized and registered.

"As China's Internet industry evolves, we have seen increasing demand for high-quality video content on our search platform. By establishing this new company, we will be able to better serve our users and customers with superior content and focused resources," said Xuyang Ren, Baidu's vice president of marketing and business development. "I am very excited to work with Mr. Gong, who has strong experience in the internet industry in China, to grow our new company into a leader in the field through product innovation and a robust network of partnerships with leading content providers in China and globally."

This is an interesting move by Baidu and goes to show that their Search business is continuing to fund the diversification of revenues for Baidu (not unlike Google). Further, given the crack downs last year by the Government on BitTorrent-based download service providers like Btchina.net for "irregular operations" Baidu may seem like a 'cleaner' option for regulators of the State Administration of Radio Film and Television department.

But Baidu still has competition with both government-funded and private-funded online video ventures. last week, China Network Television, the national network television broadcasting organization of China with ties to CCTV, was formally launched under the domain name of CNTV.cn. And two weeks ago, Chinese video website Youku.com completed its latest round of financing and gained USD40 million from private equity firms. These private equity firms include Chengwei Ventures, Brookside Capital, Maverick Capital, and Sutter Hill Ventures.