(Chinese Version)

On April 1^st, namely as the April Fool’s Day, Xunlei official announced its plan to sell Kankan for 130 million RMB. The buyer is Beijing Nesound International Media Corp, a major film company based in Beijing. It’s said that Xunlei will sell the company’s entire stake in Kankan to Nesound. 

According to Xunlei’s official statement, the company believes the divestment of Kankan is consistent with the company’s new strategic focus shift on streamlining existing non-core and unprofitable businesses so as to devote sufficient management attention to executing strategies on mobility and Project Crystal.

Zou Shenglong, CEO and chairman of Xunlei, stated that selling Kankan was a part of Xunlei’s transitioning process to mobile Internet. In the official statement, he said that:

We believe that this deal will bring the staff and the investors of our company a promising future. We are convinced that it is necessary to respond to changing environment, technical innovation and more diverse customer expectations with a bold new beginning. Xunlei will tap the growth potential created by its transformation from a primarily PC-based company to a mobile Internet company, which we believe to be critical to our long-term growth.

It is obvious that the fate of Xunlei Kankan, a platform with over 4 hundred million users and a reputation for its membership service, is about to change drastically.

Xunlei had been trying to find every opportunity to launch its IPO in the stock markets all along and in 2012, the company separated Kankan from its core business, download service. Later that year in November, Xunlei Kankan began to run as an independent sector. The special piracy environment in China used to cause great troubles for the company, making its core business, download service, a main target of public criticisms. As a result, Xunlei failed to become listed twice. On August 15^th, 2014, the company finally achieved its goal and got listed on NASDAQ.

However, getting listed didn’t improve the situation for Xunlei as the share price only rose slightly in the beginning and it has been decreasing for most of the time. Xunlei also shifted its focus to mobile products and games, which put Kankan in an awkward position.

In fact, Xunlei has been looking for potential buyer of Kankan for a long time. Even as early as in 2012, when the video service industry was restructuring, there had been rumors that Souhu, a video-streaming giant in China, was going to acquire Kankan. But at the end of the day, they were just rumors. At present, Kankan has powerful rivals such as Youku-Tudou, Iqiyi, which both have more money to play this game and have already outperformed Kankan in many aspects. Video streaming websites literally burn money to run. However, hard work and great investments don’t always bring profits, this is the harsh reality. 

In this case, it’s best for Xunlei to get rid of Kankan, which is obviously dragging the company down.

It’s reported that Xunlei kankan’s buyer, Beijing Nesound International Media Corporation, is an enormous media company. This company possesses many popular TV series in China, such as Invincible Ugly, Yongzheng Dynasty, Qianlong Dynasty and Towards the Republic. Nesound’s main interest is clearly not Kankan itself, but the cooperation with Xunlei’s download service sector later on.

People might think 1.3 hundred million is a cheap price for Kankan, but I prefer to consider it as a win-win situation for both sides.

(The article is published and edited with authorization from the author @Jia Ru, please note source and hyperlink when reproduce.)

Translated by Garret Lee(Senior Translator at ECHO), working for TMTpost.