ByteDance to inject $ 170 million into Zhangyue e-book reader – TechCrunch

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While short videos drive ByteDance’s revenue and give the Chinese startup international recognition, the company is expanding into many new areas like other tech giants to fuel its growth. It has touched on business software and e-learning, and news broke this week that ByteDance will invest in one of China’s largest e-book readers and publishers, Zhangyue.

Zhangyue announced Wednesday evening that a wholly-owned subsidiary of ByteDance plans to acquire about 11% of its shares for 1.1 billion yuan, or $ 170 million. The listed online literature company in China, with a current market capitalization of 12 billion yuan, operates an application where 170 million users read novels, magazines and cartoons, and listen to audiobooks every month for the first semester.

For comparison, its immediate rival China Literature, a spin-off of Tencent, claimed 217 million monthly users in the same duration.

The partners are targeting a booming online reading market driven by smartphone penetration in China. In 2019, users spent nearly an hour a day on their e-reading apps, according to iResearch market information provider. The sector is expected to generate 20.6 billion yuan in revenue, including subscription and license fees, by 2020; this is an increase from 6.6 billion yuan in 2015. Meanwhile, e-book users in the country will reach 510 million this year, the researcher said.

The deal will form a close alliance between Zhangyue and China’s leading digital entertainment company. Under the agreement, ByteDance may assign a board member to Zhangyue and may license the publisher’s intellectual property.

In return, Zhangyue will benefit from ByteDance’s assistance in areas such as ad buying, monetization and other technologies. The success of Douyin, TikTok and newsreader Toutiao, which collectively claim hundreds of millions of users, have made ByteDance a new darling of brands and advertisers.

In total, the collaboration will result in transactions worth 470 million yuan between the partners the following year, up from 270 million yuan a year before the stake was acquired.


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