Chinese search giant Baidu says it plans to buy online video provider PPS for 370 million U.S. dollars. This is Baidu's latest move to cement its position in the internet space.

Watch out YouKu Tudou, China's largest online video platform. Baidu, long the Chinese leader in search, is going for a bigger piece of the online video pie. It took more than a year of talks, but Baidu has secured the deal to snap up PPS, a major Chinese online video provider. PPS will be integrated into Baidu's own video platform iQiyi. The new entity could become China's largest online video platform by number of mobile users and video viewing time.

The deal is expected to close in the second quarter. Baidu said after the acquisition, iQiyi CEO Gong Yu will remain at the helm, while PPS founder Zhang Hongyu and President Xu Weifeng will serve as co-presidents at the new entity.

The acquisition is Baidu's latest step to diversify businesses beyond its core search sector.

The latest deal would make iQiyi a more serious rival to industry leader Youku Tudou, which was created last year through the merger two major video giants Youku and Tudou.

So far, China's online video industry has struggled to monetize clicks due to the high cost of content, but they are betting on long-term advertising revenues in the booming mobile Internet space. The Baidu deal comes on the heels of other similar acquisitions globally, showing how important online video is becoming to the internet market.

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