ByteDance Invests $170 Million in E-Book Reader Zhangyue

Although brief-form videos remain the primary source of income for ByteDance and have brought the Chinese company global prominence, the organization is diversifying into a variety of new sectors—similar to other major technology companies—to encourage continued expansion. The company has explored business-focused software and digital education, and it was reported this week that ByteDance will be making a financial investment in Zhangyue, a prominent Chinese e-book reader and publishing firm.

Zhangyue revealed on Wednesday that a fully-owned ByteDance affiliate intends to purchase approximately 11% of its shares for 1.1 billion yuan, equivalent to $170 million. The publicly traded Chinese online literature company, currently valued at 12 billion yuan, manages an application utilized by 170 million individuals monthly during the first half of the year to read novels, magazines, and manga, as well as to listen to audiobooks.

By way of comparison, China Literature, a company spun off from Tencent and a direct competitor, reported 217 million monthly users over the same period.

This partnership aims to capitalize on the rapidly growing online reading market, which is being propelled by the increasing prevalence of smartphones in China. Data from market research firm iResearch indicates that, in 2019, users devoted close to an hour each day to their e-reading applications. The industry is anticipated to generate 20.6 billion yuan in revenue—including subscription and licensing income—by 2020, a significant increase from the 6.6 billion yuan recorded in 2015. Furthermore, the researcher estimates that the number of e-book users in the country will reach 510 million this year.  

This agreement will establish a strong working relationship between Zhangyue and a leading force in China’s digital entertainment landscape. As part of the arrangement, ByteDance will have the right to appoint one member to Zhangyue’s board of directors and will gain access to license the publisher’s intellectual property.

Conversely, Zhangyue will benefit from ByteDance’s expertise in areas such as advertising procurement, revenue generation, and other technological advancements. The success of Douyin, TikTok, and news platform Toutiao—which collectively serve hundreds of millions of users—has positioned ByteDance as a highly sought-after partner for brands and advertisers.

Overall, the collaboration is expected to result in 470 million yuan in transactions between the two companies in the coming year, an increase from the 270 million yuan in transactions that occurred prior to the equity acquisition.