‘NETFLIX OF CHINA’ MAKES ITS MARK
● Entertainment is big business in China. iQiyi, China’s largest video streaming service, is breaking new ground in this area. The company has been dubbed “the Netflix of China” for adapting the model of the popular US-based streaming service to suit the Chinese market.
iQiyi was founded in 2010 by Baidu, China’s largest online search engine. Like Netflix, iQiyi charges for subscriptions, but it also runs advertisements, sells merchandise, distributes content to other channels and offers games. In 2017, it signed a licensing agreement with Netflix enabling it to be the only platform in China to provide its customers with popular Netflix originals such as Stranger Things and The Haunting of Hill House.
It is true that iQiyi is limited to only the Chinese market while Netflix has growth opportunities around the globe. However, being limited to the Chinese market of 1.3 billion people isn’t necessarily a bad thing. Instead, it has encouraged the company to strive to find ways to drive growth.
iQiyi also produces some original content. Some of these programmes, such as Hot Blood Dance Crew — a reality programme where dancers from all walks of life battle it out to become the best dancers in the country — have become big hits locally. Hot Blood Dance Crew
was one of the most-watched programmes in China last year.
The strategy seems to have paid off. iQiyi reported net revenue of US$1 billion in the second quarter of the year, up 15% over the same period last year. It expects revenue to grow by up to 10% this quarter. In addition, iQiyi has seen subscribers grow to 100.5 million, up 50% from last year. By comparison, Netflix has about 150 million subscribers worldwide.
However, iQiyi isn’t currently making a profit. The company went public early last year. After soaring more than 150% in the first few months after its IPO, the stock then plunged to below its initial public offering price, where it has remained ever since. As of the end of the second quarter, iQiyi reported a net loss of $339 million.
Despite its losses, the company continues to invest heavily in producing original movies, online games and an e-bookstore, as well as improving its short-form video operations with an aim to be a one-stop entertainment platform.
It remains to be seen if they will be enough to nudge the business into the black in the near future.