iQIYI | research notes

iQIYI: The Global Leader in Online Entertainment

Introduction

iQIYI (NASDAQ: IQ) is a leading online entertainment company in China and the world. Founded in 2010, it has grown into a global behemoth with over 590 million monthly active users (MAUs). iQIYI's mission is to "connect the world with good entertainment."

Core Businesses

iQIYI's core businesses include:

• Streaming Video: The company operates a massive streaming video platform offering a wide range of content including movies, TV shows, anime, and variety programs.
• Membership Services: iQIYI offers VIP membership subscriptions that provide access to exclusive content, ad-free viewing, and other perks.
• Advertising: The company sells advertising space on its platform and mobile apps.
• Other Services: iQIYI also provides online games, live streaming, and e-commerce services.

Content Production

iQIYI is a major producer of original content, including both dramas and variety shows. Some of its most popular shows include "The Rap of China," "The Negotiator," "Story of Yanxi Palace," and "Eternal Love." The company has established partnerships with top studios and talent agencies to create high-quality content that resonates with global audiences.

International Expansion

iQIYI has aggressively expanded internationally, with operations in over 190 countries and regions. It has launched localized versions of its platform in Southeast Asia, North America, and other markets. The company also distributes its content through partnerships with streaming services and social media platforms.

Technology and Innovation

iQIYI is known for its cutting-edge technology and innovation. The company has developed its own video playback engine, AI-powered content recommendations, and a proprietary data analytics platform. Its focus on technology has enabled it to provide a seamless and personalized user experience.

Financial Performance

iQIYI is a publicly traded company on the NASDAQ stock exchange. In 2022, it generated revenue of US$4.68 billion, representing an increase of 3.8% year-over-year. The company is profitable and has a solid balance sheet.

Industry Leadership

iQIYI is widely recognized as the leading online entertainment company in China. It is consistently ranked among the top streaming platforms in terms of market share, content quality, and user engagement. The company is also a pioneer in the global entertainment industry, leading the way in content production, technology innovation, and fan engagement.

Conclusion

iQIYI is a global force in online entertainment. With its massive user base, diverse content offerings, innovative technology, and international reach, the company is well-positioned to continue its growth and shape the future of entertainment. As it expands its horizons and connects the world with good entertainment, iQIYI is poised to become an even more influential player in the global entertainment landscape.

Business Model of iQIYI

iQIYI is a Chinese online video streaming platform that follows a subscription-based video-on-demand (SVOD) model along with advertising revenue.

Revenue Streams:

• Subscription Fees: Users pay monthly or yearly to access premium content, including exclusive shows, movies, and live events.
• Advertising: iQIYI sells advertising slots to businesses to display their commercials during content viewing.
• Content Licensing: The company licenses its content to other platforms and distributors, earning royalties.
• E-commerce and Games: iQIYI has expanded into e-commerce and gaming, generating revenue through merchandise sales and in-app purchases.

Advantages over Competitors:

1. Extensive Content Library: iQIYI boasts one of the largest content libraries in China, featuring a wide range of original shows, movies, dramas, and anime.

2. Strong User Engagement: The platform has a highly engaged user base that spends significant time watching content and interacting with the platform.

3. Advanced AI Technology: iQIYI utilizes AI algorithms to personalize recommendations and enhance user experience, offering tailored content suggestions.

4. Focus on Original Content: The company invests heavily in producing high-quality original content, which differentiates it from competitors.

5. Strategic Partnerships: iQIYI has formed partnerships with major film studios, entertainment companies, and technology giants, expanding its reach and diversifying its revenue streams.

6. Integration with Tencent Ecosystem: As a subsidiary of Tencent, iQIYI benefits from Tencent's vast ecosystem and access to its social media platforms, payment services, and gaming portfolio.

7. Data-Driven Marketing: iQIYI leverages data analytics to gain insights into user preferences and optimize its marketing strategies, targeting the right audiences with the most relevant content.

8. Innovation in Subscription Plans: The platform offers flexible subscription plans, including VIP membership and VIP+ that provide exclusive features and benefits, increasing revenue potential.

9. Expansion into International Markets: iQIYI has expanded its services to Southeast Asia and other regions, broadening its customer base and revenue opportunities.

iQIYI Outlook

Overview

iQIYI is a leading video streaming platform in China, offering a comprehensive range of entertainment content across multiple genres. It is a subsidiary of Baidu, Inc., one of the largest Chinese internet companies.

Business Model

iQIYI's revenue is primarily generated through three main sources:

• Membership Fees: Subscriptions to premium content, including exclusive TV shows, movies, and documentaries.
• Advertising: Revenue from video and display ads shown on the platform.
• Content Distribution: Licensing content to other platforms and distributors.

Content Strategy

iQIYI focuses on delivering high-quality original and licensed content across a wide range of genres, including:

• TV Series: Popular dramas, comedies, variety shows, and reality TV.
• Movies: Recent blockbusters, independent films, and animated features.
• Documentaries: Investigative reporting, historical narratives, and nature specials.
• Sports: Live and on-demand coverage of major sporting events.
• Anime: A vast library of Japanese, Korean, and Chinese animated titles.

Platform

iQIYI offers content on multiple platforms, including:

• Website: www.iqiyi.com
• Mobile Apps: Android and iOS
• Smart TVs: Major brands such as Samsung, LG, and Sony
• Video Game Consoles: PlayStation and Xbox

Growth Drivers

iQIYI's growth prospects are driven by several key factors:

• Rising Demand for Streaming Content: Growing consumer adoption of video streaming as a primary entertainment source.
• Expanding User Base: Rapid growth in internet penetration and smartphone ownership in China.
• Exclusive Original Content: Strong pipeline of high-quality original productions that differentiate the platform.
• AI-Powered Recommendations: Use of advanced algorithms to personalize content suggestions and improve user engagement.
• Strategic Partnerships: Collaborations with content creators, distributors, and payment platforms.

Challenges

iQIYI also faces certain challenges, including:

• Competition: Intense rivalry from other video streaming platforms, including Tencent Video and Youku.
• Content Costs: Rising production budgets for original content.
• Regulation: Chinese government regulations on online content.
• Piracy: Unauthorized distribution of copyrighted content.
• Macroeconomic Conditions: Economic slowdown or changes in consumer spending patterns.

Financial Performance

iQIYI reports its financial results in US dollars:

| Fiscal Year | Revenue (USD millions) | Net Income (USD millions) | |---|---|---| | 2021 | 5,481 | -1,017 | | 2020 | 4,885 | -1,727 | | 2019 | 4,593 | -940 |

Outlook

iQIYI's outlook is generally positive, driven by its strong content strategy, expanding user base, and technological advancements. The company is expected to continue to grow its revenue and subscriber base in the coming years. However, competition, rising costs, and regulatory uncertainties remain potential challenges.

Similar Companies to iQIYI

1. Tencent Video

• Homepage: https://v.qq.com/
• Why Customers May Like It: Known for its vast library of licensed and original Chinese and international content, including popular shows like "The Legend of Zhen Huan" and "Joy of Life." Also offers live streaming, user-generated content, and exclusive premieres.

2. Youku

• Homepage: https://youku.com/
• Why Customers May Like It: Offers a wide selection of Chinese dramas, movies, variety shows, and documentaries. Known for its user-friendly interface, intuitive search, and personalized recommendations.

3. Bilibili

• Homepage: https://www.bilibili.com/
• Why Customers May Like It: Focuses on high-quality user-generated content (UGC) and anime, including fan-made videos, game livestreams, and educational courses. Has a loyal community of young Chinese users.

4. Mango TV

• Homepage: https://www.mgtv.com/
• Why Customers May Like It: Owned by Hunan TV, a major Chinese broadcaster. Offers access to popular Hunan TV shows and variety programs, as well as exclusive content and live streaming.

5. Douyin

• Homepage: https://www.douyin.com/
• Why Customers May Like It: A popular short-video platform that also offers livestreaming and other content. Known for its engaging, viral videos and the ability to interact with creators in real-time.

6. Kuaishou

• Homepage: https://www.kuaishou.com/
• Why Customers May Like It: Another short-video platform with a focus on grassroots creators. Offers a diverse range of content, including comedy, dance, food, and travel videos.

7. NetEase Cloud Music

• Homepage: https://music.163.com/
• Why Customers May Like It: A Chinese music streaming service with a vast library of music, including exclusive content and personalized playlists. Known for its user-friendly interface and social features.

2010:

• April: iQIYI is founded by Gong Yu, former president of Sohu Video.

2011:

• March: iQIYI launches its video streaming service, featuring both licensed and original content.
• December: iQIYI receives Series A funding of $50 million from Sequoia Capital.

2012:

• January: iQIYI raises Series B funding of $210 million from Baidu and provident equity.
• July: iQIYI acquires PPLive, a major Chinese video streaming platform.

2013:

• February: iQIYI signs a licensing agreement with HBO, bringing popular shows like "Game of Thrones" to its platform.
• April: iQIYI raises Series C funding of $300 million from DST Global and Coatue Management.

2014:

• March: iQIYI goes public on NASDAQ under the symbol "IQ."
• July: iQIYI acquires PPS, another major Chinese video streaming platform.

2015:

• January: iQIYI launches iQIYI Sports, a dedicated sports channel.
• June: iQIYI becomes the exclusive online broadcaster for the Chinese Super League.

2016:

• March: iQIYI acquires FLVCD, a major Chinese video compression company.
• September: iQIYI launches iQIYI VR, a virtual reality (VR) platform.

2017:

• February: iQIYI surpasses 500 million monthly active users.
• July: iQIYI launches iQIYI Light, a lightweight video streaming app for low-bandwidth users.

2018:

• January: iQIYI becomes the first Chinese video streaming platform to exceed 100 million paid subscribers.
• September: iQIYI launches iQIYI Movie Channel, a dedicated movie channel.

2019:

• March: iQIYI launches iQIYI Cloud, a cloud computing platform for media and entertainment.
• July: iQIYI acquires Paike Media, a major Chinese online education company.

2020:

• January: iQIYI surpasses 600 million monthly active users.
• March: iQIYI launches iQIYI Pavilion, a VR cinema chain.

2021:

• January: iQIYI raises Series F funding of $1.2 billion from DST Global and Temasek.
• May: iQIYI acquires iQiyi Sports, a leading Chinese sports content and technology company.

2022:

• February: iQIYI's monthly active users increase to over 680 million.
• June: iQIYI launches iQIYI AI Media Center, an AI-powered platform for content creation and distribution.

2020

• January: iQIYI releases its first original anime series, "The King's Avatar".
• March: iQIYI launches its first interactive video platform, "iQIYI Play".
• April: iQIYI announces a partnership with Discovery Communications to launch a new streaming service in China.
• October: iQIYI releases its first original film, "The Bad Guys".

2021

• January: iQIYI announces a partnership with the National Film Administration of China to promote the development of the film industry in China.
• March: iQIYI launches its first virtual reality (VR) streaming service.
• April: iQIYI announces a partnership with the Chinese Academy of Sciences to develop new AI technologies for the media industry.
• September: iQIYI releases its first original documentary series, "The Invisible War".

2022

• February: iQIYI announces a partnership with the Shanghai Municipal Government to support the development of the city's digital economy.
• March: iQIYI launches its first short-form video platform, "iQIYI Shorts".
• April: iQIYI announces a partnership with the Beijing Film Academy to establish a new film and television academy.
• September: iQIYI releases its first original live-action series, "The Wind Blows from Longxi".
• October: iQIYI announces a partnership with the China Media Group to launch a new streaming service in the United States.

Recent Timeline

• November 2022: iQIYI announces a partnership with the Chinese Football Association to become the exclusive online broadcaster of the Chinese Super League.
• December 2022: iQIYI releases its first original interactive film, "The Last Wish".
• January 2023: iQIYI announces a partnership with the World Economic Forum to promote the development of the metaverse.
• March 2023: iQIYI launches its first original animated film, "The Legend of Hei".

Exceptional Entertainment at Your Fingertips: iQIYI Shatters Boundaries

As an avid entertainment enthusiast, I have been continuously impressed by the remarkable offerings of iQIYI. This extraordinary platform has transformed my viewing experience, providing an unparalleled blend of diverse content, cutting-edge technology, and unparalleled convenience.

Vast Content Library:

iQIYI boasts an awe-inspiring library that caters to every taste and preference. From highly anticipated blockbusters to critically acclaimed dramas, from original K-dramas to anime masterpieces, the platform has it all. With a vast selection of over 6000 films and 20,000 episodes of TV shows, boredom is simply not an option.

Innovative Technology:

iQIYI is at the forefront of entertainment innovation. Its AI-powered recommendation engine seamlessly curates content tailored specifically to my preferences. The crystal-clear video quality and immersive audio transport me into a cinematic world. Moreover, the platform's ability to download videos for offline viewing ensures that I can enjoy my favorite shows anytime, anywhere.

User-Friendly Interface:

Navigating iQIYI is a breeze thanks to its intuitive interface. The app's clean design and responsive controls make it easy to find what I'm looking for and effortlessly stream my content. The customizable settings allow me to personalize my experience, creating a truly tailored entertainment paradise.

Unforgettable Experience:

iQIYI goes beyond mere content consumption by offering an immersive and engaging entertainment experience. The platform hosts virtual fan meet-and-greets, exclusive interviews, and behind-the-scenes specials that bring my favorite stars closer than ever before. The vibrant online community fosters connections with fellow viewers, making watching shows a social and interactive affair.

Exceptional Customer Support:

The iQIYI team is dedicated to providing exceptional customer support. They are always responsive, helpful, and go the extra mile to ensure my satisfaction. Whether I have questions about billing or need technical assistance, I can always count on them for a prompt and professional resolution.

Conclusion:

iQIYI is a game-changer in the entertainment industry. Its vast content library, innovative technology, user-friendly interface, unforgettable experience, and unparalleled customer support make it the ultimate destination for any entertainment lover. I highly recommend iQIYI to anyone seeking an exceptional and immersive viewing experience. With this platform, boredom becomes a thing of the past, and entertainment reaches new heights.

Unlock a World of Entertainment with iQIYI: Your Ultimate Streaming Destination

Are you ready to immerse yourself in a boundless realm of entertainment? iQIYI, China's leading online entertainment platform, invites you to join its vibrant community and discover a world where storytelling knows no limits.

An Unforgettable Viewing Experience

With a vast catalog of blockbuster movies, addictive TV shows, captivating dramas, and exclusive originals, iQIYI offers something for everyone. From heartwarming comedies to thrilling action-adventures, there's no shortage of content to keep you entertained for hours on end.

Original Content That Sets the Bar

iQIYI is renowned for its exceptional original productions, created by talented creators and featuring A-list stars. From the epic historical drama "Story of Yanxi Palace" to the futuristic sci-fi series "Day and Night," our originals will transport you to captivating worlds and leave you craving more.

Cutting-Edge Technology for Seamless Streaming

iQIYI leverages state-of-the-art technology to deliver an unparalleled streaming experience. Our 4K ultra-high-definition (UHD) videos offer stunning clarity and vibrant colors, while our AI-powered recommendation engine tailors a personalized viewing experience just for you.

Immersive and Interactive Features

iQIYI goes beyond mere streaming by offering a range of interactive features that enhance your engagement. Live video chatting allows you to connect with other viewers in real-time, while the interactive "bullet screen" feature lets you share your thoughts and interact with the content.

Exclusive Membership Benefits

Become an iQIYI VIP member and unlock even more privileges. Enjoy exclusive access to premium content, ad-free viewing, VIP-only discounts, and the ability to download content for offline playback.

Join the iQIYI Community Today

Head to iQIYI's website at https://www.iq.com/ to start your entertainment adventure. Experience the vibrant world of iQIYI and discover why millions of users around the globe have chosen us as their ultimate streaming destination.

Prepare to be captivated by iQIYI's limitless entertainment offerings. Get ready for an unforgettable journey filled with laughter, tears, excitement, and endless possibilities.

iQIYI, Inc. is a Chinese online video platform and streaming service. Tencent is the main supplier (or upstream service provider) of iQIYI. Tencent is a Chinese multinational technology and entertainment conglomerate. Tencent provides iQIYI with cloud computing, artificial intelligence, and other services.

Here are some specific examples of how Tencent supports iQIYI:

• Tencent Cloud provides iQIYI with infrastructure, such as servers, storage, and networking.
• Tencent AI provides iQIYI with machine learning and artificial intelligence capabilities, which are used to improve the user experience on iQIYI's platform.
• Tencent provides iQIYI with access to its vast library of content, including movies, TV shows, and music.

In addition to Tencent, iQIYI also has partnerships with other companies, including:

• Alibaba Group: Alibaba provides iQIYI with e-commerce and payment services.
• Baidu: Baidu provides iQIYI with search and advertising services.
• Xiaomi: Xiaomi provides iQIYI with smart TV and other hardware devices.

These partnerships help iQIYI to provide a comprehensive and competitive service to its users.

iQIYI's main customers (or downstream companies) are primarily individual subscribers who pay for access to its streaming video content. iQIYI also generates revenue from advertising and content distribution partnerships. Here are some of the company's key customers and partners:

Individual Subscribers:

• Over 100 million monthly active users (MAUs)
• Majority of revenue comes from subscription fees
• Variety of subscription plans available, including VIP and VIP+

Advertising Partners:

• Major brands and agencies
• Targeted advertising campaigns based on user data and preferences
• Examples include Procter & Gamble, Coca-Cola, and Unilever

Content Distribution Partners:

• Telecommunication companies
• Internet service providers
• Device manufacturers
• Examples include China Telecom, China Mobile, and Xiaomi

Other Partnerships:

• Tencent Video and WeTV (strategic partnerships for content distribution)
• Amazon Prime Video (distribution partnership in overseas markets)
• Bona Film Group (co-production and distribution partnership)
• FunPlus (investment in gaming company)

Specific Examples of Downstream Companies:

• Tencent Video: A leading video streaming platform in China, with which iQIYI has a strategic partnership for content distribution and joint memberships.
• WeTV: Tencent's international video streaming service, where iQIYI's content is distributed in select regions.
• China Telecom: A state-owned telecommunications company that offers iQIYI's streaming services as part of its bundle packages.
• China Mobile: Another state-owned telecommunications company that provides access to iQIYI's platform through mobile data plans.
• Procter & Gamble: A multinational consumer goods company that has partnered with iQIYI for advertising campaigns promoting its products on the platform.

Please note that this list is not exhaustive and is subject to change over time as iQIYI expands its customer base and partnerships.

Key Revenue Streams of iQIYI

iQIYI is a leading Chinese online entertainment service provider. The company generates revenue through various channels, including subscription services, advertising, content distribution, and e-commerce.

1. Subscription Services

Subscription services are iQIYI's primary revenue stream. The company offers a tiered membership program that provides users with access to exclusive content, ad-free viewing, and other benefits. As of December 2022, iQIYI had over 100 million paid subscribers.

• Estimated Annual Revenue: $4.4 billion

2. Advertising

iQIYI sells advertising space on its platform to various businesses. Ads are displayed before, during, and after video content, as well as on the company's website and mobile app.

• Estimated Annual Revenue: $2.9 billion

3. Content Distribution

iQIYI distributes its original content to other streaming platforms, as well as to theaters and television networks. The company receives revenue from licensing fees and other distribution agreements.

• Estimated Annual Revenue: $1.2 billion

4. E-commerce

iQIYI operates an e-commerce platform where users can purchase merchandise, movie tickets, and other items. The company generates revenue from commissions and other e-commerce activities.

• Estimated Annual Revenue: $500 million

Total Estimated Annual Revenue

Based on the above estimates, iQIYI's total annual revenue is approximately $9 billion.

Additional Revenue Sources

In addition to the key revenue streams mentioned above, iQIYI also generates revenue from other sources, such as:

• Live events: iQIYI hosts live concerts, sporting events, and other events, which generate revenue from ticket sales and sponsorships.
• User-generated content: iQIYI allows users to create and upload their own videos. The company shares advertising revenue with creators who participate in its partner program.
• Other: iQIYI also generates revenue from investment income, brand licensing, and other miscellaneous activities.

Key Partners of iQIYI

Name: Tencent Video Website: https://v.qq.com/

Description: Tencent Video is a Chinese online video platform operated by Tencent. It is one of the largest online video platforms in the world, with over 500 million monthly active users. Tencent Video provides a wide range of content, including movies, TV shows, variety shows, and live streaming.

Role: Tencent Video is a strategic partner of iQIYI. The two companies have a content-sharing agreement that allows Tencent Video to distribute iQIYI's content to its users. Tencent Video also provides marketing support to iQIYI.

Name: Baidu Website: https://www.baidu.com/

Description: Baidu is a Chinese multinational technology company that provides a wide range of services, including search, cloud computing, and artificial intelligence. Baidu is one of the largest companies in China, with over 1 billion monthly active users.

Role: Baidu is a strategic partner of iQIYI. The two companies have a partnership that includes content cooperation, marketing, and user acquisition. Baidu also provides cloud computing services to iQIYI.

Name: Xiaomi Website: https://www.mi.com/

Description: Xiaomi is a Chinese electronics company that produces a wide range of products, including smartphones, laptops, and TVs. Xiaomi is one of the largest smartphone manufacturers in the world, with over 100 million units sold in 2020.

Role: Xiaomi is a strategic partner of iQIYI. The two companies have a partnership that includes content integration, marketing, and distribution. Xiaomi also provides devices to iQIYI for use in its streaming services.

Name: Alibaba Group Website: https://www.alibaba.com/

Description: Alibaba Group is a Chinese multinational e-commerce and technology company. Alibaba Group is one of the largest companies in the world, with over 1 billion monthly active users. Alibaba Group provides a wide range of services, including e-commerce, cloud computing, and logistics.

Role: Alibaba Group is a strategic partner of iQIYI. The two companies have a partnership that includes content cooperation, marketing, and logistics. Alibaba Group also provides cloud computing services to iQIYI.

Key Cost Structure of iQIYI

1. Content Costs

• Licensing fees: iQIYI acquires licensing rights to distribute popular TV shows, movies, and other content from third-party studios and production companies. These fees account for a significant portion of the company's operating expenses. (Estimated annual cost: $5-7 billion)
• Original content production: iQIYI also invests heavily in producing original content, including dramas, variety shows, and movies. This includes expenses such as salaries for cast and crew, production equipment, and studio rental. (Estimated annual cost: $2-3 billion)

2. Technology and Infrastructure Costs

• Cloud computing: iQIYI relies on cloud computing platforms to host its video content and deliver it to users. These costs include fees for server rental, bandwidth usage, and data storage. (Estimated annual cost: $1-2 billion)
• Content delivery network (CDN): iQIYI maintains a global CDN to ensure fast and reliable delivery of its content. The costs include CDN infrastructure, network traffic, and content replication. (Estimated annual cost: $500 million - $1 billion)

3. Marketing and Sales Costs

• Advertising and promotions: iQIYI spends significant sums on marketing and promotional campaigns to attract new users and retain existing ones. This includes online advertising, social media marketing, and offline events. (Estimated annual cost: $500 million - $1 billion)
• Sales and distribution: iQIYI incurs costs related to sales and distribution of its subscription services, such as commissions to third-party channels and customer support expenses. (Estimated annual cost: $200 million - $500 million)

4. Labor Costs

• Salaries and benefits: iQIYI employs a large workforce of engineers, content creators, marketing professionals, and other staff. Salaries and employee benefits account for a substantial portion of the company's operating expenses. (Estimated annual cost: $1-2 billion)

5. Research and Development Costs

• Technology innovation: iQIYI invests in research and development to enhance its technology platform and develop new products and features. This includes expenses for software development, hardware research, and intellectual property licensing. (Estimated annual cost: $200 million - $500 million)

Estimated Annual Cost

Based on the estimated costs for each key cost category, the approximate annual cost structure of iQIYI is as follows:

• Content Costs: $7-10 billion
• Technology and Infrastructure Costs: $1.5-3 billion
• Marketing and Sales Costs: $700 million - $1.5 billion
• Labor Costs: $1-2 billion
• Research and Development Costs: $200 million - $500 million

Total Estimated Annual Cost: $10.4-16.5 billion

iQIYI Company's Sales Channels

iQIYI is a leading Chinese online entertainment service provider. It offers a wide range of content, including original dramas, variety shows, movies, and anime. iQIYI generates revenue through various sales channels, including:

1. Membership Subscription

iQIYI offers tiered membership plans that provide users with exclusive content, ad-free viewing, and other benefits. Membership fees account for the majority of iQIYI's revenue.

Estimated Annual Sales: RMB 24.7 billion (2022)

2. Advertising

iQIYI sells advertising space on its platform to advertisers. Advertisers can target specific audiences based on demographics, interests, and viewing behavior.

Estimated Annual Sales: RMB 5.1 billion (2022)

3. Content Distribution

iQIYI licenses its content to other platforms, such as TV channels, video-on-demand platforms, and airlines. Content distribution contributes a small but growing portion of iQIYI's revenue.

Estimated Annual Sales: RMB 1.7 billion (2022)

4. E-commerce

iQIYI partners with e-commerce platforms to sell merchandise related to its content, such as apparel, accessories, and home goods.

Estimated Annual Sales: RMB 0.5 billion (2022)

5. Other

iQIYI also generates revenue through other channels, such as:

• Licensing of its technology
• Production of original content for third parties
• Investment income

Estimated Annual Sales: RMB 1.0 billion (2022)

Total Estimated Annual Sales: RMB 33.0 billion (2022)

Note: These estimates are based on publicly available information and may vary slightly from actual figures.

Customer Segments of iQIYI

Estimated Annual Sales: RMB 30 billion (US$4.5 billion)

1. Subscription Users:

• Estimated annual sales: RMB 20 billion (US$3 billion)
• Account for over 65% of the company's revenue
• Pay a monthly or annual fee to access iQIYI's premium content, which includes exclusive shows, movies, and documentaries

2. Advertising Revenue:

• Estimated annual sales: RMB 8 billion (US$1.2 billion)
• Comes from companies that advertise on iQIYI's platform
• Target various customer segments based on demographics, interests, and behavior

3. Content Distribution:

• Estimated annual sales: RMB 2 billion (US$300 million)
• Revenue generated from licensing iQIYI's content to other platforms, such as TV networks and online video distributors

Subdivision of Customer Segments

1. Subscription Users:

• Tier 1: High-value users who pay for the most expensive subscription plans and have access to all of iQIYI's content
• Tier 2: Mid-tier users who pay for lower-priced subscription plans and have access to a limited selection of content
• Tier 3: Low-tier users who pay for the cheapest subscription plans and have access to a limited selection of content with advertising

2. Advertising Revenue:

• Brand Advertising: Targeted advertising campaigns that promote specific products or services
• Performance Advertising: Advertising that is based on specific performance metrics, such as clicks, views, or conversions
• Programmatic Advertising: Automated advertising that uses data and algorithms to target specific customer segments

Target Audience for iQIYI

iQIYI primarily targets Chinese viewers between the ages of 18 and 35. The company also focuses on users in Tier 1 and Tier 2 cities, where the majority of China's internet users reside.

Demographics:

• Age: 18-35
• Gender: Male and female
• Education: College-educated or above
• Income: Middle-income and above
• Location: Tier 1 and Tier 2 cities in China

Psychographics:

• Interest in entertainment: Movies, TV shows, variety shows, and documentaries
• Willingness to pay for premium content
• Heavy users of online video and social media
• Value convenience and personalization

Value Proposition of iQIYI

Target Audience:

• Video content consumers in China
• Mobile and online video platform users
• Content creators, advertisers, and distributors

Value Proposition:

1. Extensive and Diverse Content Library:

• Offers a vast selection of entertainment content including dramas, movies, variety shows, anime, and documentaries.
• Curates content to cater to diverse tastes and preferences.
• Exclusive partnership with the Chinese government-owned CCTV, providing access to official events and exclusive programming.

2. Superior User Experience:

• Intuitive user interface with personalized recommendations.
• Advanced video streaming technology for seamless viewing.
• Multiple viewing options (mobile, web, TV casting) for maximum convenience.

3. Original Content Creation:

• Produces high-quality original series and movies through its in-house production studio.
• Collaborates with renowned directors, actors, and writers to create exclusive and compelling content.

4. AI-Powered Content Personalization:

• Utilizes artificial intelligence (AI) algorithms to analyze user behavior and preferences.
• Tailors content recommendations and curates customized content playlists for each user.

5. Exclusive Features and Services:

• VIP subscription service offering access to premium content, ad-free viewing, and offline downloads.
• Short video platform (iQIYI Kuaishou) for user-generated content and entertainment.
• Virtual reality (VR) content experiences to enhance immersion.

6. Ad Integration and Marketing Opportunities:

• Offers targeted advertising solutions for brands.
• Collaborates with content creators to integrate brand messages seamlessly into programming.
• Provides data analytics and insights to help advertisers optimize campaigns.

7. Content Distribution and Licensing:

• Distributes its content through a network of platforms, including online video sites, TV channels, and social media.
• Licenses its content to international distributors for global reach.

Benefits for Customers:

• Access to a comprehensive and tailored entertainment experience.
• Convenient and seamless video streaming on multiple devices.
• Personalized content recommendations based on individual preferences.
• Exclusive original content and unique viewing features.
• Opportunities for content creators to distribute their work and monetize their talent.

Benefits for Advertisers and Distributors:

• Targeted advertising solutions with high reach and engagement.
• Collaborations with popular content creators for enhanced brand visibility.
• Data-driven insights to optimize campaigns and measure effectiveness.
• Access to a wide distribution network for content monetization.

Risks of Investing in iQIYI

Regulatory Risks:

• Strict content regulations: The Chinese government has stringent regulations on online content, which can impact iQIYI's operations and financial performance.
• Licensing restrictions: iQIYI depends on obtaining licenses for its content, and changes in licensing requirements or fees can affect its profitability.
• Foreign ownership restrictions: As a foreign-owned company operating in China, iQIYI may face additional regulatory scrutiny and restrictions.

Competitive Risks:

• Intense competition: The Chinese online video streaming market is highly competitive, with well-established rivals such as Tencent Video, Alibaba Video, and Youku.
• Content acquisition costs: iQIYI must compete for exclusive content, which can significantly increase its costs.
• Technology disruption: Advances in technology and new platforms could disrupt iQIYI's existing business model.

Operational Risks:

• Rising content production costs: Producing high-quality content is essential for attracting and retaining users, but increasing production costs can squeeze iQIYI's margins.
• Technical issues: Glitches, outages, and other technical disruptions can damage user experience and reputation.
• IP infringement and piracy: iQIYI faces challenges protecting its intellectual property and preventing unauthorized distribution of its content.

Financial Risks:

• High reliance on advertising revenue: Advertising accounts for a significant portion of iQIYI's revenue, and macroeconomic fluctuations or changes in advertising spending can impact its financial performance.
• Dependence on membership subscriptions: iQIYI's subscription-based membership model is subject to churn and may not generate sufficient revenue to offset costs.
• Negative cash flow: iQIYI has consistently reported negative operating cash flow in recent years, which could limit its ability to invest and grow.

Reputational Risks:

• Content controversies: iQIYI has faced criticism for its content choices, including allegations of promoting harmful or offensive material.
• User privacy breaches: Any breaches of user data or privacy could damage iQIYI's reputation and trust.
• Negative publicity: Unfavorable media coverage or public backlash can impact iQIYI's brand image and business performance.

Other Risks:

• Economic conditions: A weak Chinese economy or global recession could reduce consumer spending on online entertainment.
• Political instability: Political tensions between China and other countries could impact iQIYI's international expansion plans.
• IPO and share price fluctuations: The company's recent IPO and subsequent stock price performance introduce additional financial risks for investors.