China’s online video giant iQiyi has ambitions to become an entertainment kingdom for Chinese people around the world.
Often referred to as China’s Netflix, the Baidu-owned video platform boasts one of China’s largest content libraries, including content from Chinese TV stations, original content, and licensed content from entertainment companies around the world – including Netflix.
The similarities with Netflix are unavoidable - both iQiyi and Netflix began as streaming video sites and have evolved to create their own highly successful original content. Both platforms also operate a subscription model, however, iQiyi complements this model with advertising, sponsorship and brand-funded content models.
And like Netflix, iQiyi has its sights set on achieving big things, as evidenced by the company's recent IPO and Nasdaq listing which raised more than $2.2bn. iQiyi has said the investment will go towards original content creation and platform innovation and development. It also provides a nod towards the video giant's ambitions.
In China, iQiyi is locked in a fierce battle with rival platforms Tencent Video and Alibaba’s Youku Todou. As digital video viewing explodes in China with Chinese consumers now spending more time on mobile devices than with traditional TV, iQiyi and its rivals are racing to create original compelling content for demanding audiences.
iQiyi, like most Chinese companies, has experienced an accelerated growth in recent years. Founded eight years ago, the business has evolved with viewing behaviours shifting from PC viewing to mobile phones and OTT. It has also witnessed the dramatic change in consumer attitudes towards paying for content, as evidenced by the platforms more than 50.8 million subscription customer base.
The Drum sat down with iQiyi’s chief marketing officer Vivian Wang, prior to the IPO, to discuss the video giant’s strategy for growth and its focus on content, IP and innovation.
“We started off with online streaming, now we can say we are number one in online streaming industry,” says Wang. “We have a new vision to become a great entertainment company driven by technological innovation.”
Central to this strategy has been iQiyi’s strategic deal with Baidu to integrate AI and big data to create innovative new marketing opportunities and viewing technologies.
“It is certainly not enough to be a broadcast platform. We want to become an entertainment kingdom, to produce our own IP and provide joyful experiences,” says Wang.
Content creation and IP are now central to iQiyi’s business along with the brands that are integrating their products into the original productions. While Netflix has found success in comedies and dramas, iQiyi’s heartland is variety shows.
Last year, the company created the runaway hit The Rap of China, a hip-hop talent show, which attracted more than 3 billion views across its 12-episode run.
The Rap of China is a great example of iQiyi’s strategic focus on integrating sponsors and advertisers into the fabric of its programming. The variety show attracted sponsors including Chinese water brand Nongfu Spring, Xiaomi, McDonald’s China, Absolut and Chevrolet, and, iQiyi made $46 million in advertising and sponsorship.
Wang says, “The Rap of China is a huge success in content and marketing. We also have other shows that we expect to become popular.”
One such show is Hot Blood Dance Crew, which is billed to be one of the platform’s hottest properties this year.
This integration of sponsors and content, or IP as Wang refers to it, is a key strategy for the entertainment platform and central to this is AI and data to ensure more relevant content and targeted advertising. The Baidu deal will enable iQiyi to draw from the internet giant’s masses of data to serve content, and advertising, to consumers based on their location, viewing habits and interests.
“The Baidu-iQiyi plan will integrate AI and big data from Baidu into our marketing so that our marketing will become more precise, and we hope to develop more technologically-driven advertising products by working with them.”
“We want to dig more into IP integrative marketing” continues Wang. “In fact, we hope that more and more customers pay attention to the big IP, and we want to push the big IP content first in a deeper and more thorough way. We want to dig more into IP integrative marketing. It's our direction to integrate well with customers.”
The partnership also means iQIYI is able to push video advertising to Baidu’s huge search audience, together the two companies account for 80% - 90% of China’s 800 million mobile internet users, which makes working with the platform even more lucrative to advertisers.
The partnership is also providing iQiyi with technological innovations to change the viewing experience.
“I think in the future users can freely choose different angles to watch dramas and variety shows, even just focus on one celebrity. You can use AI as an editor for some shows, and you can just watch the celebrity in the show. It is happening on some shows now.
“For example, if the show lasts two hours but I have only 30 minutes and still want to watch it and understand it, it can be automatically edited into a 30 minutes version. This is one of the options we are expecting to achieve by working with Baidu,” says Wang.
Baidu’s increasing investment in technology as it becomes an AI-first company is believed to have been one of the main drivers behind the iQiyi IPO, as the internet giant looks to line its wallets.
However, the IPO move also indicates a stronger global future for iQiyi, as it looks beyond China for investment and support. Yet despite this, Wang believes the company's future is still Chinese.
“I think we will have an international perspective, but we will still be in the Chinese world. We definitely want to be a giant entertainment kingdom for Chinese people, so that iQiyi can be found wherever there are Chinese speakers,” says Wang.