Market Insight

iQiyi to work with Baidu for more AI application partnerships in 2018

November 17, 2017

Jun Wen Woo Jun Wen Woo Senior Research Analyst – Online Video, IHS Markit

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During its annual iJOY event in Shanghai, Baidu-owned online video service, iQiyi has revealed plans to release more than 200 shows in 2018 and to collaborate with its mother company Baidu on artificial intelligence (AI) applications to drive its business. iQiyi aims to be a top media company driven by both content and technology innovation.

iQiyi was founded in April 2010 by Baidu and Providence Equity Partners. Baidu is the biggest shareholder of iQiyi, with 80.5% stake in the company. In September 2017, iQiyi announced its plan to file for an initial public offering (IPO) in the United States in 2018.

Our analysis

AI helps iQiyi to attract more subscribers and improve its revenue

AI technology has helped iQiyi to study user behaviour and forecast for better strategy planning in content production, investment, as well as its advertising and marketing. iQiyi plans to create 200 programs in 2018 with the help of AI technology to assist in content production, programs acquisition and audience classification. Baidu’s artificial intelligence (AI) technology leverages the strength of Baidu’s search capability, as well as the big data accumulated from the large user base of iQiyi and Baidu.

AI assistant within iQiyi VR devices to enhance user experience

In March 2017, iQiyi introduced its first 4k VR device, Qiyu. The second virtual reality (VR) hardware, i71VR was launched in October 2017. iQiyi has integrates AI technology to its VR devices by introducing Vivi, the AI assistant within the VR device. Vivi is able to assist users in accessing iQiyi content as well as recommend movie via voice interaction. The launch of virtual reality hardware is able to enhance iQiyi user experience while watching its content. Apart from producing more quality content, it is right for iQiyi to diversify its revenue and strengthen its video ecosystem by integrating VR hardware and AI technology to its video service.

iQiyi needs to be innovative to stay competitive in the market

As Baidu is smaller compared to both of its competitors – Alibaba and Tencent in terms of company revenue, it is very important for iQiyi to innovate and leverage its existing resources to stay competitive in the highly competitive online video market. iQiyi’s plan to go public in 2018 will help the online video company to raise capital to support content cost to acquire and produce content. The online video market in China is currently led by Baidu’s iQiyi, Alibaba’s Youku Tudou and Tencent Video. An IPO of iQiyi will help iQiyi to get for more funding, especially with a deceleration of Baidu’s advertising revenue and increasing content costs.

Geography
China
Organization
Baidu
Research by Market
Media & Advertising
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