Profits Crumble by 80% at iQiyi, Chinese Video Streamer, in Second Quarter

As an observer with a keen interest in the world of digital entertainment, I find myself following the journey of iQiyi with a mixture of admiration and concern. This China-based streaming giant has shown remarkable resilience over the years, breaking new ground and setting trends in the industry. Last year’s achievement of net profits was a testament to their relentless pursuit of success, even amidst a declining subscriber base.

In the second quarter, I experienced a dip of 5% in my revenue stream as a representative of China’s video streaming company, iQiyi. Additionally, there was a significant drop of 80% in our net profits.

I was thrilled to learn on Thursday that the company reported revenues amounting to approximately RMB7.45 billion ($1.04 billion) for the April to June period. However, this figure represents a decrease compared to the same period last year and is also 6% lower than the first quarter’s earnings.

In contrast to a net profit of 365 million RMB ($51.1 million) during the same period last year, and a profit of 655 million RMB ($91.7 million) in the first quarter of this year, the most recent quarter yielded a net profit of approximately 68.7 million RMB ($9.6 million).

For the very first time in its history, the company managed to record annual net profits last year, despite a decrease in its subscriber base. This drop in subscribers, numbering 101 million as of December 2023, was significantly counterbalanced by an uptick in average revenue per user.

Starting from the beginning of this year, iQiyi has stopped sharing information about their member count or Average Revenue Per User (ARPU). Their regulatory filing stated that membership service revenue amounted to approximately RMB4.5 billion ($630 million), showing a 9% decrease compared to last year. This decline is mostly attributed to the variation in the performance of their content offerings. This marks the second consecutive quarter in which subscription income has decreased.

The free advertising revenue on the platform dropped by approximately 2%, amounting to around RMB1.5 billion ($210 million), largely because of a decline in brand advertising and partly compensated by an increase in performance-based advertising.

As a devoted follower, I’m excited to share that our content distribution earnings reached approximately 698 million yuan, marking a 2% growth compared to last year. Interestingly, other sources of income skyrocketed by 16%, totaling around 784 million yuan. This significant rise can be attributed mainly to the surge in revenue from talent agency services and our fruitful collaborations with third parties.

The document failed to specifically discuss the declining subscriber-based operations of the company, but it implied challenges due to rival streaming services. Moreover, it provided no insights into iQiyi’s endeavors to expand its business beyond mainland China.

According to Gong Yu, the intense competition in the long-form video market during the second quarter is beneficial for the industry as it makes it more attractive compared to other forms of entertainment. He emphasizes that lasting success depends on continuously providing top-quality content that strikes a balance between artistic value and commercial gain, which is something iQiyi remains dedicated to.

On Wednesday, the company’s NASDAQ-listed ADR shares almost reached their record lows, closing at $3.08 per share. This valuation places iQiyi, which is primarily owned by tech titan Baidu, at a market capitalization of approximately $1.62 billion.

2024-08-22 13:46

Profits Crumble by 80% at iQiyi, Chinese Video Streamer, in Second Quarter

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