Earlier this month, Baidu acquired all stakes of iQiyi held by Providence Equity Partners, making the Chinese search giant the largest stakeholder of iQiyi with more than 90% shares. iQiyi is one of the many Hulu equivalents in China.
Dr. Gong Yu, CEO of iQiyi shared with local media Tencent Tech his mindset of the deal and his perspectives on China online video segment in the wake of the share buyout.
Synergy Between Baidu & iQiyi
As Dr. Gong puts it, after the share buy-back, iQiyi wouldn’t have to live under the double pressure of business development and fund raising. It could just be concentrating on the business side. Also, iQiyi would endeavor to live up to Baidu’s expectation: run its own brand, strive to surpass those big rivals and finally pull off an IPO.
It’s not just wishful thinking.
What Baidu can help is more than merely money. It could also booster iQiyi’s growth from many respects.
For instance, If iQiyi’s video downloading service and Baidu’s cloud storage combined together, it’s a convenience for users to download videos either to their local disk, or onto the cloud, thus synching between devices would be easy.
Another benefit coming from the tie-up is that by accessing to hot keywords on Baidu, iQiyi can ‘home-make’ videos based on the search trend. The simple mindset behind this is, people love what, we give them what. Costs for making these video come cheaper and they attract people’s attention as well as traffic.
On the other hand, iQiyi can help produce promotional videos for advertisers based on most search terms on Baidu in a way to better monetize Baidu’s search traffic. The two would spilt ad revenue from such effort, Gong said.
iQiyi’s home-made video biz
Though the video market as a whole is struggling due to low ads revenue, rising content costs and bandwidth costs, iQiyi stands up to the challenge with its own strategy.
IQiyi is now highlighting on producing home-made videos.
Though for now own-branded videos accounted for only less than 5% of all the traffic to the site, Gong was hoping or expecting the number could be 15% in the future, at that time the biz could contribute about 20% of iQiyi’s total revenue.
In terms of market performance, Gong claimed that iQiyi is in a better financial position compared with the IPO-eve Youku. But for an IPO, the company is still waiting for the market to recover from the current turmoil.