On Thursday, video-streaming platform iQiyi released fourth quarter and full year results for 2018, posting a loss of RMB 9.1 billion ($1.3 billion) in 2018, ahead of analyst expectations, with subscriber revenue driving growth. Memberships reached 87.4 million, representing 72% growth year-on-year and revenue surged as a result, rising 52% this year to RMB 25 billion ($3.6 billion) compared with a year ago.

“Membership business continued to be the main engine driving our growth, while we further broadened and diversified other revenue streams,” said CFO Wang Xiaodong. He added, “2018 was also a transition year for us, as we devoted more resources towards producing original content which added pressure to our margins.”

Original content helps lure paying subscribers, said CEO Yu Gong, amid a general shift in internet user behavior toward accepting paid content.

iQiyi reveals user numbers and net loss since inception in IPO filing

Fourth quarter results were in line with the full year, with revenue rising more than 50% compared with the same period a year earlier driven by income from subscriber services. Advertising revenue grew more slowly as economic headwinds weighed.

Parent company and search giant, Baidu, also saw a deceleration in online marketing revenue, it said in its fourth quarter and full year earnings release from the same day, as net income in the fourth quarter fell 50% year-on-year.

“Baidu’s Q4 earnings beat expectations, with solid growth driven by the company’s investments in AI, Cloud and video service, iQiyi. As the last few quarters have indicated, uncertainties about the Chinese economy seem to be slowing down their advertising business,” said eMarketer analyst Oscar Orozco in an email.

For the first quarter of 2019, iQiyi forecasts net revenue of RMB 6.8 billion to RMB 7.1 billion ($990 million to $1 billion) with memberships continuing to drive growth as the company maintains its focus on producing original content.

Bailey Hu is based in China’s hardware capital, Shenzhen. Her interests include local maker culture, grassroots innovation and how tech shapes society, as well as vice versa.

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