15 October 2018

iQiyi rides universal appeal of Korean star-crossed lovers

She’s an actress, he’s an alien and the show is a close encounter that’s proving an out-of-this-world-smash hit in China. So much so that one online game developer in Xiamen reportedly gave its workers a day off on Friday, knowing that all of the staff will have been up late the night before watching the finale of the South Korean drama “My Love From the Star” {來自星星的你}.

Online video site iQiyi {愛奇藝} bought the exclusive rights to broadcast the show in China and is believed to be cashing in big time. The company said the show’s rights were quite low to buy and great value given that it has been watched 830 million times since it launched in December. The success will not only bolster its financial bottom but also help pave the way for iQiyi to go public in the United States later this year.

Zhang Yuxin, senior director of business development at iQiyi, told Chengdu Commercial Daily that exclusive broadcast rights for Korean programs are generally a lot lower than for mainland-made shows because South Korean broadcasters are keen to compete in China.

Zhang wouldn’t say just how much the company paid but according to news website Sohu IT, bids for these kinds of shows range between 500,000 yuan (US$81,600) to 1 million yuan.

The exclusive rights to another big hit on iQiyi’s site, mainland-made iPartment {愛情公寓}, reportedly cost the company as much as 40 million yuan.

iPartment generated 70 million yuan in advertising revenue for the site, making it a nice investment. But the Korean show may be even more profitable. Well-known brands like Chanel, Dior, Estee Lauder, AutoNavi and China Resources C’estbon Food & Beverage are all lining up to advertise on iQiyi.

As a subsidiary of search behemoth Baidu (BIDU.US), iQiyi owes part of its success to the parental support like big data that its rivals can’t access.

Over 60 percent of iQiyi’s traffic comes from Baidu. Baidu also records key search words and feeds data back to iQiyi to help the video site decide which types of shows it should buy to track viewers’ tastes.

The popularity of the Star show is well beyond that iQiyi could have imagined and comes at a great time — the company is on the verge of a US IPO. “When the market is good, when the company is ready, we will look for IPO opportunities”, iQiyi vice president Li Yipeng said in May. Rumors have it that Baidu CEO Robin Li {李彥宏 } has been quietly weighing in to help advance the video site’s listing plan.

Baidu hasn’t said much about iQiyi’s finances since 2012, but there are glimpses of its operating situation. As of March 2012, Baidu booked a loss of US$45 million from investing in iQiyi and bandwidth spending has kept rising since then. The site also continues to pour money into buying programming.

iQiyi founder and CEO Gong Yu {龔宇} has said the firm will plow more than 1 billion yuan this year into TV shows, much more than any satellite broadcaster in China. And those hefty cash needs may be one of the reasons Baidu wants iQiyi to go public as soon as this June.

There’s little chance to rest — competition is heating up with rivals LeTV {樂視網} and Youku Tudou {優酷土豆} for a market that research firm iResearch estimates reached 12.8 billion yuan last year, growing 41.9 percent year on year. Each is trying to stake its claim by not only buying in product but by going one step further and investing heavily in in-house production as well.

– Contact the writer at [email protected]



EJ Insight writer

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