The VoD or video on demand business is growing larger and larger now. China also has its own VoD platform. iQiyi is not only the second largest video platform in the country, but also one of the biggest in the world.
Baidu backed up the platform since its founding in 2010. And it has since been growing big in the country. Now, it has more than 650 million subscribers with more than 500 billion hours spent on the platform.
But just like Netflix, profit is still a far away goal for iQiyi. The continuous cash burn at original content production cost puts it further from profit. After various dramas and variety shows produced in the past years, it now plans on focusing on movies.
Drama series and variety shows production puts a choking $484 million loss at 4th quarter last year. This is nearly four times the loss it experienced the previous quarter.
With shorter duration than those of drama and variety shows, movie can cut off the production cost better. Moreover, as the movies are not to put on huge theater screens, iQiyi can save up the special effects cost. In addition, new Chinese regulation allows the company to pay less for movie stars.
The loss is okay for iQiyi, but not for Baidu
It seems like Baidu is even more in rush to get iQiyi profitable. No wonder, the production cost spent by the VoD platform puts Baidu in a very difficult position. It experienced a profit loss for the first time ever since it went public on Nasdaq in 2005.
Though Baidu even noticed its worker that it is in crisis, iQiyi is working just fine. Since it went public on 2017, it had never been profitable. The investor that invested $2.5 billion on the firm do not even expect any profit until 2022. Even the loss it reported the first quarter this year is $302 million, much less than the previous quarter.
Meanwhile, a profit loss is a shocking thing for Baidu. And resignation of one of its most important exe
