Baidu, China’s Google, is losing out to rivals in considering their video content as its core advertising product. According to the company’s latest financial results, its video streaming business iQiyi posted a net loss of US$ 1.3 billion (9.1 billion yuan) in 2018, compared to just 3.74 billion yuan last year.
The video site aspires to be the “Disney of China”, with a production house and a plan to merchandise an entire library of intellectual property. The content costs have jumped 75 percent to $3.42 billion mainly on account of iQiyi expenses, higher from 2018. iQiyi recently announced raising $500 million to fuel its spending spree and also had filed for a $1.5 billion U.S. IPO in February.
Last year, IQiyi added 36.6 million subscribers and now has a total user to 87.4 million while closest rival Tencent Video had 82 million users as of Q3. Almost 98.5 % of them are paying, which is a good figure, given that the Chinese use most free content, since it suffers rampant online piracy.
It was in 2018 that Baidu has crossed the 100 billion yuan earnings for the first time reaching 102.3 billion yuan ($14.88 billion) in total revenues. This was a jump of 28 percent from the last year.
Despite the huge resources Baidu has out into becoming AI and automation focused tools, online advertising through search results, news feed and video content are still its major source of income. This part of its business sis today facing big competition from ByteDance, the fast-growing new media company that offers a whole new suite of news and video apps. The market seems to love them too! . The Beijing-based ByteDance that is posing a challenge even to Tencent was expected to touch US $7.4 billion in revenues last year, said Bloomberg-citing sources.