iQiyi, the Chinese VoD service owned by Baidu, has filed for an initial public offering of shares in the US. The company claims over 50 million subscribers and said it wants to raise USD 1.5 billion to help expand its content offering.
iQiyi said in its registration with the SEC that it plans to use around half the proceeds for content and 10 percent for investing in technology. The remainder will go to general corporate purposes. The IPO is also expected to raise its brand profile and help attract and retain employees with stock options.
The service's reach extends to over 420 million monthly active users, both on mobile devices and PCs. Daily active users reach 126 million on mobile devices and 53.7 million on PCs, and users consume an average 1.7 hours of content per day, the company said. iQiyi said figures from iReasearch show it's the largest video streaming service in China, based on MAUs and daily time spent as well as on smart TVs through its licensed partner.
iQiyi is already active in producing its own content and claimed it accounted for five of the top 10 original internet variety shows and six of the top 10 original internet drama series in China, based on peak monthly active users measured by iResearch. 'The Lost Tomb', a drama series it released in 2015, generated more than 100 million video views within the first 24 hours and over 4 billion video views in total.
Nearly 38 percent of its revenues came from subscriptions in 2017, which grew by 73.7 percent to CNY 6.54 billion (USD 1.0 billion). Online advertising revenue grew 44.4 percent last year to CNY 8.16 billion. The group remains loss-making, with a net loss of CNY 3.74 billion last year, widening from CNY 3.07 billion in 2016.
Baidu will remain the controlling shareholder after the IPO, due to the issue of new 'Class B' shares to the company prior to the IPO. The two also signed a services and competition agreement, and iQiyi said it expects to continue to rely on Baidu for technical, infrastructure and financial support until it generates positive cash flow.
iQiyi's main competitors are Tencent video and Alibaba's Youku Tudou. According to iResearch, the online entertainment industry in China has grown from CNY 50.8 billion in 2012 to CNY 156.9 billion in 2016 and is expected to reach CNY 688.4 billion in 2022.
