China’s streaming wars may end with a duopolistic peace
IQiyi insists the setback was down to one-off factors, such as virus-induced disruption to film production, which temporarily emptied the content pipeline. Perhaps. But Tencent Video offers a richer selection of English-language content, including hit television series like “Chernobyl” and “Silicon Valley”. More important, the rivalry between Tencent Video and iQiyi is a proxy war between mighty Tencent and fading Baidu, a search firm that is iQiyi’s majority owner. Indeed, iQiyi seemed to concede as much in its latest annual report, writing that “competitors include well-capitalised companies that are capable of offering compensation packages more attractive to talents.”
Still, as Westerners who pay for a few video subscriptions can attest, streaming is not a zero-sum game. Gigi Zhou of BOCOM International, a broker, reckons the Chinese market will soon be big enough to sustain both iQiyi and Tencent Video, which also has yet to make money. Ms Zhou expects 400m Chinese to subscribe to video-streaming platforms by 2023, up from some 300m in 2019. So long as no new rival emerges, each firm could capture around 150m, helping them spread costs over more subscribers and so turn a profit.
Before streaming peace can break out, iQiyi faces another fight. On August 13th it said it was under investigation by America’s Securities and Exchange Commission after a short-seller accused it of inflating sales data, a charge it denies. If found guilty, it may have to delist from New York’s Nasdaq exchange. The firm’s stable share price implies investors’ faith in battle-hardened Mr Gong is unshaken. ■