iQIYI Bi-weekly Newsletter (Feb.20, 2023-Mar.03, 2023)
BUSINESS
iQIYI Reports 2022 Q4 and Full-Year Earnings, Realizing Full-year Non-GAAP Operating Profit for the First Time
On Feb. 22, iQIYI reported its 2022 Q4 and full-year earnings results. In 2022, the company recorded substantial improvement in financial performance, business operations and market share, achieving operating profit for four consecutive quarters, realizing full-year non-GAAP operating profit for the first time, far exceeding the goal set at the beginning of the year. In fiscal year 2022, revenues were RMB29.0 billion (US$4.2 billion). Non-GAAP operating income was RMB2.2 billion (US$315.1 million), compared to non-GAAP operating loss of RMB3.0 billion in 2021. As of Dec. 31, 2022, total subscribing members of iQIYI grew to 119.7 million.
At the same day, GONG Yu, Founder and CEO of iQIYI, published a letter to investors. According to the letter, 2022 was a year of breakthroughs where iQIYI completed an iconic turnaround under extremely volatile market conditions. iQIYI made substantial progress in gaining market share, upgrading business operations and improving financial performance. iQIYI’s long-term commitment to original content yielded exceptional results. Particularly in Q4'22, iQIYI’s market share, membership revenues, operating profits, operating cash flow and free cashflow all reached record highs.
GONG Yu in an interview
Looking ahead at 2023, iQIYI’s goal is to achieve "high-quality growth", which focuses on growing both revenue and operating profit. In order to realize "high-quality growth", iQIYI will continue to emphasize investing in core businesses while cautiously evaluating new business opportunities. IQIYI will also continue to invest in top-class premium content, maintain a high-quality yet diversified content portfolio, and modestly increase marketing spend while ensuring desirable ROI.
iQIYI to Raise $600M Through Convertible Senior Note Offering
On Mar.1, iQIYI announced the pricing of its offering of US$600 million in aggregate principal amount of 6.50% convertible senior notes due 2028 (the "Notes"). The Notes will bear interest at a rate of 6.50% per year, payable quarterly in arrears on Mar. 15, Jun. 15, Sep. 15 and Dec. 15 of each year, beginning on Jun. 15, 2023.
iQIYI had completed three rounds of financing in the 12 months prior, raising a total of about US $1.3 billion. The multiple rounds of financing in just one year proved that the capital market is reassessing the true value of iQIYI as well as that of the long-form video industry at large.
iQIYI’s Partnership with Douyin Gains Mutual Benefit
On Feb. 27, GE Chengzhi, head of the iQIYI Research Institute, introduced the latest progress in the partnership between iQIYI and Douyin, which Ge called an industry milestone. According to Ge, the partnership has inspired creators to further improve the quality of their work and helped realize benefits for both long- and short-video platforms.
GE Chengzhi, head of the iQIYI Research Institute
iQIYI entered into a content licensing cooperation agreement with Douyin on Jul. 18, 2022, pursuant to which the Company will license select content to Douyin for editing and distribution as short form videos in the formats agreed by the two companies. The two parties agreed on various short video creation practices including narration and mixing, which effectively contributed to the standardized use of the intellectual property rights of long-form video content.
On Sep. 5, 2022, iQIYI and Douyin further launched a program to encourage the creation of long video-based short videos, which granted creators access to an expanded range of new and classic works. By the time it concluded on Oct. 30, different topics under the program generated a total of 62.9 billion plays, 540 million likes, and a single highest play of 158 million.
CONTENT
iQIYI-presented Film HACHIKO Set to Premiere on Mar.31
HACHIKO, the Chinese version of the classic Japanese film Hachiko Monogatari, will premiere nationwide on Mar. 31. With the original screenplay written by Kaneto Shindo, HACHIKO depicts the friendship between human and dogs, highlighting the importance of family. The film is directed by XU Ang who previously directed highly acclaimed films such as 12 Citizens, and starred by famous Chinese director/actor Feng Xiaogang and Joan Chen(The Last Emperor).
Poster of HACHIKO
The iQIYI-presented film introduced local twists to the classic film to enhance its resonance with local viewers. For instance, the story takes place in the Chinese city Chongqing, and a Chinese Field Dog will take the lead in the film.
iQIYI-presented Film Ping-Pong: The Triumph Hits Cinemas
On Feb. 17, Ping-Pong of China, an iQIYI-presented film, officially landed in movie theaters around the country. To date, the global box office of the film reached US 13.574 million.
Poster of Ping-Pong: The Triumph
Based on real-life events, Ping-Pong of China took place in the early 1990s during which the performance of China’s men’s table tennis team was at an all-time low. The film showcases the team going through arduous training and ultimately winning the 1995 World Table Tennis Championships in Tianjin.
iQIYI Launches First All-Immersive Entertainment Experience the Luoyang VR Project
On Feb. 18, iQIYI officially unveiled its Luoyang Virtual Reality (VR) Project in Shanghai, showcasing the industry's first-ever all-immersive entertainment experience which incorporates VR technologies, original IP-based plotlines, and immersive theatre.
Players in Luoyang VR Project
The project marks the first attempt in the VR industry to integrate different elements from immersive theatre, VR, and original IP. The set construction, for instance, makes full use of and expands upon the physical space, while customizing the wall and ground structure according to the game content.
Created by the iQIYI DREAMVERSE studio, the Project marks the latest addition to iQIYI Chinese Historic City Universe (iCHCU) of Luoyang, which consists of 12 distinct entertainment projects all inspired by the popular Luoyang IP.
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