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‘Chinese Netflix’ iQiyi plans IPO in the US

Chinese internet search giant Baidu is planning a possible IPO for its video streaming unit iQiyi in the US.

iQiyi’s streaming service

iQiyi, sometimes referred to as the ‘Chinese Netflix’, has submitted a filing with the US Securities and Exchange Commission for a proposed listing on a US stock exchange. Baidu said the listing would “commence as capital markets conditions permit”. Baidu said it had yet to determine the number of shares to be sold and added that planned to remain iQiyi’s controlling shareholder.

iQiyi was recently valued by analyst at Jefferies at around US$15 billion. Baidu has invested heavily in content for the venture. In its full-year results, which were published yesterday, the internet giant said its content costs for last year amounted to RMB3.8 billion, or 15.9% of total revenues, compared with 14.1% of revenues in 2016. It said the increase was mainly due to iQiyi’s increased content costs.

Baidu, which is listed on the NASDAQ exchange in the US, has been on a drive to diversify away from its core search engine business by embracing new technologies including artificial intelligence and autonomous driving. Robin Li, the company’s chairman and CEO, said that plans for 2018 included a move to “differentiate iQiyi with AI”.

Baidu last year struck a strategic cooperation agreement with Huawei spanning everything from AI platforms and technology to the content ecosystem.

iQiyi faces competition in the Chinese market from Tencent Video and Alibaba-owned Youku Tudou.

Last year, Netflix licensed a raft of shows including Stranger Things and Black Mirror to iQiyi in a deal described by the global streaming leader as a modest entry into a market that has proved difficult, if not impossible, for international players to make headway in.

Baidu posted total revenues of RMB84.8 billion last year, up 20% on the prior year, with mobile revenue representing 73% of the total, up from 63%. Operating profit was RMB15.7 billion, up 56%.