Nasdaq-listed streaming platform iQIYI raises $285 million from Baidu

Chinese streaming platform iQiyi announced on Friday that it has raised $285 million from its controlling shareholder Baidu and a consortium of investors through a private placement.

According to iQiyi, Baidu has committed to acquire 164.7 million newly issued iQiyi class B ordinary shares, while the consortium, which includes Oasis Management Co. Ltd., has agreed to buy 304.7 million newly issued Class A ordinary shares.

As of February 28, 2021, Baidu controlled over 52% of iQiyi’s outstanding ordinary shares and 91.6% of the voting power.

iQIYI is facing challenges from short-video apps like Douyin and Kuaishou, in the meantime, Tencent’s WeTV and Alibaba-backed Youku are also competing with it on content offering. 

The Nasdaq-listed company is trying to maintain growth by raising membership prices and cutting costs. At the end of 2021, the company slashed 20% of its workforce, equivalent to 1,500 employees.

In the three months through December, iQiyi’s quarterly loss swelled to 1.8 billion yuan ($278.7 million) from 1.5 billion yuan in the comparable previous period. Revenue for the quarter dropped by 100 million yuan to 7.4 billion yuan.

Outside China, the Baidu-backed streaming firm is also competing with Tencent’s WeTV. Between 2019 and 2020, iQiyi and WeTV each launched international versions in Southeast Asia to reach a wider audience. Both of them adopted the freemium business model and embraced premium Asian content as a core selling point. 

With its young online population, Southeast Asia is becoming the newest battleground for streaming platforms, with video subscription revenue set to grow fivefold by 2025, according to a study by Google, Temasek Holdings and Bain & Co.