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Baidu and iQiyi Go After $29.8 Billion Television Box Market

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Television box powered by Baidu’s AI technology

Baidu (BIDU) is expanding in the television box market, which is on pace to generate $29.8 billion in annual revenues by 2024, according to Grand View Research. Baidu teamed up with iQiyi (IQ) and China’s leading cable network, Beijing Gehua CATV Network, to build Gehua Little Fruit set-top-box, which launched last week.

The Gehua Little Fruit set-top box is powered by Baidu’s AI (artificial intelligence) technology. AI is Baidu’s core area of research. The company spends 15% of its annual revenue on research projects with almost the entire budget going to AI-related research. As an AI-powered television box, Gehua Little Fruit set can be operated through voice commands.

Diversifying the business

Baidu previously built the Shadow Stick set-top-box. So the launch of Gehua Little Fruit box marks its expansion in the television box market. Expanding in the television box market is part of Baidu’s efforts to diversify its business. The company currently generates the bulk of its revenue from advertising with advertising accounting for 82.1% of its revenue in the second quarter. However, Baidu is still more diversified than Facebook (FB) and Google parent Alphabet (GOOGL), which earned 98.5% and 85.9% of their revenues from advertising, respectively, in the second quarter.

Baidu is a large investor in iQiyi, a Netflix-like online video provider that went public in the US earlier this year. Netflix (NFLX), which is on track to spend as much as $8.0 billion on content production in 2018, has a contract with iQiyi to distribute its shows in China. Baidu owns 93.3% of voting rights in iQiyi.

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