Inside iQiyi’s New Joint Venture

iQiyi enters Shanghai subway marketing

iQiyi (IQ) has teamed up with several like-minded partners to form a joint venture focused on subway marketing in Shanghai, China. iQiyi is an online video provider based in China. It was previously a unit of Baidu (BIDU), China’s top Internet search engine company. Baidu holds more than 90% of voting rights in iQiyi.

As a result of the joint venture, iQiyi videos will be shown on around 37,000 screens in the Shanghai metro subway system, which transports some 10 million passengers every day. iQiyi sees the joint venture as opening up another opportunity for it to promote both its brand and content in China.

Inside iQiyi’s New Joint Venture

Subscription revenue rose but advertising revenue fell

iQiyi monetizes its video content in a variety of ways including selling video subscriptions and advertising. In the third quarter of 2018, iQiyi generated $415.3 million in video subscription sales, an increase of 78% YoY. The growth in subscription revenue was driven by an increase in the number of subscribers, which rose to 80.7 million from 42.7 million a year earlier. The company made $348.9 million in advertising revenue in the quarter, representing a decrease of 4.0% YoY.

Total revenue jumped 48%

iQiyi’s total revenue rose 48% YoY to $1.0 billion in the third quarter. Its industry peers such as Netflix (NFLX), Amazon (AMZN), and Alphabet (GOOGL) grew their revenue by 34%, 29%, and 21% YoY, respectively, in the third quarter. Tencent (TCEHY), one of iQiyi’s domestic competitors, posted a revenue increase of 24% YoY in the third quarter.