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Why iQiyi Is Turning to Artificial Intelligence

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Jun. 17 2019, Updated 1:42 p.m. ET

Fighting costs with AI technology

iQiyi (IQ) plans to use AI to improve its movie and video streaming sales and cut operating costs, said CEO Yu Gong during an interview with CNBC last month. The digital video company, which split from Baidu (BIDU), has been seeing losses since going public in the US last March. In this year’s first quarter, the company’s net loss jumped year-over-year to $270.3 million from $63.1 million as operating costs soared.

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In contrast, Tencent (TCEHY) made a profit of $4.1 billion in the first quarter, and Tencent Music (TME), a digital music company that split from Tencent and went public in December, posted a profit of $147 million. Chinese e-commerce leader Alibaba (BABA), into the movie and video streaming business through its Alibaba Pictures and Youku units, made a profit of $3.8 billion in the first quarter, and Netflix (NFLX) and Amazon (AMZN) made profits of $344 million and $3.6 billion, respectively. Amazon is also into video streaming, although its main operations are e-commerce.

Former parent Baidu is an AI leader

By leveraging AI technology, iQiyi says it could reduce its production costs, which account for a huge chunk of its operating expenses. Baidu, iQiyi’s former controlling shareholder, is a leader in AI research. Baidu has been applying the technology to improve its Internet search service and develop self-driving vehicles.

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