With the prospect of 10x growth: how AI has become a major bet for iQiyi's "China's Netflix"
iQiyi plans to produce the bulk of movies and TV series with artificial intelligence in as little as five years / Photo: X / IQiyi
Chinese streaming service iQiyi, which operates on the principle of Netflix, has figured out how to overcome years of sales decline. In five years, most of its movies and TV series will be created using artificial intelligence, said Yu Gong, the company's founder and CEO. This will be a monumental shift in the industry and will push iQiyi into its biggest reorganization since it was founded in 2010, Bloomberg writes . Wall Street projects the "Chinese Netflix" to grow 950%.
From dawn to dusk
Yu Gong founded Qiyi - as iQiyi was called in its first year of existence - in 2010. The company set out to replace pirated videos with licensed high-definition streaming, for which it was dubbed "China's Netflix." It now makes money from subscriptions, selling advertising, online games, and the rights to its own original content.
It received its first $50 million in development funding from investment firm Providence Equity Partners and Chinese tech giant Baidu, which bought out the partner's stake for an unnamed sum in 2012.
In early 2016, Gong and Baidu's CEO tried to acquire the video service from the tech giant for $2.3 billion, but faced criticism from its shareholders. They believed that Baidu would get much more if it continued to own iQiyi. As a result, the partners abandoned their offer.
Later that year, The Wall Street Journal, citing sources, reported on iQiyi's plans to IPO and raise up to $1 billion, with the entire company valued at $4-5 billion.
The company eventually priced its initial IPO in 2018, selling 125 million American Depositary Receipts for shares (one ADR equals seven shares) at $18 apiece - for a total of $2.25 billion, excluding the underwriters' option.
Since then, the company has lost 93% of its capitalization.
In recent years, it has been struggling with declining sales, Bloomberg writes. In 2025, it reported a 7% drop in revenue to 27.29 billion yuan ($3.9 billion). In 2024, the decline was 8% to 29.23 billion yuan ($4 billion).
Bloomberg attributes the momentum to the growing popularity of short video platforms such as ByteDance's Douyin.
AI as an engine of reform
This year, during iQiyi's annual content presentation, Gong announced that in five years, the bulk of the company's movies and TV series will be created using artificial intelligence. Bloomberg calls this not only, the beginning of the biggest reorganization in iQiyi's history, but also a monumental shift in the industry.
The agency describes the company's reform as follows: it plans to turn its video app and website into a kind of social network, where mostly AI-generated content will be posted. Shortly before that, iQiyi unveiled Nadou Pro, a suite of AI agents designed specifically for the professional creation of long-form videos.
To demonstrate Nadou's capabilities, the company unveiled a lineup of 16 films in the science fiction and anime genres during the conference, Bloomberg writes. To incentivize the creation of more content, iQiyi plans to pay producers an additional 20 percent of advertising and membership revenue, Gong said.
In addition, iQiyi is investing in a new social video app that is supposed to be a kind of analog to OpenAI's Sora video generator, according to a Bloomberg article. "This happens once a decade. We have to take it as it comes," the agency quoted Ma as saying.
He believes that China's movie industry is stuck in a vicious circle where rising production costs and investment risks are holding back content production, while users are moving to competing entertainment formats. The CEO of the Chinese service believes artificial intelligence will help overcome stagnation and lead to a surge in new content creation. "I'm sure it's the right decision - we'll have the answer in a year," Gong said.
iQiyi is not alone in its endeavor. Major studios - from Netflix to Amazon - are increasingly experimenting with AI technology to reduce production costs, Bloomberg points out. Amazon has created its own team to implement AI in its movie and TV projects.
What the analysts are saying
Wall Street's views on the company's prospects are almost equally divided: 12 analysts believe that its securities are worth buying, 11 advise to hold them. Three months ago, their sentiments were more pessimistic: 11 analysts recommended buying the company's ADR, nine - to hold and two - to sell.
The average target price is $12.6, which is 10.5 times the current quotes.
Long-form videos continue to lose ground in competition with short-form TV series, which could keep iQiyi's subscription and advertising revenues low in the domestic market, investment bank HSBC wrote in February 2026 (Oninvest has the report). This prompted it to cut the company's 2026-2027 revenue forecast by 6% and earnings by 19-31%. It also lowered its target price for the company's securities by 5% to $1.9, maintaining a hold recommendation.
The investment bank said it has taken into account the potential impact of AI on reducing content production costs and on future revenue growth.
HSBC cites iQiyi's advantage in the global market as content, including mini-series. This differentiates the company from competitors such as Netflix, which mainly focuses on Western content.
UBS recommends buying iQiyi shares with a target price of $2.5. In a report dated March 30 (available at Oninvest), the investment bank calls iQiyi one of the largest online video companies in China in terms of monthly active users and paid subscribers. It believes that strong demand for content will allow the company to raise subscription rates, which will have a positive impact on its revenue. However, with increased competition, iQiyi will likely have to increase its content production costs.
