iQIYI to beef up original content ahead of planned listing

Chinese video streaming provider iQIYI plans to attract more internet users to pay for production of more premium original content, part of its strategy to differentiate itself from rival Youku Tudou before making its US IPO in two years.

"It is original content that matters the most to our key audience group such as the post-1985 generation and those living in non-tier-1 cities," Gong Yu, chief executive of iQIYI said in an interview, adding that sitcoms and romantic comedies are the most popular shows, capturing the highest percentage of female audiences.

More funds for original content will be available since the purchase price of foreign dramas, especially those from Korea, have fallen due to an increase in the current inventory.

The strategy will also help boost advertising revenue since big brands and advertising firms only want to be associated with professionally-made content which carries their brand image more effectively.

"Unlike professionally-made content, advertisers don't pay for traffic [generated] from user-generated content because there [is too much of it]", said Hou Tian, a Beijing-based analyst at TH Capital, an independent research firm.

Youku Tudou has licensed 200,000 original programmes compared with 8,000 for iQIYI, according to Hou's estimate. In addition to generating advertising revenues, producing in-house content such as variety shows can help retain loyalty with active users.

The average production cost of a variety programme such as a talk show, musical or magic demonstration is about 200,000 yuan (HK$253,000) per episode, according to Hou, who added that the company could produce up to 9,200 episodes.