China Netflix-style providers are facing a tough time amid sluggish growth in new users

With over 100 million paying subscribers, China’s iQiyi and Tencent Video have secretly grown to become the world’s second- and third-major video streaming services providers by paying user base, behind only Netflix.

However, both firms are facing continued net losses amid slower growth of new users and sluggish advertising sales.

At a Tencent conference held in Beijing last Friday, the Chinese tech giant announced that its video streaming service is used every day by over 200 million users, while its platform has surpassed the milestone of 100 million paying subscribers, a claim that was first revealed in the company’s third-quarter earnings report.

Tencent Video is the second Chinese video streaming business to hit the 100 million mark, after its rival Baidu-backed iQiyi, which announced a subscriber base of 105.8 million as of September. Meanwhile, US-based Netflix reported over 158 million paying users, and is projected to reach 177.5 million by 2023.

Unlike ads-free Netflix, which is predicted to generate total revenues of US$20 billion and a net income of US$1.5 billion in 2019, according to its third-quarter earnings report, Chinese players are facing difficulties in paving the way to profitability.

Although Tencent does not detail the financial situation of its streaming unit, the deep-pocketed tech powerhouse said at the beginning of the year that Tencent Video’s annual net loss could hit 8 billion yuan (US$1.15 billion) in 2019. Likewise, iQiyi is also money-bleeding. In the first nine months of the year, its accumulated net loss surpassed 7.8 billion yuan, 40 per cent wider than the figure from the same period in 2018.