China’s streaming giant iQiyi reports rare quarterly profit after deep job cuts

Chinese Netflix-style platform iQiyi reported its first ever quarterly profit after cutting back spending on content and staff, an encouraging development for the country’s struggling online streaming industry amid regulatory uncertainty and a slowing economy.

The Nasdaq-listed company, majority-owned by search giant Baidu, made a profit of 169.1 million yuan (US$26.7 million) in the first quarter, compared with losses of 1.3 billion yuan in the same period last year.

The quarterly profit, the first after a decade of losses, was in part thanks to stringent cost controls over content, with costs reduced by 19 per cent due to fewer variety show launches, and a focus on offering premium content.

“We believe the performance in the first quarter is replicable as we continue to execute this operational methodology in the future quarters,” chief executive Gong Yu said on an earnings call with analysts.

“On efficiency management, we will continue to focus on driving efficiency by leveraging the power of technology while maintaining the current lean corporate structure.”

The Beijing-based company’s revenue in the past quarter, however, declined 9 per cent to 7.3 billion yuan, dragged down by a 30 per cent plunge in advertising business amid economic headwinds. Membership subscription revenue, which accounted for over 60 per cent of total sales, grew 4 per cent to 4.5 billion yuan.