China’s top Netflix-style app operator iQiyi plans on-demand cinemas in online-to-offline push

iQiyi opens first on-demand movie theatre to marry online content with offline cinema-like experience

PUBLISHED : Monday, 21 May, 2018, 10:04am
UPDATED : Tuesday, 29 May, 2018, 4:02pm

China’s biggest online streaming app operator is going into the cinema business, with a twist.
Instead of showing up at a certain time to view a certain movie, film buffs can now choose to book private on-demand cinemas by iQiyi to play their choice from the Beijing-based company’s library of titles.
The first of such on-demand cinemas was opened today in Zhongshan city in the southern Guangdong province, according to iQiyi in a release, which did not disclose the amount of its investment.

The company said it will soon open more of these cinemas, to be called Yuke, in more of China’s first- and second-tier cities.The move by iQiyi, a spin-off from Chinese online search giant Baidu, to explore offline business opportunities draws a parallel with the more mature trend of the country's internet giants, especially those in e-commerce, actively buying up and teaming up with bricks-and-mortar retailers to integrate online and offline commerce.

Alibaba Group Holding, the parent company of the South China Morning Post, is leading what it terms the “New Retail” wave by investing billions in grocery chains and shopping malls to provide seamless online-to-offline shopping experience.

The launch of the on-demand cinemas creates opportunities for the integration of retail services and offline consumption, with merchandise related to iQiyi online content available for purchase in cinemas, according to the company.

iQiyi, which had 61.3 million paid subscribers as of March, will take advantage of its “strong brand awareness, massive user base, popular content and advanced technology to contribute to the growth of this booming market and extend our premium viewing experience to offline consumers,” Yang Xianghua, iQiyi’s senior vice-president, said in a statement.

iQiyi’s foray into offline business also echoes a rumoured offline expansion by Netflix. 

US-based Netflix had pursued a deal to buy the Mark Cuban-owned Landmark Theaters but ultimately backed out over the high price, according to a recent report by the Los Angeles Times.

Netflix, which spent over US$8 billion producing its own films and television shows last year, is disqualified from winning major film industry honours like the Academy Awards because its productions are not shown in cinemas.

For iQiyi, producing original content ranks as a priority in its competition with Tencent Holdings and Alibaba in the online video-streaming market.

Tim Gong Yu, the founder and chief executive of iQiyi, told analysts after the Nasdaq-listed company’s recent earnings report that about one-third of its spending on content in the next two to five years will be focused on self-produced films, TV series and programmes.

The launch of Yuke cinemas will make iQiyi the first major online entertainment platform to tap into the on-demand cinema market. The box office receipts generated will be included in China’s official box office estimates, the company said.