China's Netflix iQIYI flexes muscle with strongest Q2 performance

The main driver for the company's impressive revenue growth is the steady supply of quality original content, with 67 percent of dramas released in the second quarter being original productions.

“Our original content strategy continued to deliver top-notch titles, which in turn brought the strongest second-quarter performance in our history in terms of key metrics, such as total revenues, profits, free cash flow, and average daily subscribers,” remarked Gong Yu, founder and chief executive officer of iQIYI.

The second quarter saw audiences around China keep their eyes glued to several iQIYI-produced series such as The Ingenious One, Thirteen Years of Dust, Destined, and Beauty of Resilience, helping the streaming giant defend its leading position in the market share of dramas for six consecutive quarters.

Apart from being a market leader in dramas, iQIYI also led the market share for total variety shows in the three-month period that ended on June 30. Thanks to several hit variety shows such as The Rap of China and Become a Farmer, iQIYI’s market share of exclusive variety shows doubled compared with the first quarter. Themed on farming, Become a Farmer took Chinese social media by storm and was nominated for Best Variety Show at the 28th Shanghai TV Festival Magnolia Awards.

The report also shows that the growth and early-stage businesses maintained good momentum. The total revenues of iQIYI Lite, which offers users easy and quick access to tailored video content, reached a historical high in the second quarter, up 35 percent year over year, with a spike in membership revenue.

The influence of high-quality original Chinese dramas is growing rapidly in the overseas market, with revenue generated by original dramas increasing by 160 percent year over year.

“On top of these exceptional results, we are investing in transformative technologies, including generative Al, to prepare us for future growth,” Gong said.

As the accuracy rate of scene and character breakdown aided by generative AI has exceeded 90 percent so far, the company has been using large language models (LLMs), to accelerate script evaluation and improve budgeting and resource management. The company has also been tapping into Generative AI to better user experience and create advertising ideas.