iQIYI's membership base maintained steady growth in the second quarter, with continuous expansion into lower-tier cities and overseas markets.

On August 12, iQIYI released its financial report for the second quarter of 2021. Total revenue for the second quarter reached 7.6 billion yuan, a year-on-year increase of 3%, with this quarter’s total revenue approaching the high end of the company’s guidance. This quarter, iQIYI saw a net increase of approximately 900,000 members, bringing the total number of subscribers to 106.2 million; membership service revenue was 4 billion yuan, flat compared to the same period last year. This is iQIYI's second quarterly earnings report after adjusting membership prices. The data from Q1 and Q2 show that the slight adjustment in subscription pricing did not dampen users' willingness to pay for video services. For video platforms, the ability to continuously attract user subscriptions still depends on their capacity to provide high-quality content.

"The performance in the second quarter was largely in line with our expectations," said Gong Yu, CEO of iQIYI. "Although the second quarter is traditionally a slow season, our subscriber base grew to 106.2 million, driven by popular original series launched during the quarter. iQIYI continues to lead the market across various operational metrics. At the same time, we are encouraged by the positive momentum shown by iQIYI Lite, targeting users in China’s lower-tier cities, as well as our overseas business. We are still in the early stages of industrializing the film and TV industry, and we are making ongoing efforts to drive industry development for long-term growth. Relying on our deep understanding of users, highly innovative internal studios, and leading technology, we believe we are well-positioned to address current challenges and seize future market opportunities."

Over the past year, leading domestic video platforms have adjusted membership prices for the first time in nine years. iQIYI and Tencent Video raised their prices in November of last year and April of this year, respectively. There was some debate over whether the increase in video membership fees would impact membership size. As it stands now, the price hike has not significantly affected the user base. In the first quarter of this year, iQIYI’s membership base saw a net increase of about 3.6 million, and in the second quarter, they also achieved nearly a million additional subscribers. Overall, the sustained growth can be attributed to the platform's ability to produce high-quality content. In the first quarter of this year, iQIYI produced 'The Bond,' a hit drama series at the start of the year, and movies such as 'My First Millions' and 'Shaolin Temple: Legend of the Jade Bracelet' partially alleviated the lack of new releases in theaters. The second quarter is often considered a 'slow season' for the video industry, but thanks to the influence of high-profile content like 'The Rebel,' 'Fall in Love With a Soldier,' and 'A Little Dilemma,' iQIYI’s membership base saw stable growth.

In the second quarter, iQIYI’s operating loss was 1.1 billion yuan, with the operating loss rate decreasing from 17% in 2020 to 15% this quarter. Although losses have further improved, for video platforms that still rely heavily on investment to produce quality content, maintaining steady growth in both memberships and advertising while exploring additional revenue streams remains key to their financial health. In May this year, iQIYI introduced the 'Cloud Cinema' model, aiming to create an online trading platform that connects Chinese filmmakers and explores the potential for single-movie PVOD (Premium Video on Demand) monetization.

Notably, this quarter, iQIYI’s other revenue achieved a year-on-year growth of 20%. Other revenue in iQIYI's financial reports primarily comes from its entertainment ecosystem business. During this year’s Labor Day holiday, the movie 'Sweeping Away the Darkness,' produced by iQIYI Pictures, grossed over 400 million yuan at the box office, undoubtedly becoming a significant part of the company’s other revenue for this quarter.

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