Could Baidu become the Chinese Netflix?
Baidu is usually thought of as China’s answer to Google. It’s been very clear recently that it is focusing on artificial intelligence (AI) – and area it is already making significant headway in. However, the company also has a hand in streaming video on demand (SVOD) services, through its business iQiyi. This is a competitive segment, where it faces stiff competition from its major technology rivals Alibaba and Tencent. However, Baidu may have just found the answer to blowing both of those rivals out of the water.
Chinese regulations mean that Netflix can’t enter the country itself, depriving it of an enormous market for its pricey original content. So it’s signed a deal with Baidu that will give iQiyi exclusive rights to that content in China. This is a huge deal for the latter company: Netflix is widely believed to have become so dominant due to a stable of immensely popular, award-winning, shows that it commissioned off its own back. These include critical successes like House of Cards and Orange is the New Black.
This premium content may help Baidu attract more paying subscribers to its iQiyi platform. Online videos are gaining significant traction in the country, but enrolling paid subscribers remains difficult: in January 2017, 474 million mobile devices carried the iQiyi app, yet the company only reported 20 million paid subscribers. Using a large collection of top quality, exclusive, content to draw more people in could help Baidu increase market share in the sector.
There are many signs that SVOD providers will be big in China. The country is embracing Ecommerce quicker and more comprehensively that the west, and it is now the second largest movie market in the world. If Baidu act fast, the potential is there to do something really special.
Dominion holds Baidu in its Global Trends Ecommerce Fund.
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