There is a lot of attention on the competition between Netflix and Disney+, both are aggressively expanding across many parts of the world. While many regional streaming players, such as iflix and Hooq in Southeast Asia, expired due to high cost structure and limited monetization.
In China, where everything tech is a fierce competition, streaming is no exception. Currently, iQIYI, Youku and Tencent video are the top three video streaming websites services. They produce originial variety shows, TV dramas, and movies to fight for loyal audiences, and all of them are losing vast sums of money.
Not surprisingly, the three companies are backed by (or affiliated with) Baidu, Alibaba and (obviously) Tencent respectively. IQIYI is the only independently listed among the three, with a rollercoaster:
There are many reasons why these platforms are not making a profit, from corruption to running creative content business like a food delivery operations (with focus on operational efficiency and KPIs). In 2020, report shows that Tencent video showed intention to acquire iQIYI as the combination of the two platforms would reduce costs.
And at a market cap of around US$20 billion, IQIYI is actually quite affordable for Tencent. However, it seems that the acquisition is on hold concerning anti-monopoly laws.
Recently, something interesting happened – though denying an acquisition, the two arch-rivals started collaborating.
Chuang 2021 and Youth with You Season 3 are two Chinese idol group elimination shows produced by Tencent Video and iQiyi respectively. These two shows are considered as rival shows as they target the same audience, young female, who will vote for their favourite traineess to become an idol group.
However, iQIYI and Tecent video just reached collaboration regarding these two shows on their overseas platforms-iQIYI global and WeTV (Tecent video international). With that being said, for overseas audience who want to watch both shows, they do not have to download two apps.
Not sure how many are actually watching outside China, but this is significant. Both companies are expanding outside China: IQIYI built an office in Singapore, hiring an ex-Netflix executive at the helm of its global operations; while Tencent Video bought the assets of the demised iflix.
Personally, I think the collaboration between these two platforms is beneficial for Chinese cultural output. Overseas audience are more exposed to Chinese pop culture. This also might be a sign that iQIYI and Tencent will conduct cooperation at a higher level – testing it in international markets is probably less risky for them.
Long journey ahead
Collaboration testing aside, for both companies to tackle international markets successfully (where they are competing against Disey+ and Netflix), they need to do more to attract the best talent, and make them work effectively within the (largely Chinese) organisation.
Maybe they are already reading this book?: