Baidu’s iQIYI Partners with Lions Gate Entertainment in China
Must-Know News Updates in the Media Sector
Online streaming in China
Bloomberg Business reported on October 9, 2015, that Baidu’s (BIDU) iQIYI online video platform unit had partnered with Lions Gate Entertainment (LGF) to offer movies in China through video-on-demand or a subscription service.
The agreement will give iQIYI exclusive SVOD (subscription video-on-demand) and TVOD (transactional video-on-demand) theatrical window rights to Lionsgate theatrical titles. This includes Lionsgate franchises like the immensely popular Hunger Games and other tentpole movies.
The agreement will give Lions Gate Entertainment access to 500 million unique users in China (FXI). According to a Statista survey, as of September 13, 2015, iQIYI had 28.4 million unique visitors in China. It was ranked at a distant eighth place in comparison to more popular sites such as Youku Tudou (YOKU) and Sohu (SOHU).
There is a possibility that Baidu has joined with Lions Gate Entertainment to boost its popularity among Chinese users through popular content.
Reason for the partnership
According to an iResearch Report, laptops, desktops, and smartphones are becoming increasingly popular for viewing content online in China. This indicates that internet penetration is increasing in China. As the above chart indicates, 80.1% of Chinese users prefer desktops while 79.5% of users prefer smartphones for viewing online content.
The same report also shows that ~69% of Chinese users who are viewing content online are Millennials, that is, people in the 18–35 age group.
There is a possibility that these users could adapt to English language content quickly. Such users may prove relevant to English language online OTT (over-the-top) players such as Netflix (NFLX) and other English language content providers such as Lions Gate Entertainment. Netflix is also looking to enter China in the near future.
You can gain diversified exposure to Lions Gate Entertainment by investing in the iShares Russell 1000 Growth Index ETF (IWF), which holds 0.04% of the stock.
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