Tencent eye up stake in China’s biggest video streaming service iQIYI

Tencent Holdings are looking beyond music at a stake in what has been described as China’s equivalent to Netflix.

Tencent Holdings are notorious for making investments in some of the biggest tech and digital companies around the world. As the majority-parent company of Tencent Music Entertainment their focus has often been on digital music but they’re reportedly eyeing up the video streaming business now too.

iQIYI has been described as China’s answer to Netflix for streaming shows and films across the country with 119 million users but has also explored online games recently. Tencent have reportedly approached Chinese web search engine company Baidu about an “undetermined” stake in iQIYI, which Baidu owns a majority 56% stake in.

As is often the case with Tencent’s investments, iQIYI are actually a competitor to one of Tencent’s own business. They operate Tencent Video, a service with 112 million paying subscribers which is only a slightly smaller userbase than the aforementioned most popular Chinese video service.

A source speaking to Reuters reportedly said: “A tie-up would improve their bargaining power when producing and purchasing content, and lower marketing costs that would otherwise be spent on grabbing users from each other.”

iQIYI’s shares rose by nearly 40% following Reuters report, showing the power of an investment from Tencent.

Head of Social Media and Marketing, RouteNote

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