The shockwaves of AI are hitting the general public one after another with increasing intensity.
Just as the public was recovering from the Sora 2 bombshell dropped by OpenAI, at the beginning of this year, ByteDance’s Seedance 2.0 once again sparked exclamations with its realistic effects.
Today, a “novice” with absolutely no understanding of video content production models can, with just a few taps of their fingers and a few prompts, generate a short film comparable to the quality of a Hollywood blockbuster in just a few minutes.
Seeing this, people can’t help but exclaim: AI is about to disrupt the content industry.
Yes, AI will inevitably and completely change the way content is produced and its efficiency. So, tracing back upstream to the source of content production—long-form video platforms—how should they navigate under the impact of the AI wave? Let’s use iQIYI, Inc. (Nasdaq: IQ) as a case study to see how a content giant is embracing AI.
How to Use AI to Address Resource Mismatch?
As iQIYI has just released its earnings report, let’s first look at the financial data. In 2025, iQIYI’s total revenue decreased by 7% year-over-year to RMB 27.29 billion , with a full-year net loss of RMB 206.3 million ; compared to a net income of RMB 764.1 million in the same period of 2024 .
At a glance, the figures don’t look great, but the focus today is not here. Many media outlets are concentrating on analyzing the decline in its membership subscriptions and advertising revenue. However, setting aside these well-worn topics, today we want to mainly look at iQIYI’s AI strategy, which has become particularly important after Seedance amazed the global audience.
In fact, iQIYI was quite astute. As early as 2023, it introduced AIGC technology to assist in aspects of content production like script evaluation and material generation, aiming to reduce costs and increase efficiency. Of course, the technology level was quite limited at that time, and efficiency gains were confined to small areas. In my view, this was more like a gradual exploration process. It wasn’t until 2025 that iQIYI took bigger steps, starting to advance along two main lines: “overall technological efficiency improvement” and “ecological reshaping.”
Let’s first look at the ecological aspect.
This ecological expansion is not a blind move but is targeted.
Currently, the film and television industry is facing a structural dilemma of resource mismatch: the market is flooded with poor-quality films, leading to a visible crisis of trust among audiences. Although occasional masterpieces like the Ne Zha series break Chinese box office records, the overall market remains sluggish. To a large extent, this is because core resources are controlled by a few, while many talented creators with ideas struggle due to a lack of funding and platforms.
In response to this industry mismatch, iQIYI is attempting to use AIGC to break down barriers.
In July 2025, iQIYI held the “Beyond Tools, Toward Teammates” AI short film creation competition , achieving true “zero barrier to entry”: anyone over 18 could create using Veo 3 or Seedance 1.0 Pro for a chance to win prizes ranging from $600 to $3,000. To help participants progress from beginner to advanced levels, the platform also set up communication groups and provided training. Official data shows the competition was a huge success, with over 2,200 teams or individuals from more than 20 countries and regions registering to participate .
Beyond discovering general creators, iQIYI has also reached into the professional film and television arena, which demands higher aesthetic standards. The platform teamed up with Oscar-winning Chinese cinematographer Peter Pau to launch the “Peter Pau × iQIYI AI Theater” , opening a creation camp and putting out a call for talent. The first batch of AI film and television works, each over 15 minutes long, are expected to premiere as early as the first quarter of next year.
Technological progress is not achieved overnight. With the rise of more engineering-capable AI agents, iQIYI, targeting the pain point of “productivity shortage,” developed its own AI agent platform, “Nadu Pro” . Unlike previous efforts that optimized content creation at a single stage, this platform aims to comprehensively optimize the entire content production process. It is understood that the platform is currently in a closed beta testing phase .
As underlying technological support, iQIYI applied for nearly 1,000 new patents over the past year, many related to AI technology innovation ; by the end of 2025, its cumulative patent applications exceeded 12,000 , ranking 72nd among the top 100 Chinese enterprises for effective invention patents.
Beyond the production side, AI is also reshaping the user experience.
As of the fourth quarter, the role-interaction agent “Taodou World” had launched over 1,700 characters , providing users with an immersive experience through dialogue, fan fiction creation, and virtual social interaction, effectively extending the long-tail value of IPs. In 2025, revenue from this business grew significantly year-over-year.
At the same time, iQIYI is also using AI to enrich its offline ecosystem.
On February 8, the Yangzhou iQIYI LAND officially opened for business . Within the year, parks in Beijing and Kaifeng will also be launched successively. Compared to traditional theme parks, this asset-light operational model deeply integrates IP with cutting-edge technologies like AI and XR, offering users a more flexible and efficient immersive experience.
When Will the AI Dividend Materialize?
Although iQIYI’s AI strategy is laid out in a methodical manner, objectively speaking, the substantive boost from AI to its financial performance is still in a period of building momentum.
This can be glimpsed in the latest financial report.
While the full-year 2025 financial data was not outstanding, by the fourth quarter, performance had shown a trend of stabilization and improvement. For the quarter, iQIYI’s revenue increased by 3% year-over-year to RMB 6.79 billion ; its net loss narrowed significantly to RMB 5.8 million , a marked improvement compared to a net loss of RMB 189.4 million in the same period of 2024 . Non-GAAP operating income for the period reached RMB 143.5 million .
It must be acknowledged that the current rebound in performance is still more reliant on pull from traditional high-quality IPs, such as Strange Tales of Tang Dynasty.
In other words, the direct financial returns from the AI buff are not yet apparent—high-quality content still requires high content costs. For example, in the fourth quarter of 2025, iQIYI’s content costs increased by 11% year-over-year to RMB 3.83 billion .
Of course, this is not something to criticize. In the three years since AI emerged, it was only in 2026, with the surge of OpenClaw and Seedance, that the public truly felt the transformative power of productivity.
Judging from management’s statements, they are also well aware that AI’s profound impact on performance is more medium-to-long term.
Yu Gong, Founder and CEO of iQIYI , believes that video large models will significantly reduce the production costs of long-form videos, shorten cycles, and lower the barrier to creation . He pointed out that, aside from Manga dramas), which are inherently AI-native content, children’s animation and short dramas have now been verified to be directly generated by AI, with production costs dropping to one-tenth or even lower than traditional methods ; traditional web movies, documentaries, and even live-action theatrical films and variety shows are also beginning to introduce AI to reduce costs.
He offered an optimistic estimate: “We estimate that within 2-3 years, commercially produced blockbusters dominated by AI generation will emerge” .
What AI can optimize is cost. Only if revenue continues to climb does it represent a sustainable business model. Of course, two points in the financial report did show growth, and they happen to be directions AI can amplify.
Returning to the financial data, first, IP serialization operation.
The company’s content distribution revenue in the fourth quarter was RMB 790 million , compared to only RMB 410 million in the same period last year, an increase of approximately 93% , nearly doubling, making it the fastest-growing segment among the four business areas .
The core driver was the full-link monetization of the “Strange Tales of Tang Dynasty” IP. Additionally, derivative short dramas continuously broke popularity records, with over 70% of viewers in the first week having watched the original long-form drama series—multi-form content is not consuming the IP, but extending its lifecycle.
The 2026 opener Punishment Zone 2 exceeded 10,000 in popularity, making “Punishment Zone” iQIYI’s second serialized IP to exceed 10,000 for two consecutive seasons. Five dramas throughout the year exceeded 10,000 in popularity, and Yunhe’s annual total effective play market share for dramas remained the highest in the industry, proving iQIYI still has solid IP operational capabilities.
Second, the high growth rate of the overseas business.
Data shows its full-year overseas membership revenue increased by over 30% year-over-year, with the year-over-year growth rate accelerating to 40% in the second half of the year. Membership revenue in Brazil, Mexico, and Indonesia each surged by over 80% .
This was mainly due to content breakthroughs. Double Tracks topped the popularity charts in 14 markets, and short dramas began contributing to overseas membership revenue. In December, five locally produced short dramas, including Korean, Thai, English, and Indonesian series, premiered simultaneously.
Going overseas and AI also have natural synergy: AI translation, dubbing, and subtitling technologies can significantly reduce the cost of content localization. Netflix is already using AI to automate multi-language translation and dubbing. If iQIYI can successfully implement this, the marginal cost of going overseas still has room to decrease.
If 2025 was iQIYI’s trial with AI, then 2026 will be the implementation and practice of the strategy. Based on this, just cost reduction alone will have a huge boost on iQIYI’s future operating profit margin.
iQIYI’s Chief Content Officer, Wang Xiaohui , also revealed that in 2026, iQIYI will slightly reduce the number of new drama productions, focusing more on innovation and quality for top-tier projects . At the same time, in areas like manga dramas, animation, and vertical-screen short dramas, production methods are gradually shifting to being dominated by AI generation .
Returning to the company’s overall strategy, looking towards 2026, iQIYI also plans to endow itself with richer labels—it plans to vigorously build a dynamic AIGC ecosystem, and its media platform model will shift from centralized to decentralized. Specific measures will be announced at this year’s iQIYI World·Conference in April .
We all know that in this era of the “hundred models war,” embracing AI is not a choice but a matter of survival. iQIYI, as a platform, is also providing its own solutions in its own way, continuously exploring forward.
