China’s Version of Netflix Seeking IPO of $8 Billion

IQiyi is seeking an initial public offering in the U.S. as soon as next year that could give the most popular Chinese Netflix-like streaming video service a value of over $8 billion, said sources familiar with this matter.

The company, which is controlled by Baidu the search giant, is ready to start negotiations with banks as well as deal makers. It is looking for a value of as high as $10 billion, said sources, who request anonymity due to the matter being private.

Baidu wants to maintain a controlling stake that it currently holds in iQiyi upon the IPO through dual-class shares. The IPO process remains in its infant stages for the streaming service and its final valuation is subject to change.

IQiyi is the only video service in China that licenses some shows from Netflix and needs to increase its offerings as it battles with rivals owned by Tencent Holdings and Alibaba Group Holding.

Baidu, which is investing heavily in autonomous vehicles and artificial intelligence must buy and create additional content to keep its lead amongst video platforms online.

IQiyi at $10 billion will have a value that is just a fraction of that of Netflix but surpass listed rival in China Leshi.

On Tuesday, no comment was released by Baidu about the possible pending IPO.

Quality video is the key to keep users and increasing revenue from advertising from over 30 million paying subscribers.

Alibaba and Tencent have each said that they are committed to dishing out money to buy content. Tencent has spent on Game of Thrones and NBA broadcasts.

IQiyi said earlier this year it was in talks to share additional revenue and data with partners including Google, to give its platform a boost.

Many services offered by Google that distribute content like YouTube continue to be blocked by China, reducing the ability of the U.S. based company to expand within the country.

IQiyi has already partnered with Netflix, which was looking to find a way to get inside China to help build a truly global audience for its expanding library of shows.

Netflix passed the 100 million threshold of subscribers without any viewers in the most populous nation in the world, where the government censors limit the content type that is available to viewers.

The competition continues to grow more intense as more and more people in China have mobile devices and more and more are using them to watch streaming video.

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