Q3 2025 iQIYI Inc Earnings Call
Speaker #2: Thank
Speaker #2: Thank you for standing by, and welcome to the iQIYI third quarter 2025 earnings conference call. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.
Speaker #2: If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Chang Yu.
Speaker #2: Please go
Speaker #2: ahead. Thank you,
Speaker #3: Operator: Hello, everyone, and thank you for joining iQIYI's third quarter 2025 earnings conference call. The company's results were released earlier today and are available on the company's Investor Relations website at ir.iqiyi.com.
Speaker #3: On the call today are Mr. Yu Gong, Founder, Director, and CEO; Mr. Jun Wang, our CFO; Mr. Xiao Guiguang, our CCO, Chief Content Officer; Mr. Yu Qiaoduan, Senior Vice President of our Membership Business; Mr. Xiang Haiyang, Senior Vice President of Movies and Overseas Business; and Mr. Gang Wu, Senior Vice President of Brand Advertising Business.
Speaker #3: Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Jun who will go through the financials after the prepared remarks.
Speaker #3: The management team will participate in the Q&A session. Before we proceed, please note that the discussion today will contain forward-looking statements made under the Safe Harbor Provisions of the U.S.
Speaker #3: Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Speaker #3: Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC. iQIYI does not undertake any obligation to update any forward-looking statement except as required under applicable law.
Speaker #3: I will now pass on to Mr. Gong. Please go ahead.
Speaker #3: ahead. Hello, everyone.
Speaker #4: Thank you for joining us today. This summer, we captured the hearts of audiences with our original blockbuster drama "The Thriving Land." Chang Yu, as we begin today's earnings call, I would like to share the journey of bringing the compelling story to life.
Speaker #4: "The Thriving Land" became a highlight of iQIYI's highly acclaimed masterpiece theater, "Dajia Ju Chang," a collection renowned for its expertly crafted adaptation of famous novels.
Speaker #4: "The Thriving Land" tells a compelling tale of three families across two generations in rural China in the 1920s. When production began in Shandong last September, we heard questions and concerns.
Speaker #4: Can today's audience be drawn to a story set 100 years ago? However, we built this project with strong confidence backed by our years of experience in adapting literature to hit dramas.
Speaker #4: A lifelong journey to the wonder of our time; therefore, it is our belief that great stories resonate universally. They transcend time, culture, and age, forging deep connections with viewers across regions and demographics.
Speaker #4: This ability to tell timeless stories is what sets long-form content apart from faster-paced, bite-sized entertainment. As we all now know, "The Thriving Land" became a major hit, exceeding the 10,000 mark on the IQIYI popularity index score and topping this year's enlightened data chart for peak daily market share.
Speaker #4: Its influence expanded far beyond our platform, making it meaningful—impacting traditional TV and offline as well. It achieved the highest average rating per episode on CCTV's drama channel and boosted tourism in its filming location, echoing the offline success of the no-cost and to the wonder.
Speaker #4: The success of "The Thriving Land" is no coincidence. It is built on iQIYI's proven content methodology to create an amplified iQIYI value through high-quality storytelling and advanced production technology.
Speaker #4: To connect with broad and diverse audiences and to develop our business model with IP at the core, from online to offline, and from domestic markets to global audiences, our business model continues to evolve and scale.
Speaker #4: Today, our online operations are well-established, global expansions are accelerating, and our experienced business is advancing accordingly. On top of that, we are embracing exciting opportunities enabled by a supportive regulatory environment and advancements in AI. These new regulatory policies play a solid foundation for innovation and growth in the long-form video industry.
Speaker #4: And at the same time, we are leveraging AI to transform how content is created and consumed. In July, we partnered with Google and ByteDance and launched a global AI short film competition aimed at discovering and nurturing talents who create short videos using AI technologies.
Speaker #4: We also collaborated with award-winning cinematographer Mr. Peter Paul on a co-branded AI theater featuring AI-driven content. We aim to leverage iQIYI's professional production expertise to cultivate the next generation of creators.
Speaker #4: Pioneer innovative AI-driven content production methods and deliver compelling AI-powered storytelling that resonates with audiences. Now, let's dive into the details of our business performance in Q3.
Speaker #4: Starting with content, which is a cornerstone of our business, our goal is to engage audiences with diverse, beloved content that drives commercial success.
Speaker #4: For long-form dramas, we focus on top-notch stories with high commercial value. In the third quarter, we once again secured the top position in total viewership market share according to Enlightened Data.
Speaker #4: Our diverse, high-quality lineup includes the nationwide hit "The Thriving Land" and our in-house custom detective serials "Coroner's Diary," which emerged as a summer dark horse with an IQIYI popularity index score exceeding 10,000.
Speaker #4: Additionally, the science fiction serial "Movies" earned strong acclaim for its innovative storytelling, reaching a peak popularity score of over 8,000 and 800. Moving to movies, we achieved major breakthroughs in original sales article releases.
Speaker #4: "The Shadow Age" grossed over R&B 1.2 billion, leading the summer box office and making a historic achievement for us. On our online movie platform, we retained the top viewership market share for 15 consecutive quarters, driven by a diverse selection of key titles.
Speaker #4: In Q2, we launched an innovative revenue-sharing model to maximize returns for fields with limited box office opportunities. This strategy is gaining traction in Q3, with new titles like "A Cool Fish 2" for Ji Tai Lai, generating over R&B 17 million in revenue-sharing model in two months.
Speaker #4: For variety shows, our focus on top-tier titles delivered strong results in both popularity and revenue. The King of Stand-Up Comedy Season Two, our flagship IP, generated impressive membership and advertising revenues.
Speaker #4: It achieved an IQIYI popularity index of over 8,000 and dominated the general market with a leading market share. According to Enlightened Data, additionally, our newly launched observation show her prime sparked widespread discussions.
Speaker #4: To deepen audience engagement and elevate our variety show IP value, we introduced consumer products like collectible cars and co-branded merchandise collections, resulting in stronger audience loyalty.
Speaker #4: Turning to micro-dramas, they continue to enhance our content ecosystem, achieving double-digit sequential growth in average daily viewing time and daily subscription revenue in the third quarter.
Speaker #4: Our micro-dramas have also attracted sponsorship from brand advertisers, with more partnerships anticipated in the future. This growth has been driven by our focus on premium content, enhanced original production capabilities, and an expanded library of free titles.
Speaker #4: Our micro-drama content library now includes over 20,000 titles, with over half available for free. We have also established a strong capability for consistently releasing original micro-dramas.
Speaker #4: Hits such as "Feet of Three Lives" and "Immortal Paradise" resonate strongly with audiences. Additionally, we introduced a dedicated micro-animation channel and kicked off original production micro-animations, an innovative format of short-form animation that has experienced rapid growth in the past year, following the success of micro-drama and heavily leveraging AI technology.
Speaker #4: For animations, we continue to improve our original production capabilities. In the third quarter, our original series continue to enjoy strong viewership. Additionally, our highly regarded original production "Love Between Fairy and the Devil" returned with a second season, captivating a larger audience and driving high engagement.
Speaker #4: Next, let me show you our exciting slate of content for the first quarter. The diverse pipeline includes "Fitted Cars," "Beloved Silent Owner," "Strange Tale of Tom Dynasty 3," "Legend of the Magnate Speed and Love," and "Silent Times."
Speaker #4: The movie pipeline includes all original sale article film skins, for sale article release, and our original sale article hit "The Shadow's Edge" for online streaming.
Speaker #4: The first batch of original internet films and the emerging film projects, as well as the licensed film, such as "Died to Rise: The Legend of the Volunteers," and "Last and Nobody," the original variety show, includes flagship IP "Blue Mean Journey 2," Young Farmers, and the brand new IP "Wonder Together." The micro-drama pipeline includes the first micro-drama based on the highly popular IP "Strange Tale of Tom Dynasty," titled "Tom Dynasty Mysterious: The Conspiracy," as well as "Forcing You in My Final Days."
Speaker #4: And St. Mark's Destiny. The animation and children's content includes new animation of the Night Song returning cartoon, a new IP came, and the first food track.
Speaker #4: Moving on to membership services, we aim to build a household-name membership brand with brand market appeal, backed by a vibrant content ecosystem and exceptional services.
Speaker #4: Membership service revenue recorded sequential growth in Q3, driven mainly by original hit dramas like "The Thriving Land" and "Coroner's Diary," as well as sales of articles beyond content.
Speaker #4: We are increasing our efforts to enhance membership services and deliver on the family-oriented statement plan sent out, with inclusive perks like an express package offering early access to shows. This has proven to be a driver of new subscriptions and upgrades to this premium town.
Speaker #4: The currency experience program continues to boost engagement with meaningful revenue growth year over year. We have created stronger synergy between membership and advertising revenues by introducing branded homes within the program.
Speaker #4: There are also integrity membership experiences with top IPs. This quarter, we launched the IP-themed membership cards for the learning of the journey of legend for Shanghai, giving fans a deeper connection to their favorite stories and characters.
Speaker #4: Connecting with our audience is at the heart of what we do. Our annual flagship July 17th IT membership festival has become a signature fun appreciation event loaded with inclusive perks and irresistible subscription offers.
Speaker #4: We also strengthened membership value and loyalty through over 10 VIP-only gatherings, ranging from one meter to advanced screenings. We have elevated membership performance by focusing on operational optimization, aiming to boost membership value and encourage subscribers to stay with our service longer.
Speaker #4: This includes initiatives to promote longer-term plans and targeted promotions for specific audiences. Additionally, we expanded our bundled membership partnership to 16 brands while broadening our sales channel across e-commerce and telecom platforms.
Speaker #4: Moving on to the advertising business, in the third quarter, we recorded double-digit annual growth, mainly driven by premium variety shows like "The King of Stand-Up Comedy Season 2" and hit dramas like "The Journey of Legend" and "The Thriving Land." Our content-related ad solutions continue to gain traction, contributing over 60% of brand ad revenue.
Speaker #4: Key verticals such as food and beverage, internet services, e-commerce, and beauty and personal health all showed robust annual growth. We use AI to drive production innovation and advertising efficiency with features like creative bullet charts and AI-generated ad materials, including animation style for innovative marketing solutions.
Speaker #4: As we entered Q4, we aim to capitalize on major advertising opportunities such as the Double 11 shopping festival, Christmas and New Year campaigns, and new smartphone launches.
Speaker #4: Our focus will be on maximizing ad sales from premium variety shows, dramas, and our Drama Center brands. We are further enhancing monetization on smart TVs.
Speaker #4: We will continue leveraging AI to improve brand advertising efficiency. For performance ads, we now have a healthier and more balanced advertiser portfolio, with revenue dependent on immediate individual clients.
Speaker #4: By industry, internet services and education and training performed well this quarter. Looking ahead, we will focus on capturing new budgets in the internet services sector, including tools, social platforms, and mini-games.
Speaker #4: We are scaling up revenue in education and training, wellness management, and e-commerce. Additionally, we plan to expand our performance and inventory and utilize AI to further enhance monetization efficiency.
Speaker #4: Moving on to technology and products, we continue to harness cutting-edge technologies to transform the entertainment experience, improve content production efficiency, and boost content value across our platform.
Speaker #4: On the content creation front, we are leveraging AI to transform storytelling. A notable example is our partnership with Academy Award-winning Mr. Peter Paul. Together, we will launch the Peter Paul IT AI Center to pioneer the next generation of AI-driven storytelling and talent development.
Speaker #4: The first titles are set to premium soon, which we are very excited for. Additionally, we are using AI to produce high-quality original micro-animation at a much lower cost.
Speaker #4: Another unique example is the AI part. I quick real connections to come, which now cover all major content categories. This feature utilized a smart editing agent to automatically convert long-form videos into vertical shots.
Speaker #4: Which are then included in iQIYI Quick Real Collections. iQIYI Quick Real Collections offer users a real experience akin to that of micro dramas. We are transforming user engagement with a total and AI-powered personal assistant that provides personalized support, including video search and plot insights.
Speaker #4: The latest update improved recommendations for micro dramas and short-form videos alongside long-form content. We are also enhancing plot Q&A capabilities. Additionally, we introduced binge-watching rankings, allowing users to track time spent on their favorite series and view their rankings.
Speaker #4: This feature has received highly positive feedback from fans. In addition to advancing AI applications, we are driving the industrialization of video production with cutting-edge virtual production technology.
Speaker #4: Our virtual production capabilities now support both in-house and external projects. This quarter, we launched an omni-directional motion-simulating vehicle rig filming platform. Powered by our in-house developed IQ stage virtual production system, the platform naturally enhances the efficiency of high-frequency vehicle scene shots.
Speaker #4: It delivers streamlined, repeatable workflow and has already been utilized for virtual production in major theatrical productions. Moving on to business performance ingredients outside of mainland China, we maintained strong growth momentum in Q3, with membership revenue increased by over 40% annually.
Speaker #4: Markets like Brazil, Spanish-speaking regions, Mexico, and Indonesia had membership revenue more than doubled year over year in this quarter. The average daily subscriber also reached an all-time high.
Speaker #4: The strong performance is supported by an exceptional content lineup. Our C-drama, Chinese drama continues to gain popularity globally, with revenues growing double digits both annually and sequentially.
Speaker #4: Notably, the Thai dubbed version of Coroner's Diary set platform records for both viewing time and peak revenue within its language segment. It also topped IT popularity charts.
Speaker #4: In 13 overseas markets, meanwhile, our local content slate also exceeded "King General: The Series" and "Linghun Chongsheng" in viewership as a phenomenon in Thai-language content this year.
Speaker #4: Generating the highest membership revenue among all Thai dramas on our platform and topping related rankings on Google and Twitter. Beyond long-form content, micro-dramas continue to build strong momentum overseas.
Speaker #4: Membership revenue from micro dramas grew 114% sequentially by the end of September. Micro dramas ranked second only to long-form dramas across several core metrics, including membership revenue and viewing time.
Speaker #4: Moreover, multiple IT original micro-dramas have gained solid traction abroad. For example, "How Dare You" and "Chang Yu Tong" have shown a strong long-tail effect three months post-launch.
Speaker #4: We are also expanding into locally produced micro-dramas, with multiple projects in English, Thai, Korean, and Indonesian. These are in production and targeted for launch this year. Looking ahead, we will continue to deliver high-quality content to international audiences.
Speaker #4: Deepen partnerships with telecom operators and local partners, and leverage AI to drive user acquisition. Moving on to the experience business, we are focusing on two key areas: IP-based consumer products and offline experiences.
Speaker #4: We are leveraging our extensive and unique IP resources to build a more robust entertainment ecosystem. For IP-based consumer products, we have upgraded our business model from a licensing-only approach to a dual-track strategy, combining self-operated merchandise with licensing.
Speaker #4: Q3 growth was strong, with revenue from IP-based consumer products more than doubling year over year. In particular, revenue from self-oriented merchandise grew more than 70% sequentially, driven mainly by collectible cars from top drama titles.
Speaker #4: Meanwhile, our self-operated portfolio has expanded beyond collectible cars into additional categories, supported by the establishment of in-house teams. For IP licensing, the hit drama "The Journey of Legend" has partnered with over 30 licensees, setting a new record while spanning multiple sectors, including e-commerce, FMCG, and beauty.
Speaker #4: In our offline experience business, we are pioneers in this emerging field. At the heart of this initiative are IT labs, which are designed to operate under an asset-light model.
Speaker #4: Our two locations, Yangzhou and Kaifeng, are under development, with the Yangzhou IT lab scheduled to open early next year. A third site in Beijing has also been announced.
Speaker #4: By integrating technologies like AI and XR with our content IP labs, we will provide interactive and scalable experiences that are faster to iterate and more efficient than traditional theme parks.
Speaker #4: This approach reduces space and capital requirements, with revenue expected to come mainly from ticket sales. As 2025 draws to a close, we reflect on a year of rapid transformation driven by technical innovation and involving business models.
Speaker #4: We are not morally adapting; we are advancing, fueled by our thriving overseas expansion, growing experience business, and ongoing AI investments. Breakthroughs in any of these areas could elevate us to new heights amid this change.
Speaker #4: Our call remains the same: creating premium content IP supported by a proven commercial model. This foundation earns us the role of hundreds of millions of users and the trust of industry partners.
Speaker #4: Moving forward, we will continue delivering quality content, fostering creativity with partners and driving long-term value for shareholders. Now, let me hand it over to Chen for the financials.
Speaker #2: Thank you, Mr. Gong. And hello, everyone. Now, let me walk you through the key numbers for the third quarter. The total revenue for the third quarter will be $6.7 billion.
Speaker #2: Up 1% sequentially. The membership services revenue reached RMB 4.2 billion, up 3% sequentially, driven mainly by original blockbuster dramas and theatrical mega hits, "Nezha 2," during the summer season.
Speaker #2: The online advertising revenue was RMB 1.2 billion, a decrease of 2% sequentially, as the performance in the second quarter benefited from the major advertising campaigns.
Speaker #2: The content distribution revenue reached RMB 644.5 million, up 48% sequentially. The increase was mainly driven by the strong distribution performance of the original theatrical movie invested by iQIYI, along with the growth in transactions for dramas.
Speaker #2: Other revenues were RMB 585 million, down 29% sequentially. Moving on to costs and expenses, the common cost was RMB 4 billion, up 7% sequentially, as we launched a more diverse selection of premium content during a peak summer season.
Speaker #2: The total operating expenses were RMB 1.3 billion, down 3% sequentially. We benefited from our disciplined expense management. Now, turning to profits and cash balances, the non-GAAP operating loss was RMB 21.9 million, and the non-GAAP operating loss margin was 0.3%.
Speaker #2: As of the end of the third quarter, we had cash equivalents, restricted cash, short-term investments, and long-term restricted cash, including in the prepayments and other assets, totaling RMB 4.9 billion.
Speaker #2: At the quarter end, the company had a loan of $522.5 million to PAG, recorded under amounts due from related parties. For more detailed financial data, please refer to our press release on our IR website.
Speaker #2: Now, we will open the floor for questions.
Speaker #2: Q&A. Thank
Speaker #3: If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.
Speaker #3: If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all on the call, if you wish to ask your question to management in Chinese, please then translate your question into English.
Speaker #3: Your first question comes from Zhang from CICC. Please go ahead.
Speaker #4: I management for taking my question. It has been three months since the new regulations were issued, so could management provide an update on the progress?
Speaker #4: Thank you.
Speaker #5: Thank you, Shiqing. We'll invite our Chief Content Officer, Mr. Xiaohui, to answer this question.
Speaker #6: 好，感谢各位。我来跟大家回答这个问题。首先，新政的核心目的是推动影视行业的健康发展。到现在出台了两个多月，我们在多个方面也看到了一些积极的进展，包括广电总局和省局对于重点项目也实施了同步的审查。试运行了系列剧、剧播剧、单元剧、青柠喜剧等类型的剧目，边审边播的这个机制，以及其他的优化协审的机制等等。
Speaker #5: The core objective of the new policies is to promote the healthy development of the long-term value industry. In the past two months since its implementation, we have observed positive progress in several areas.
Speaker #5: Including the concurrent review of key dramas by the National and Provisional Administration, as well as the exploration of concurrent review of broadcasting for new content formats, such as anthology drama, multi-season drama, multi-art drama, and sitcoms.
Speaker #5: As well as the optimization of co-review methods.
Speaker #5: Under the 其实在新的政策环境下，我们也积极地创新内容制作和播出的模式。比如我们在探索全新的内容形态，就是网络故事片的开发和合作。将它纳入到我们现有的辽源计划的合作范畴当中。我们也是希望通过与合作伙伴的收入分成这种模式，吸引更多的创意人才和优质内容来共同推动行业的创新和发展。 new policy environment, we are actively innovating in content production and broadcasting models. For example, we're exploring a brand new content format called online feature series, and integrating it into our existing emerging film project collaboration framework.
Speaker #5: Going through a revenue-sharing model with our partners, we aim to attract more creative talent and high-quality content, strongly driving innovation and growth in the industry.
Speaker #6: 从目前的执行进展来看，新政对整体影视行业的利好的信号是清晰的。IQIYI已经有部分的项目了，也受益于这个政策的支持，更快速地达到了被播的这个状态。随着项目制作的有序推进，我们也会逐步地看到政策带来的规模化成果。长远来看，新政将引领行业迈入一个新的发展周期。我们广大的从业者也将会从中受益。谢谢。
Speaker #5: We found the
Speaker #5: Current progress of implementation. It is clear that the new policies have sent positive signals to the industry. Some of our projects have already benefited from the policy support, allowing them to reach a ready-to-broadcast status more quickly.
Speaker #5: As productions proceed smoothly in the future, we will gradually see the broad benefits of the policies take shape. In the long term, the policies will drive the industry into a new growth phase, benefiting professionals across the board.
Speaker #5: Thank you.
Speaker #3: Thank you. Your next question comes from Vicki Wei from CITI. Please go ahead.
Speaker #3: Thank you. Your next question comes from Vicki Wei from CITI. Please go ahead, Guanyu Changwan.
Speaker #4: Chang Hao, 谢谢接受我的提问。我的问题是关于会员业务的，能不能请管理层给我们分享一下您对会员业务的那个展望。 Things management for taking my questions. When management shares some color about your outlook about the membership business. Thank you.
Speaker #5: Thanks, Vicki. We'll invite our Senior Vice President, Yu Xiaodong, to take this question.
Speaker #6: 谢谢您的提问。下面我来回答这个问题。9月底以来，我们整体会员业务发展的势头不错。主要有以下三个原因。第一是持续推出优质的内容。第二是不断提升权益和服务。第三是优化市场和销售策略。包括我们拓展了联名卡，为教师和学生提供定向优惠等等。
Speaker #5: Since the end of September, our membership business has experienced nice growth momentum, driven by three main factors. First, the continual release of high-quality content; second, the ongoing enhancement of member services and benefits; and third, the optimization of marketing and sales strategies, such as expanding bundled memberships and offering targeted discounts for teachers and students.
Speaker #6: 9月底上线的沉默的荣耀打破了全程的限制。吸引了很多年轻的观众。另外，女性项目的内容一笑随歌，天地变心，还有迷雾剧场的命悬一生、树影迷宫，这些内容同样都广受用户的喜爱。
Speaker #5: The
Speaker #5: The Silent Honor, which was released at the end of September, broke demographic boundaries and captured the hearts of young audiences. Our female-oriented content, such as Faded Hearts and Sword and Beloved, along with the suspense theater titles like The Hunt and The Dead End, also gained wide popularity.
Speaker #6: 近期上线的唐朝诡事录之唐安，是唐朝诡事录IQIYI系列的第三部产品。播出后迅速赢得了广大用户的好评，热度也破了万。成为该系列的第二部热度破万的戏剧。同时，也让这个IQIYI系列成为爱奇艺首个实现双剧热度都破万的系列剧。今年的新作是在延续经典元素的基础上，也注入了更多创新的内容。这样不仅展现了优质IQIYI系列化开发的实力，同时还成功吸引和稳固了一批忠实观众。
Speaker #5: The recently
Speaker #5: released "Strange Tale of the Tang Dynasty III to Chang An," which is the third drama of the "Strange Tales of the Tang Dynasty" iQIYI series.
Speaker #5: Received widespread acclaim shortly after its premiere, with its popularity index on iQIYI surpassing 10,000. It became the second drama in the series to hit this milestone.
Speaker #5: Making the Strange Tales of the Tang Dynasty iQIYI's first iQIYI series to have two seasons exceeding the 10,000 popularity mark. The latest release in the series, while building on the classic elements, introduced more innovative content.
Speaker #5: Showcasing the strength of high-quality iQIYI series development, and also successfully attracting and retaining a loyal audience base. At the same.
Speaker #6: 同时我们也通过精细化的运营，提升会员的价值和权益的感知。例如，提供更丰富的会员订阅选择，更丰富的会员专属的IQIYI衍生品，还有高阶会员专属的线下活动等等。
Speaker #5: We have enhanced membership value and perception of benefits through more refined operations. For example, we are offering more diverse subscription options, member-only iQIYI merchandise, and offline events tailored for premium members.
Speaker #6: 我们有信心在优质内容和权益服务的支持下，未来实现整个会员业务的健康增长。谢谢大家。
Speaker #5: We're confident in achieving sustainable growth in our membership business with the support of high-quality content and enhanced member benefits and services.
Speaker #5: you. Thank you.
Speaker #3: Your next question comes from Felix Liu from UBS. Please go ahead.
Speaker #4: ????????????????????? iQIYI ????????????????????????????????????Thank you, management, for taking my question. We noticed that the Chinese culture industry has made good progress in the overseas markets lately. Can management share more progress on your overseas expansion and strategy?
Speaker #4: Thank
Speaker #4: Thank you. Thanks,
Speaker #5: Felix, we'll invite our Senior Vice President of our overseas business, Mr. Zhang Haiyang, to take this question. Please.
Speaker #7: 谢谢提问。海外业务今年表现强劲。Q3总收入、会员收入同环比的增幅都创了近两年的新高。
Speaker #5: Overseas business has shown strong performance this year, with Q3 total revenue and membership revenue achieving the highest annual sequential growth in the past two years.
Speaker #7: 华裔内容是我们海外内容的基本盘。IQIYI是海外用户观看华裔内容的第一选择。我们持续地在各个市场推广华裔内容。明显地看到它在海外主要的市场影响力在不断地提升。同时有效地带动了我们的用户和会员数的增长。
Speaker #5: We see that Chinese content serves as the cornerstone of our overseas content portfolio. And iQIYI has become the top choice for an increasing number of overseas users to watch Chinese-language content.
Speaker #5: We continue to promote Chinese-language content across various markets and have seen a significant increase in its influence in major overseas markets, which effectively drives the growth in our user base and also the membership numbers.
Speaker #7: 再本地剧方面，我们在泰国、马来、印尼、中国、台湾进行了采购和自制。其中泰国是做得最成功的市场。今年推出了多部爆款，比如泰剧《灵魂重生》的播放时长和收入，均创了我们泰剧的新纪录。我们将泰剧加配字幕后在其他市场播出，自制泰剧在美国和其他海外市场的收入已经超过了泰国本土市场。泰剧也成为陆剧、华语剧以后第二个具有国际市场传播力的内容品类。未来我们将增加自制泰剧、马来剧和印尼剧的数量。
Speaker #5: In terms
Speaker #5: Of local content, we have engaged in both licensing and original productions in Thailand, Malaysia, Indonesia, and Taiwan. Among these, Thailand has been our most successful market this year.
Speaker #5: We launched several hit titles, such as the Thai drama "Kinjara: The Series," which set new records on our overseas platform in terms of both viewing hours and revenue for Thai content.
Speaker #5: With subtitles added, our original Thai dramas have been distributed in other markets. The revenue from our original Thai dramas in the U.S. and other overseas markets has already surpassed that of Thailand's domestic markets.
Speaker #5: We are pleased to see that Thai dramas have become the second globally recognized content category after C-dramas. Looking ahead, we plan to increase the production of original Thai, Malaysian, and Indonesian dramas.
Speaker #7: 今年初我们提到了要今年开拓一些新的市场，比如中东，比如拉美的新地区和服务地区的巴西。这几个区域在今年一直保持高速增长，会员收入和会员数均有非常显著的增长。
Speaker #5: we mentioned that some of the newly developed markets, such as the Middle East, Spanish-speaking regions in Latin America, and Brazil regions. And these regions have maintained rapid growth, actually, throughout the year, with significant increases in membership revenue and subscriber numbers.
Speaker #7: 未来我们将持续推出优质内容，并且借助AI的技术提升内容制作和宣发的效率。目前AI海外内容的宣传工作中，有AI生产的物料占比已经超过了70%，极大地提升了宣传效率。 谢谢。
Speaker #5: In the future, we will continue to deliver high-quality content while leveraging AI technology to enhance content production and promotional efficiency. Currently, over 70% of promotional materials for our overseas content are generated using AI, which significantly boosts our market efficiency.
Speaker #5: Thank you.
Speaker #3: Thank you. Once again, if you wish to ask a question, please press *1 on your telephone. Your next question comes from GG Zhao from Guangfa Securities.
Speaker #3: Please go ahead.
Speaker #4: 感谢管理层接受我的提问。我的问题是关于AI的，然后想问一下，就是目前的AI在影视娱乐领域的应用越来越深入，那可否请管理层可以给我们分享一下本爱奇未来在AI应用内容生产，还有业务布局等方面的思考。 I will translate the question myself. The application of AI in the global film and television industry has been advancing in increasing depth to maximize share strategic insights and future plans pertaining to AI adoption content production and business layout.
Speaker #4: Thank
Speaker #4: you. Thank you.
Speaker #5: We'll have our CEO, Mr. Yu Gong, to take this question.
Speaker #6: 大家好。AI在未来给IQIYI的非常好的一个机会。打个比方，就像20年来，过去的20年来，互联网技术给了online video这个行业超越电视行业的技术优势一样，AI，特别是大模型，将给IQIYI特别好的一个机会。
Speaker #5: Okay. For I think for the AI technology it provides a very opportunities outlook for IQIYI, to take a knowledge of, for example, in the past 20 years, actually, the internet actually provided online video industry an opportunity and advantage to surpass traditional linear TVs.
Speaker #5: And we think currently with the large language models for AI actually provides a similar opportunity outlook for iQIYI.
Speaker #6: 在过去的将近三年内，IQIYI应用AI主要在三个方面，第一个方面提高运营效率，比如说生成海报图等等。提高速度，降低成本，比如说海外业务的翻译，这个机器翻译要比人翻译成本要低很多，速度快很多。
Speaker #5: AI technology has been deeply integrated into our operations and is helping us achieve goals in three key areas. The first one is to increase our operational efficiency. We use AI for marketing materials, for example, by automatically generating posters and promoting promotional marketing materials.
Speaker #5: And also, we use that for overseas content translation, while the cost is much cheaper compared to the human labor side.
Speaker #5: faster. Got
Speaker #6: Got it.
Speaker #6: 货币化能力的提升方面，比如说广告素材的生成，比如说提高广告算法的投放精准度和转化率。 The second
Speaker #5: The point is, AI actually boosts monetization capabilities, as it can efficiently produce advertising creative materials. We can use that to optimize placement algorithms, which help us to improve targeting accuracy and also conversion rates.
Speaker #6: 第三点是在赋能加持内容制作方面，比如说我们的剧本工坊提高小说的评审的效率，然后提高剧本的评估的准确性和效率，影像工坊可以做很多概念图、概念demo的video等等。
Speaker #5: The third
Speaker #5: The point is AI can empower us for content production. Actually, we use AI as a core component for our internal production capabilities. For example, we have a screenplay workshop in iQIYI. We use that to significantly enhance the evaluation and creation capabilities for novels and scripts.
Speaker #5: And also, we have an image workshop feature that can effectively support early-stage creative development. For example, by providing concept posters, as well as storyboard generation and character design.
Speaker #6: 第四点是推出一些用户用的基本功能，比如说淘到个人助手，比如说调看功能，提高用户的观影体验。
Speaker #5: And the fourth point is we actually use AI to build out some basic user features. For example, based on the AI we rolled out to talk to the world and also jump features, all of these will improve the viewing experiences.
Speaker #6: 以上四点未来会继续优化，那么未来的重点还有三点比较重要，第一点是现在跟未来都很重要，第一点是要把我们内部用到的这些智能制造系统的功能开放给我们紧密的合作伙伴，让我们的这些partner共同利用AI提高制作能力，提高效率。
Speaker #5: Four points earlier, as the ones we already use in our daily operations, we will keep refining them and upgrading them. Hopefully, it will bring more benefits.
Speaker #5: And now, going forward, we'll focus on three major areas. The first one is iQIYI's intelligent production system, which actually was previously reserved for internal use. We will, going forward, gradually open up its core functions for our close partners.
Speaker #5: So, we're helping them leverage AI to enhance their production capabilities.
Speaker #6: 然后通过一些市场行为，比如说AI短片大赛，还有跟鲍德喜的AI剧场等等这些市场活动，然后挖掘还培养用AI创作的新一代的创作者，这些新一代的艺术家。然后构成一个健康的内容生产的生态系统。
Speaker #5: We will continue to promote the use of AI in the market and also for the industry. For example, we launched initiatives such as the AI Short Film Creation Competition, as I mentioned earlier in the opening remarks, and also partnered with Academy Award winner Peter Powell to roll out the AI Theater.
Speaker #5: I think the main purpose of these initiatives is to discover and nurture AIGC creative talents through collaborations and also market promotions. The purpose is to foster an innovation-driven content ecosystem going forward.
Speaker #6: 最后一点就是最关键的，从现在开始用我们的技术加已经有的新一代的创作者合作伙伴，再慢剧动漫什么知识内容纪录片网络电影这样简单内容先生产出AI主导的内容，然后为以后现在的长篇剧长剧电影等等大规模的使用AI创造前期的条件，打好基础。
Speaker #5: And last but not least, our focus will be collaborating with our partners and also utilizing our current AI technologies to explore more on a large-scale application of AIGC in areas, for example, like micro animations, animated educational content, documentaries, etc.
Speaker #5: And hopefully these AIs will become a core engine of content creation. This is the first stage, and going forward, the bigger picture will be to utilize AIGC to apply them in our long-form video content, for example, dramas and films.
Speaker #6: 我们预估如果快了，未来一两年之内慢了三年多不会超过五年，这个说小了也是行业吧，说大了整个互联网视频行业会发生巨大的一个变化。所以我们会投入非常大的力量，可以说是心有最大的力量，不光是心业务，传统业务加心业务投入最大的力量，去用AI去做创新，去做改变。谢谢。
Speaker #5: One to two years—that's on the slower side—or maybe three years. But we think, overall speaking, no more than five years. AI will bring dramatic change to our internet space and also to the video content creation industry.
Speaker #5: So going forward, and currently, we have been investing heavily in AIGC and also AI technology applications. This is one of the core areas of investment for the company right now.
Speaker #5: So, hopefully going forward, we can utilize AI to do more creative content and also to change the content ecosystem. Thank you.
Speaker #5: you. Thank you.
Speaker #1: That concludes our question-and-answer session. I'll now hand it back to management for closing remarks.
Speaker #5: Thank you, everyone, for participating in the call today. If you have further questions, do not hesitate to contact us. See you next quarter.
Speaker #5: Thank
Speaker #5: you. Thank you.
Speaker #6: Bye
Speaker #6: bye. Thank you.