iQIYI invested 150 million yuan in Coocaa Internet TV industry and started the "group fight" mode

For today's Internet TV industry, the biggest event is the marriage between iQiyi and Skyworth Group. Yang Dongwen, president of Skyworth Group Co., Ltd., announced that iQiyi has invested 150 million yuan in Coocaa, a subsidiary of Skyworth, and iQiyi holds a 5% stake.

Gong Yu, founder and CEO of iQiyi, believes that China's online video industry has entered a post-competitive era, changing the previous lack of regularity and logic in the fight. Yang Dongwen's description is more direct. He believes that the Internet TV industry has entered the stage of group fighting from the melee, the goals of each company are clearer, and alliances will become more common, and will eventually transition to oligopoly competition.

The two powerful parties joined forces to fight against their competitors, and the cooperation between the two parties seemed to be a perfect match.

But how should the 150 million be spent? How will iQiyi handle its relationship with other partners? Is Coocaa worth iQiyi's additional investment?

Will it be awkward for both parties if iQiyi and Coocaa join hands?

Facing cross-border competition from Internet companies such as LeTV, Xiaomi, PPTV, and Baofeng, traditional TV manufacturers have actively responded. In April last year, Skyworth separated its Internet TV sub-brand Coocaa into a separate subsidiary and operated it independently. At that time, Coocaa also said that it might be possible to go public and raise funds in the future.

Although iQiyi’s investment in Coocaa was held at this press conference, it was understandable for Skyworth, as Coocaa’s major shareholder, to come and support the event.

On the other hand, as early as 2014, Xiaomi invested RMB 1.8 billion (about USD 300 million) in iQiyi in order to add content to its own TVs. The two parties have carried out in-depth cooperation in content, technology product innovation, and mobile Internet. Previously, iQiyi also launched an Internet TV with TCL. The partner Skyworth has also cooperated with Alibaba, Tencent, Mango TV, etc.

From this perspective, the identities of both parties are a little awkward, as both have had interactions with their partners’ competing products. In response, Yang Dongwen said, “In a market economy, it’s not about you or me, but there are differences in the concepts of mainstream and strategic cooperation. We will definitely go deeper with comprehensive partners with whom we have capital relations. The establishment of such a sense of trust is very important. Both parties will work hard to promote product innovation and the integration of technology, software and hardware. We can let go of all burdens, and there will be more innovations after letting go.”

Gong Yu believes that "iQiyi's strategic direction is an open ecosystem. We are expanding it at the level of video media platform, which can accommodate more content providers upstream and allow more users to use as many devices as possible to access iQiyi's content downstream. We have open cooperation with terminal manufacturers and will not engage in exclusive cooperation of a certain type."

Regarding the cooperation between the two parties, Wang Chuan, head of Xiaomi TV, was interviewed. Wang Chuan said: "When we invest in a company, we do not require that the company can only cooperate with Xiaomi. Our investment principle is not to hold controlling stakes, to help without causing trouble, and to be in a position without overstepping one's authority. As shareholders, we hope that iQiyi can have a good development." This shows Xiaomi's open and inclusive attitude towards investment targets.

It is understood that in the future, iQIYI will carry out in-depth cooperation with Skyworth in various aspects, including capital, VIP membership services, technology, and advertising models. Starting from the next fiscal year, Skyworth's Internet TV will be pre-installed with VIP membership services and related content through the Galaxy Internet TV integrated broadcast control platform. This new sales model of bundling terminals and VIP content will greatly enhance the experience of Internet TV terminal users and provide users with more high-quality content choices.

Is investing in Coocaa a wise choice for iQiyi?

Since 2013, the smart TV industry has continued to heat up. In addition to Xiaomi and LeTV, Internet brands such as Weijing, Baofeng TV, Fengxing TV, Coocaa, and CAN have also entered the market. Faced with challenges, traditional TV manufacturers Hisense, Skyworth, and Changhong have also established Internet TV sub-brands to meet the challenges. Among many terminal manufacturers, iQiyi dedicated its first investment to Coocaa. Is it fully confident?

Gong Yu said that Coocaa is very consistent with the positioning of iQiyi. "For Skyworth's consideration, our share may not be large, but it is just a beginning. We will make more attempts in the future. I don't agree with the view that hardware should not make money and hardware should have zero profit. Hardware should earn the money it deserves, and software and services should also earn their own money."

Earlier, there was news that after Coocaa became independent, Skyworth paid Coocaa enough money for two years of operation. That is to say, after being separated from its parent company, Coocaa only had about 700 days to grow and develop. So what is its current situation? It is understood that by the end of 2015, the number of Coocaa's operating terminals exceeded 15 million, and the number of daily active users was 5.7 million. The target operating income set by Coocaa at the beginning of last year was 50 million, and the actual contracted operating income was 100 million, which was 100% exceeded.

In an interview, Wang Zhiguo, chairman of Coocaa, said that Coocaa no longer needs financial support from Skyworth and has been profitable since last year.

As for iQiyi, according to iResearch data, in July 2016, iQiyi had 360 million PC users, making it the largest video brand in China. As of June 1, 2016, the number of iQiyi's valid VIP members had exceeded 20 million.

Gong Yu said: "The TV screen is an important carrier for the family entertainment experience and the center of home entertainment. iQIYI and its high-quality partners need to focus on their respective advantages to guide the market upgrade. The cooperation with Skyworth is a major progress for iQIYI inside. The open IP ecosystem that iQIYI is committed to creating is to work with excellent partners in all links of the industry chain to provide users with high-quality entertainment experience."

At present, the Internet TV market has a clear trend of group development. In addition to the cooperation between iQiyi and Coocaa, there have been many cooperations between LeTV and TCL, Whaley and Konka, and major terminal manufacturers and video websites. "Group operation" has become a general trend. It is difficult to defeat the majority by fighting alone. The strong combination like iQiyi and Skyworth, which even involves mutual penetration of capital, will become the mainstream trend in the future.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.