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Product cover image for iQIYI, Chinese Netflix-Style Streaming Service: Inflated Its Revenue?

iQIYI, Chinese Netflix-Style Streaming Service: Inflated Its Revenue?

Li, Xu; Liu, Ramee

Product #:HK1366
Supplier:The University of Hong Kong
Discipline:Finance
Setting:China
Details:Case (PDF) • 20 pages • 2021-03-18

Subjects:

InternetCompetitive strategyAdvertisingMarket researchAccountingWeb-based technologiesStrategySales and marketingFinance and investingFinance and investing

Industries:

Media, entertainment, and professional sports

Geography:

ChinaAsia
Your Price:$12.40

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iQIYI Inc. ( ), which promoted itself as the "Netflix of China," was one of the three largest entertainment streaming platforms in mainland China. It was listed on the Nasdaq (NASDAQ: IQ) after being spun-off from Baidu Inc. ( ) (NASDAQ: BIDU). In April 2020, Wolfpack published a research report on iQIYI, accusing it of inflating revenue numbers, among other things. The report claimed iQIYI's revenue in FY2019 was overstated by 27% to 44%, equivalent to CNY8bn to 13bn. One of the accusations was that iQIYI recorded more than its own share in revenue, and included a large portion of its membership subscriptions bundled with services offered by its business partners.

Learning Objectives

After being taught the case students will be able to: 1. Understand the accounting principles used for iQIYI's revenue recognition. 2. Identify the approach iQIYI utilized to inflate its revenue. 3. The valuation consideration of iQIYI in this industry as OTT entertainment platform.
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Case Study: iQIYI, Chinese Netflix-Style Streaming Service: Inflated Its Revenue? (English version) | Ivey Publishing