On April 20, iQIYI held a press conference that sent several topics trending.

First, iQIYI CEO Gong Yu's statement that 'live-action filming may become intangible cultural heritage in the future' immediately topped Weibo's trending list. Shortly after, artists such as Zhang Ruoyun, Yu Hewei, and Wang Churan denied signing AI licensing agreements, sparking another trending topic.

The reason for the surge in public attention is that iQIYI chose one of the most sensitive and core aspects of the industry as its breakthrough point—the artists themselves.

Over the past two years, AI's penetration into the film and television industry has largely remained at the technical tool level, such as script assistance, scene generation, and post-production rendering. While these improvements have enhanced local efficiency, they have not touched the industry's most fundamental production relations.

The emergence of the AI artist library means that technology is beginning to test the boundaries of this core structure. When artists' performances can be digitized, standardized, and even reused, the interest landscape and production processes built around 'people' indeed face the possibility of reconfiguration.

Of course, this is far from an established commercial closed loop . From the currently disclosed information, the artist licensing model is still in its early exploration stage, and audience acceptance of digital avatars remains to be tested in the market.

This long-form video platform, established sixteen years ago, is attempting to open up new growth space with AI at a time of profound changes in industry logic. However, to their surprise, the collective denials from artists quickly brought this AI narrative back to reality.

I. Gong Yu's Search for a 'New Continent'

This may be iQIYI's most aggressive transformation yet.

How will it transition? The core is a role shift—iQIYI will move from being a 'content creation hub' to an 'intermediary layer connecting creators and users.' 'iQIYI will transform into a decentralized social media platform, building a new film and television content ecosystem where creators own IP assets, private traffic, and generous rewards,' said iQIYI founder and CEO Gong Yu during his speech.

To support this transformation, iQIYI has adjusted its revenue-sharing strategy, adopting a unified model based on net project income with no upper limit on earnings. It offers substantial incentives for high-quality content, with an additional 20% subsidy for AIGC content and another 20% for Chinese dramas (not cumulative), covering various creative types comprehensively.

Additionally, iQIYI plans to launch 25,000 short dramas and 35,000 animated dramas this year, using AI-driven massive content to hedge against the risk of relying solely on traditional long-form drama hits.

Supporting this transformation are three major product launches:

The professional film and television production platform Nado Pro, which has nearly 70 intelligent agents in development or planning, covering the entire workflow from material search, prompt generation, and character modeling.

The AI creative tool ChiJing AI for mass users complements Nado Pro, focusing on lightweight content forms such as short videos, short dramas, and animated dramas.

And the controversial AI artist library—over 100 artists, including Ma Su, Cheng Taishen, Chen Zheyuan, Cheng Lei, and Zeng Shunxi, have signed up to create exclusive digital avatars through multimodal data, providing digital performance solutions for AIGC film and television creation.

Gong Yu believes that within the next one to three years, after large-scale AI application, production costs could drop to between one-third and one-tenth of the original.

To understand the urgency of this transformation, we must look at iQIYI's fundamentals.

In 2025, iQIYI's total revenue was RMB 27.29 billion, down 7% year-on-year, marking a second consecutive year of negative growth after an 8% decline in 2024.

Specifically, all three core businesses saw declines. Membership service revenue for 2025 was RMB 16.81 billion, down about 5% year-on-year. Since the first quarter of 2024, iQIYI has no longer disclosed its specific membership numbers.

Meanwhile, online advertising service revenue was RMB 5.19 billion, down 9%, and content distribution revenue was RMB 2.5 billion, down 12%.

Profitability declined even more sharply. In 2024, iQIYI's net profit attributable to shareholders was RMB 764 million, but in 2025, it swung to a net loss of RMB 206 million. Even excluding one-time factors, Non-GAAP operating profit plummeted from RMB 2.36 billion in 2024 to RMB 640 million, a roughly 73% drop.

The core issue lies in the irreplicability of hits.

In 2023, the drama 'The Knockout' drove the average daily membership count to 129 million in a single season, adding 17 million new members in that quarter—a record for domestic video platforms. However, iQIYI has not replicated such a miracle since 2024.

Long-form video platforms have consistently struggled with the 'rollercoaster' fate, soaring with hits and plummeting without them.

The external environment is equally pressing. According to QuestMobile data, in August 2018, Tencent Video, iQIYI, and Youku had monthly active users of 530 million, 565 million, and 470 million, respectively. By June 2025, these numbers had shrunk to 363 million, 356 million, and 201 million.

Against this backdrop, Gong Yu has pushed AI to the forefront, making it one of the few new stories iQIYI can still tell.

II. Can AI Reduce Costs, but Can It Create Another 'The Knockout'?

In my view, the difficulty of iQIYI's 'decentralized' transformation lies not in AI technology itself but in its attempt to fundamentally reconstruct the production relations of the film and television industry.

The AI artist library is the core of iQIYI's decentralization strategy. Without large-scale artist licensing, digital avatars cannot become production assets available for AIGC creators.

However, artists disagree. On the 20th, representatives of artists such as Yu Hewei, Zhang Ruoyun, Li Yitong, and Wang Churan, who were rumored to have joined the AI artist library, issued denials, stating that no AI licensing agreements had been signed.

iQIYI officially responded that participation only indicates 'willingness,' and specific projects require separate licensing negotiations. Regardless of whether this explanation holds, the process of 'announcing first, then denying' itself reflects the popular online saying: 'The world is just a shoddy operation.'

A deeper issue lies in the complexity of the licensing mechanism itself.

If project-based licensing is adopted, every AI drama and digital character would require renewed actor confirmation. This means that the 'mass production' originally intended through AI would still be constrained by highly manual processes at critical stages.

Moreover, audiences may not buy it.

Gong Yu said at the conference, 'Everyone knows how hard actors work—staying in Hengdian for four or five months, working thirteen or fourteen hours a day with no personal life. With AI licensing, they could have a life like ordinary white-collar workers—still busy, but with some personal time. They might earn a bit less per project, but instead of taking two projects a year, they could take four. But I don’t recommend taking fourteen projects—that would flood the market. That won’t work.'

Gong Yu aims to reduce actors' burdens and produce more works for audiences.

He believes that when AI reduces production costs to between one-third and one-tenth of the original, the number of creators and works will explode, thereby stimulating a surge in user film and television consumption. This logic holds in economics but faces a critical variable in actual operations: the hit rate.

Youku data shows that from January to late March this year, the platform released over 14,000 AI-animated dramas, with a daily output of 470 episodes, yet less than 4% became hits.

This indicates that while AI can lower production barriers, it cannot lower the barrier to high-quality works.

Its biggest flaw is the lack of human authenticity—audiences can instinctively tell when AI performances feel hollow. The essence of film and television consumption is emotional resonance, and while AI can simulate performances, it cannot replicate human warmth. When content production becomes fully industrialized, audience aesthetic fatigue will arrive sooner than expected.

Tencent Vice President and Tencent Online Video Chairman Sun Zhonghuai holds a contrasting view. Sun believes that in the AI era, content supply will explode—'possibly ten to a hundred times more than before'—but the creative threshold for top-tier content will not decrease; instead, it will rise. 'At the top, there will still be even more exquisite premium content, with the threshold only getting higher.'""Thus, iQIYI's 'decentralized' platform strategy may only solve the problem of insufficient content quantity, but the industry's real bottleneck is the scarcity of high-quality content.

III. Long-Form Video Platforms Launch an AI Arms Race

In reality, embracing AI is not iQIYI's solo act—the three major long-form video platforms are engaged in a 'AI arms race' with differentiated paths.

Youku has chosen a dual-wheel drive of art and technology.

Youku President Wu Qian positions AI as a productivity system deeply embedded in the entire content production process. Her core judgment is: 'In the AI era, the rarest assets are not technological tools but super creators who can master both creativity and technology. Humans provide warmth and soul, while technology handles efficiency and processes—the two complement and empower each other.'""Youku is all-out building (working hard to build) an integrated talent development network for 'screenwriting, directing, and acting,' sowing seeds for composite talents who 'understand both AI and content' through a billion-yuan support plan. Youku's path emphasizes industrial application and talent cultivation, focusing on AI 'empowerment' rather than 'replacement.'""Tencent Video has raised the banner of human-machine co-creation.

Tencent Online Video Chairman Sun Zhonghuai explicitly stated that the platform's cooperation logic would shift from 'recognizing projects' to 'recognizing people,' with creative capabilities concentrating from organizational systems to individuals and small teams. The platform needs to focus on the sustained creative capabilities of these entities, shifting from investing in single large projects to long-term binding with high-quality teams.

Tencent has opened its AI toolchain, reformed its revenue-sharing mechanism to continuously benefit creative teams, and even opened its IP assets to allow lightweight co-creation. Sun revealed that a fully AI-produced long-form drama will premiere in the third quarter of this year. Tencent has strong confidence, backed by capital, IP, and an ecosystem, allowing it to pursue a high-profile strategy.

iQIYI, on the other hand, is betting on 'decentralized' transformation, taking the most aggressive path. This approach is essentially a 'light asset' strategy, using AI to reduce content procurement costs.

While the three platforms' paths differ, they all reflect a shared anxiety over the failure of long-form video business models. Over the past few years, the user base for long-form video has shrunk significantly.

In stark contrast is the explosion of short dramas. Hongguo Free Short Dramas reached 236 million monthly active users in September 2025, surpassing Bilibili and Youku, and approaching Mango TV and iQIYI. The user base for micro-short dramas has reached 696 million, with the market size exceeding RMB 100 billion for the first time in 2025.

Additionally, the divergent paths of the three platforms stem from their vastly different resource endowments.

Tencent is backed by the Tencent ecosystem, Youku benefits from Alibaba's Great Entertainment traffic synergy, while iQIYI, spun off from Baidu, faces the capital market alone, with the smallest scale and greatest financial pressure.

These resource constraints are directly reflected in their strategic choices. While Tencent and Youku act as both platforms and content creators, iQIYI has proactively decentralized and reduced its self-produced content.

In theory, iQIYI's strategy has its advantages—the more open the ecosystem and the more creators it attracts, the greater the likelihood of 'finding quality in quantity.'""However, the problem is that while Tencent and Youku are building long-term supply capabilities through 'talent cultivation' and 'team binding,' iQIYI's platform model may face another risk: creators can freely move, and content can be distributed across multiple platforms, meaning high-quality assets may not necessarily precipitate (settle) within the platform.

At the same time, as AIGC content floods in, the platform's control over top-tier content will weaken, and the stability of its membership system and brand positioning will also be tested.

A more practical issue is that this remains a 'money-burning game.'""Subsidizing creators and expanding content supply inherently require sustained investment. Over the past decade, the long-form video industry has already incurred huge costs for content yet failed to establish a solid profit model.

In this new race, a key determinant of victory will be financial reserves—and iQIYI happens to be the platform with the least ammunition among the three.