Netease Tech, 6/01/10
Gong Yu, CEO of Baidu's (Nasdaq: BIDU) online video subsidiary Qiyi, said in a recent interview with Reuters that he expects the company to achieve at least RMB 100 mln in advertising revenues next year, to begin breaking even on a quarterly basis in 2012, and to achieve total profitability in 2013.
Gong said that the Qiyi online video platform will make legally licensed video content available for free viewing to users, and will profit primarily from online advertising. The company currently employs about 200 people, of whom about 40 work in sales. Qiyi's advertisers are mostly major brands: in the month since Qiyi went online, the Bank of China, Mengniu Milk, Skyworth (0751.HK), and Midea have all placed ads on Qiyi.
According to Gong, there is great demand among advertisers for low-cost in-video ads. Qiyi's ad prices are 20% to 50% higher than its competitors, and the company plans to continue this pricing arrangement in the future. Gong said that Qiyi will spend approximately RMB 200 mln this year on agreements to license film and television content, half of which has already gone online. The site will spend less on acquiring content rights next year, as its first year has required Qiyi to spend a large initial amount to establish a video library.