IQiyi Loses Online Court Battle Over Early Access to Shows

China's top video streamer was ordered to pay $211 in damages to a gold VIP member.

Jennifer Chan
    Jun 03, 2020 1:15 PM  PT
IQiyi Loses Online Court Battle Over Early Access to Shows
author: Jennifer Chan   

IQiyi Inc. (Nasdaq: IQ) was ordered by the Beijing Internet Court this week to pay $211 to a plaintiff who argued the video streamer breached the agreement with its VIP members.

The plaintiff, Shengwei Wu, claimed that users of the platform got access to new episodes of certain TV shows ahead of the premium members if they paid an extra 42 cents, as reported by Yicai Global. Thus, Wu – a holder of a golden VIP status on iQiyi's entertainment platform – could view the shows later than non-premium viewers who paid the fee – which, he argued, meant a breach of contract.

On Tuesday, Wu won the case and was ordered to receive 1,500 yuan in compensation. The court ruled in a livestreamed hearing that iQiyi's actions damaged his interests, the South China Morning Post said.

The case was filed in December, at about the same time that Tencent Video was involved in a similar lawsuit.

Last month, iQiyi reported 23% year-over-year increase in members for the first quarter. It said it served 118.9 million subscribing users as of March 31, of whom 99.2% were paying members.

Yu Gong, the founder and CEO of iQiyi, said at the time, "The growth was driven by our strong content offerings and audience's surging demand for digital entertainment when sheltering in place amid the outbreak of COVID-19, while our content cost continued to see a moderate increase compared to a year ago."

Membership services revenue makes up the majority of iQiyi's revenues – about 60% in the first trimester, according to its report.

In 2020, China's streaming market is estimated to reach $2.1 billion, up 14.6% year-over-year, according to data from Statista.

Shares in IQ ended more than 3% higher on Wednesday, at $17.78 per American depositary share. Its parent, Baidu Inc. (Nasdaq: BIDU) closed up 4%, at $111.86 per share.

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