In the AI era, the long-form video industry needs to transform its growth logic.

On August 18, iQIYI released its financial report for the second quarter of 2026. Data shows that during the reporting period, iQIYI recorded total revenue of RMB 6.29 billion, of which membership service revenue was RMB 4.01 billion, online advertising service revenue was RMB 1.25 billion, content distribution revenue was RMB 680 million, and other revenue was RMB 340 million; in the same period, Non-GAAP operating loss narrowed significantly from the previous quarter, approaching break-even.

Over the past year, the market's judgments on iQIYI have mainly focused on two things: how to reduce losses and how to avoid user churn. Judging from the performance of the Q2 financial report, these challenges still exist objectively.

However, while the market is focusing on the pressure, another set of easily overlooked operational signals also brings investors a brand new perspective for observation:

Operating cash flow has turned positive, and the self-sustainability capability has been verified;

Content distribution revenue surged by 56% year-on-year, and non-membership businesses such as external copyright distribution and IP licensing have shown a positive growth trend;

The AI business has moved from the exploration stage to the quantifiable commercial implementation stage, and both the number of AI short dramas and their unique visitors (UV) account for more than 50% of the total short drama segment;

Overseas membership revenue expanded by 40% year-on-year, which is becoming a new growth curve.

These figures are not just isolated financial highlights. The deeper implication behind them is that they reflect early signals of the company's business model restructuring. Over the past year, against the general backdrop of pressure on the traditional long-video business, iQIYI has taken the initiative to promote two major strategic transformations: "decentralization transformation and full investment in AI". The structural improvement of the financial data in this quarter is the initial realization of the company's strategic shift, marking that iQIYI is gradually getting rid of its heavy historical burden and starting the in-depth reshaping of its valuation and business logic.

Equalized AI Productivity, Transformations in the Film and Television Industry Have Emerged

Under the wave of AI, the transformation of the film and television industry first broke through from the content production link.

In the traditional film and television industry system, film and television production is highly dependent on heavy-asset, long-cycle linear collaboration. Script, shooting, lighting, art, post-production, each link corresponds to high and rigid expenditures on manpower, funds and equipment. This extremely high entry threshold has restricted a large number of mid-tier creators by resource constraints, making it difficult to turn ideas into finished films.

With the rapid development of multimodal technology, AI has now deeply penetrated into all stages of film and television production, from the early auxiliary script conception, character design polishing, storyboard and conceptual art design; to the rapid generation of virtual scenes, digital assets and lens schemes in the middle of shooting; to editing, color grading, dubbing, soundtrack and special effect synthesis in post-production. A large number of repetitive tasks have been disassembled into reusable technical capabilities and algorithm modules, which directly reduces the production cycle and creation costs.

This endows mid-tier creators with industrial productivity that can compete with large studios, and continuously expands the production possibility boundary of the industry. While technology lowers the participation threshold, the growth logic and competitive relationship of the industry have also shifted.

First of all, boosted by AI's liberation of productivity, the industry has entered an era of "big content explosion", new forms of works are constantly emerging, and content themes are more diversified and verticalized. In this context, the focus of industry competition has also shifted from "who is more in line with the platform's traffic push direction" to "who can create better and newer content at lower cost and faster speed". The industry has entered a productivity-driven benign growth stage, and the content ecology presents the characteristics of high-frequency, diversified and sustainable growth.

Secondly, although AI has liberated productivity, it does not mean that "the commercial closed loop will form naturally". The stable output of film and television works not only requires underlying computing power, fine-tuning of vertical film and television large models, and film-level AI tools with high consistency of multimodal assets, but also requires new distribution and monetization commercial paths that adapt to the transformation of content from production to consumption, so that technological dividends can be transformed into sustainable commercial dividends.

In short, the underlying reconstruction of AI is overturning the original competition boundaries and commercial inertia of the film and television industry. Facing the structural changes of the industry, iQIYI is still the one who "takes the first bite of the crab".

Internal Cost Reduction, External Empowerment: Anchoring the "AI Platform for Content Industry"

The first step of iQIYI's transformation is to fully "go all in on AI". Essentially, through the infrastructure construction of technology, it breaks the capital market's traditional perception of it as a "long-video streaming platform", and re-establishes a new pattern of "AI platform for content industry" on the industry supply side.

In April this year, Nado Pro, iQIYI's professional-grade AIGC film and television production platform, was officially put into commercial use. After three months of iteration, more than 200 functions have been launched cumulatively, realizing key capabilities such as controllable lighting, controllable scheduling, and controllable performance, reconstructing the traditional film and television workflow, optimizing the content production chain, and effectively solving the structural pain points in traditional creation such as high cost, random effect, and large collaboration friction.

The just-released Q2 financial report shows that the production cost and cycle of AIGC projects can be reduced by 70%-90%. In June, both the number of AI short dramas and their unique visitors (UV) accounted for more than 50% of the total short drama segment. In the second quarter, the reserve of AI-native manhua dramas surged, and the play volume and viewing duration increased significantly quarter-on-quarter.

Recently, Nado Pro has also simultaneously launched functional sections such as talent pool, commercial order market, asset trading market, and Skill Store. The asset trading market has opened more than 800 digital assets, the timbre library has launched 150 differentiated timbres, and the IP library has opened more than 6,500 IP resources.

When this set of figures was announced at the iQIYI Creator Conference on August 20, it actually sent a clear signal to AIGC creators: Nado Pro does not intend to be just a production tool, it is striving to evolve into a platform that can not only monetize content production, but also monetize experience and skills, where creators can connect projects, produce and deliver work, and flexibly complete commercial monetization.

To achieve all this, it obviously has to rely on iQIYI's more than ten years of accumulated platform user scale, content operation experience and distribution and monetization capabilities. By efficiently connecting content supply and demand, opening up the monetization chain for creators, lowering the entry threshold for small and medium-sized creators, and also helping them realize a positive cycle of creation, growth, value realization and re-creation.

The disclosed revenue-sharing policy shows that the animation track has upgraded the Xinghe AI Animation Project 2.0, which allows creators to participate in revenue sharing as long as each episode is 3 minutes long and the total duration reaches 120 minutes. At the same time, the platform's own literary IP library is open to short drama and manhua drama creators for free, creators can use it at zero cost after completing adaptation and launching, which comprehensively reduces the cost and access threshold of AI content creation.

Data from the one-stop creation and operation platform "iQIYI Creator Account" shows that the number of creators and uploaded works has increased significantly since April, among which the categories with short production cycle, light volume and suitable for AI production have increased significantly.

Gong Yu, CEO of iQIYI, said that while the platform is deeply cultivating AI-enabled live-action shooting and AIGC long-form film and television creation, it is also fully promoting the transformation to a non-centralized social media. These two strategies empower each other, continuously lower the threshold of content creation, expand the creator team, and activate the platform's content vitality. Nado Pro's development strategy is to reduce the development and production cost of professional content internally, broaden the commercialization path externally, and convert professional production capabilities into incremental revenue.

This series of actions marks that iQIYI is using AI to explore and reshape its own monetization path. It not only reduces the cost of content development and production internally, but also effectively broadens the external commercialization path, converting the long-accumulated content and production soft power into high-certainty, large-scale quantifiable technology premium.

Platform Steps Back, Ecology Moves Forward: The "Decentralization" Transformation

In this quarter, iQIYI's content supply has achieved explosive growth. The average daily upload volume of different categories of content on iQIYI Creator Account alone has a quarter-on-quarter increase ranging from 30% to 500%. The explosion on the supply side forces the systematic reshaping of production relations and distribution patterns. Another highlight of iQIYI's transformation points to the strategic upgrade from a "centralized traffic distribution platform" to a "decentralized creator ecology platform".

In the traditional model, content screening is highly dependent on manual review, subjective scheduling and limited focus image distribution, and the platform highly controls the content life cycle. After the introduction of AIGC, in the face of the exponentially exploding content flood, iQIYI voluntarily stepped back and repositioned itself as a "middle zone connecting creators and users". Under the decentralized model, creators determine the content direction, audiences choose hit works according to their preferences, and the platform steps back to provide tools, channels, monetization and transaction rules. Film and television creation has thus changed from "heavy capital game" to "prosperity of the whole ecology".

In order to seize the dividends of role transformation, iQIYI has built a seven-creator service system consisting of "AI Film and Television Creation Camp, Nado·AIGC Venture Capital Conference, Peter Pau·iQIYI Film Theater, iQIYI AIGC Creative Center, Nado Pro, iQIYI Creator Account, and Creator Customer Service System" through specific measures such as hierarchical operation, transparent revenue-sharing mechanism and diversified monetization channels, to solve the practical pain points of creators such as scattered operations, insufficient resources and no path for growth in one stop.

The core of long-term ecological maintenance lies in the benefit distribution mechanism. According to the information disclosed at the Creator Conference, the maximum revenue sharing ratio for non-guaranteed medium-length drama projects on iQIYI has reached 130%; original content of animation and manhua dramas enjoys 1.2 times high revenue sharing support; medium-length dramas (including AIGC medium-length dramas) launched from April to the end of 2026, and AIGC children's content launched from September to December this year can enjoy 1.2 times exclusive revenue sharing. The transparent stepped revenue-sharing system with additional special fund incentives ensures that high-quality content of all kinds of creators can obtain stable income, and guides the industry to abandon inefficient involution and focus on polishing high-quality works.

This reset of production relations has triggered profound industry thinking. When the platform is no longer the "ultimate payer" for content performance, the financial and market risks of the platform are naturally dispersed through the decentralized ecology. Under the new rules, a large number of mid-tier creators no longer need to compete for recommendation positions through internal friction, make good use of AI tools to reduce costs, and accurately serve vertical audiences on iQIYI Creator Account. And truly excellent IP works will naturally emerge to the top of the content ecological pyramid in the market-oriented mechanism.

Where Does Future Growth Come From?

As Gong Yu said, the two strategies empower each other, continuously lower the threshold of content creation, expand the creator team, activate the platform's content vitality, and form a development flywheel. This will fundamentally reshape iQIYI's revenue structure, financial resilience and imagination space.

On the one hand, the full-link penetration of AI lowers the production threshold and marginal cost of per unit content, enabling the platform to efficiently expand the content library and creator matrix, thereby driving the growth of user base and activity.

At the same time, the decentralized ecology introduces market assessment, which partially distributes the platform's heavy capital occupation pressure and content procurement risk to the market. The platform's operating leverage shifts from heavy to light, releasing cash flow elasticity.

On the other hand, "AI + decentralization" has spawned a non-linear composite revenue model, broadening the platform's growth model of "membership subscription + advertising". Under the new model, traditional business serves as the "basic disk" of growth, precipitating membership loyalty and platform tonality; the decentralized ecology injects stable liquidity into the platform relying on high-frequency revenue sharing mechanism and rapid turnover; and the overseas business, with the efficiency improvement of AI, has realized low-cost rapid reuse in more markets, opening the ceiling of global performance expansion. This has also shown initial signs in the Q2 report: in the second quarter, multi-language local AI virtual human short dramas in English, Thai, Korean and other languages were launched, and the self-produced projects recovered the production cost in the current quarter, with stable profit space.

But at the present stage, it needs to be admitted that iQIYI's transformation is still in the early stage, and the business pressure left over from the old model and the pain of transformation still exist. However, the structural improvement of data in the Q2 financial report undoubtedly provides early positive verification signals for the company's transformation. This is not only iQIYI's self-redemption under heavy pressure, but also provides a reference transformation sample for the domestic streaming media industry.

From the perspective of valuation, in the past, the capital market regarded iQIYI as a high-risk, highly uncertain film and television content business, and its valuation multiplier was suppressed by the film and television cycle for a long time. After the transformation, the core value of iQIYI will no longer depend on how many hit works it has, but on how much AI production and monetization capabilities it can provide for creators, and how large the low-cost, cross-border secondary distribution and premium space of massive digital IP assets realized through AI technology under the new composite revenue model is.

The migration of the valuation model also means that perhaps the current capital market needs to abandon the traditional valuation scale and use a brand new evaluation framework to re-examine iQIYI's long-term growth value.