The video-streaming platform iQIYI boasts nearly 105 million subscribers, most of whom pay a membership fee as well as extra charges to access certain platform content, but at least one person – a Shanghai lawyer – is not a fan.
The lawyer, Wu Shangwei, said in a Weibo post on Monday that he would sue iQIYI, which has been dubbed "China's Netflix" for "damaging subscribers' rights and interests."
This is Wu's second lawsuit against iQIYI, and he is scheduled for a court hearing on September 23. Wu said he is looking forward to another court battle, even though iQIYI will come prepared with a new attorney. Wu added that he had no choice but to carry out the "fight re-match," as he alleges iQIYI shows no respect to subscribers.
Battling A Giant
Wu sued iQIYI earlier this year for damaging users' rights. Despite being an iQIYI Golden VIP subscriber, for which iQIYI charges 20 yuan per month for what amounts to "the privilege to watch advance series per the user agreement," Wu was still asked to pay extra fees to be able to view "Joy Of Life" – a fantasy drama promoted by iQIYI.
On June 3, during a live-streamed hearing, the Beijing Internet Court ruled that iQIYI violated users' rights by charging a 3 yuan per episode premium to its Golden VIP subscribers for earlier access. The court ruled in Wu's favor and declared that iQIYI must pay him 1,500 yuan.
However, the court also ruled that iQIYI's special early access business model in itself was not illegal. In response, iQIYI thanked the court for allowing the company its "exploration" for this new business model.
The ruling inflamed iQIYI users' heated discussions, evoking over 540 million comments on the social media site Weibo. Some netizens said the special early access feature is unethical because it dimishes the preferred rights of their membership.
Re-entering The Fray
"I have decided not to be an iQIYI subscriber any more. They have severely invaded my personal privacy." Wu posted in a statement the day after his first court case with iQIYI, when he said iQIYI showed hundred of pages of his personal viewership record to the court.
On July 16, Wu officially filed his second case against iQIYI and posted an article on Weibo, announcing his "second battle" with the company. He said he couldn't allow the company to invade his privacy and disclose his personal information.
Following this, iQIYI responded with its own Weibo posting, saying all Wu's personal information was collected and disclosed in accordance with the court's demands. It also launched a new category of paid subscription, "S-diamond," which costs twice the Golden VIP membership, claiming a wider range of privileges including earlier access.
At A Loss
In the face of ongoing fiscal losses, both iQIYI and its rival, Tencent Video, launched a feature offering "earlier access" last year for web-series productions in which these platforms invested. It allows the platforms to further monetize their VIP member base. As of March, over 20 web-series had adopted the "earlier access" business model, according to public statistics.
Partially taking the advantage of the "stay-at-home" economy during the earlier COVID-19 pandemic in China, subscribers to iQIYI during the first quarter increased to 119 million, a rise of 23% year-on-year. Membership subscription fees reached 4.6 billion yuan ($654.5 million) during this period, a rise of 35% compared with one year earlier, according to the company's unaudited first-half fiscal report.
As of this June, membership subscriptions on iQIYI had deceased to 105 million, while revenues in subscription fees were 4.046 billion yuan. Despite membership enhancing revenues, the company reported a net loss of 2.9 billion yuan during the first quarter and 1.4 billion in the second.
With 10 consecutive years of net loss, analysts said iQIYI has yet to discover its own successful business model even though it has made an effort to duplicate Netflix and Disney business models.