iQIYI's Strategic Content Diversification: A Winning Formula for Sustained Growth in the Evolving Streaming Market

In the hyper-competitive world of over-the-top (OTT) streaming, user attention is the ultimate currency. As audiences increasingly demand content tailored to fragmented viewing habits, platforms that fail to adapt risk obsolescence. iQIYI (IQ), China's leading video streaming service, has emerged as a standout innovator by embracing a dual-format “Long + Short” content strategy. This approach not only addresses the shifting preferences of a mobile-first generation but also positions iQIYI to outmaneuver rivals in a global market where short-form content is reshaping entertainment consumption.

The Fragmented Attention Economy and iQIYI's Response

The modern viewer's attention span is no longer measured in hours; it's measured in seconds. Short-form content—episodic micro-dramas, viral clips, and AI-driven interactivity—has become a dominant force, particularly among younger demographics. iQIYI's “Long + Short” strategy is a calculated response to this reality. By integrating ultra-short scripted series (micro-dramas) with its traditional long-form offerings, the platform caters to both binge-watchers and casual consumers.

According to Q1 2025 data, daily time spent on iQIYI's micro-dramas surged by 300%, while daily unique users rose by 110% compared to December 2024. These metrics underscore the strategy's success in capturing fragmented attention. The micro-dramas, averaging 1–3 minutes per episode, are designed for rapid consumption and high shareability, aligning with the algorithm-driven dynamics of platforms like TikTok and Instagram Reels. Yet, iQIYI's long-form dramas—epic historical sagas and serialized thrillers—remain its crown jewels, retaining a loyal core audience.

AI-Driven Personalization and Monetization

iQIYI's edge lies in its ability to leverage artificial intelligence to enhance both content creation and user engagement. The AI-powered “I Jump” tool allows viewers to skip directly to highlights in long-form videos, reducing friction and improving retention. Meanwhile, the OVA AI chatbot platform—featuring over 1,000 AI characters from popular IPs—has facilitated 1 million user interactions since its April 2025 launch. These innovations not only improve user experience but also create data-driven insights to refine content production.

Financially, the strategy is paying off. Content costs rose 10% sequentially in Q1 2025, reflecting higher investments in premium short-form and long-form content. Yet, this has translated into a 48% year-over-year increase in pricing revenues, driven by micro-dramas and international expansion. iQIYI's segmented app ecosystem—where the main iQIYI app focuses on paid subscriptions and the iQIYI Lite app targets free users with ads—further amplifies monetization potential. This dual-revenue model is particularly effective in lower-tier Chinese cities and among older audiences, where ad-supported content drives virality.

Competitive Edge and Valuation Potential

iQIYI's disciplined execution and AI-optimized production system have created a “blockbuster ratio” higher than its peers. For instance, its long-form dramas consistently rank atop market share charts, while micro-dramas are gaining traction globally. The company's non-GAAP operating income rose 13% sequentially in Q1 2025, a testament to its cost management and pricing power.

From an investor perspective, iQIYI's strategy is a masterclass in balancing short-term costs with long-term value creation. Analysts project $9.27 billion in quarterly revenue by December 2025, a 29% increase, and $1.40 in EPS, a 640% surge. The average one-year price target of $2.02 reflects confidence in the company's ability to sustain growth. With 8 “Strong Buy” and 6 “Buy” ratings from analysts, the stock is undervalued relative to its fundamentals, particularly as it expands into international markets.

Risks and the Road Ahead

While the “Long + Short” strategy is a winner, risks persist. Macroeconomic headwinds could dampen advertising revenue, and the short-form content space is fiercely competitive. However, iQIYI's debt management (reducing convertible debt by 63% year-over-year) and focus on premium content provide a buffer.

For investors, the key takeaway is clear: iQIYI's dual-format approach is not just a trend but a sustainable model. By catering to both deep engagement and quick consumption, the platform is future-proofing itself in a market where attention is the new gold.

Investment Advice

For long-term investors, iQIYI's current valuation offers an attractive entry point. The projected revenue and EPS growth, combined with a strong analyst consensus, justify a bullish stance. However, a hedging strategy—such as shorting the stock if it overextends beyond $2.85 (the high end of analyst price targets)—could mitigate risks tied to macroeconomic volatility or content saturation.

In the evolving OTT landscape, iQIYI's “Long + Short” strategy is a blueprint for success. As the company continues to innovate at the intersection of AI and storytelling, it's not just capturing attention—it's redefining how the world consumes entertainment.