iQiyi pivots to AI-generated content

Nadou Pro is not a single model — it is a routing layer. It fuses iQIYI's proprietary QiZhi multimodal large language models with third-party generators including SeeDance, Kling, Vidu, Hailuo, and WAN, then exposes scriptwriting, storyboard, video, and audio generation through one creator-facing interface. Senior Vice President Wenfeng Liu casts the product as 'creation, production, and distribution into one seamless, intelligent workflow,' which is another way of saying iQiyi wants to own the rails between a prompt and a premiere.

Sixteen upcoming works spanning sci-fi, fantasy, historical, and contemporary genres have already been produced on Nadou Pro, giving iQiyi a running start on its summer-2026 goal of a commercially successful AI-generated film. Model-agnosticism is the strategic tell: by keeping third-party vendors plugged in, iQiyi can ride whichever video model leads the frontier on any given quarter while still capturing the distribution margin. That is a sharply different bet from vertically-integrated Hollywood VFX pipelines — and it is a bet that compute supplier competition, not any one model, is the durable moat.

The pivot did not arrive in a vacuum. iQiyi's Q1 2026 revenue is expected to fall 13%, attributed to competition from short-form platforms like Douyin — a secular squeeze that no prestige-drama budget can out-spend. iQiyi has also posted losses every year from its 2010 founding through its first full non-GAAP operating profit in 2023, so the marginal yuan of risk tolerance for experimental cost structures is unusually high for a company its size.

Meanwhile, multimodal video models crossed a threshold iQiyi was positioned to exploit, with CEO Gong Yu now declaring 'no longer any technical barriers to producing long-form AI dramas.' The result is a convergence trade: a revenue base bleeding to short-form video, a cost base that can be reset by AI, and a competitor (Tencent Video's Sun Zhonghuai) publicly expecting a premium AI-generated long-drama debut within a quarter. Gong Yu's 'once in a decade' framing is self-serving, but the macro setup genuinely constrains the option set.

The unit-economics gap iQiyi is chasing is not a rounding error. A traditional Chinese drama episode costs roughly $200,000 to $500,000 to produce; an AI-generated one, in the sharper framing from Humai's analysis, 'costs the electricity.' Sun Zhonghuai's structural claim — that a five-to-twenty-person AI team can do the work of hundreds — puts a multiplier on that per-episode delta across an entire content slate. Layer on a 20% bonus revenue share for AI creators and a 30% net-profit share for Peter Pau AI Theater finalists, and iQiyi is also externalizing its cost of content discovery to creators willing to work for royalty-style upside instead of upfront fees.

But the economics only work if two unknowns resolve favorably. First, audience willingness-to-pay for AI content must not collapse relative to human-made drama — a meaningful concern given r/cdramasfans subscribers openly threatening non-renewal. Second, compute prices for the underlying video models must stay on a declining curve. If either assumption slips, the 'electricity cost' comparison narrows and the 20% creator bonus starts looking like a permanent structural tax rather than a promotional incentive.

Gong Yu's unveiling of a 117-artist 'AI Talent Database' produced a reputational injury that is unusual for a Chinese tech announcement. The 'iQIYI Went Crazy' hashtag trended on Weibo, and named performers — Zhang Ruoyun, Li Yitong, Wang Churan, and Yu Hewei — publicly stated 'we have never signed any AI-related authorization,' forcing iQIYI to clarify the list only reflected a willingness to discuss. That is a consent failure publicly narrated by the consenting parties themselves.

Audience sentiment on Reddit's r/cdramasfans is overwhelmingly negative, with users citing China's CAC 'No Consent = No Use' rule and explicitly threatening to cancel subscriptions; the CEO's euphemism 'performance migration' for motion-captured actor doubles drew open mockery. Fan accounts amplifying the '100+ registered actor likenesses' plus '20% revenue share' framing turned a product launch into a power-imbalance story about a platform leveraging its contracted artists. The political risk is not that iQiyi cannot legally proceed — it probably can — but that the pipeline of A-list talent willing to continue working with iQiyi under normal dramas narrows precisely when the company still needs prestige hits to fund the AI transition.

Gong Yu has been unusually explicit about the trade-off: he pledged to keep investing in professionally produced shows, but admitted 'that kind of content will shrink as a share of the platform over time.' Layered with his suggestion that actors could shoot 14 dramas a year instead of 4 — and that 'filming may one day become intangible cultural heritage' — the directional claim is that human-led prestige drama becomes a curated minority of the catalog, not the flagship. The Netflix-style app itself is being rebuilt as a social destination, not a lean-back cinema. That reframes iQiyi's product category from streaming service toward UGC-plus-IP platform with AI as the production layer.

Early signal traffic is consistent with that read. Over 2,600 creators from more than 30 countries have joined iQIYI's AI competitions and storytelling lab, the Peter Pau-led AI Theater is already shipping titles like 'Amazing Girl,' and virtual-production project usage at iQiyi jumped 125% year-over-year in the first half of 2025. If the summer AI-film goal lands commercially, the 2026 slate of 400+ new titles blending long, short, and AI-powered content becomes a template for the next decade. If it does not, iQiyi has still used the pivot to reset its cost base and shift creator payment structure toward revenue share — a floor outcome that explains why Wall Street's cited 'cautiously optimistic' stance is not naive.