For iQiyi Inc., 2026 is proving to be a turbulent year. On May 18th, the company released its first-quarter 2026 financial results, revealing a total revenue of only RMB 6.23 billion, representing a year-over-year decline of approximately 13.35%. Furthermore, the company remained unprofitable for the quarter, reporting a Non-GAAP operating loss of RMB 150 million, a stark contrast to the operating profit of RMB 460 million in the same period of 2025.

Amidst a prolonged industry downturn and competitive pressures from short-form video and content, iQiyi has faced significant challenges over the past two years. Revenue has declined for two consecutive years, with a 7% drop in 2025, marking the end of its previous profitability cycle. The first-quarter results further underscore why iQiyi is actively pursuing a Hong Kong IPO and an AI-driven strategy in 2026.

The shift from profit to loss exposes the harsh realities for long-form video platforms in an era of competition for existing users. Examining specific business segments, even iQiyi's core membership service failed to mask a year-over-year decline. In Q1 2026, membership service revenue was RMB 4.2 billion, showing a slight 2% increase quarter-over-quarter but shrinking by RMB 200 million compared to Q1 2025. Additionally, online advertising service revenue fell 6.8% year-over-year to RMB 1.24 billion.

More notably, content distribution revenue plummeted nearly 43% year-over-year to just RMB 360 million for the quarter. This revenue stream has seen a marked decline in recent years, dropping 32% in 2025. Other revenue was halved, falling from RMB 830 million in Q1 2025 to RMB 430 million in Q1 2026.

The decline across iQiyi's main businesses stems primarily from intensifying industry competition, a plateau in long-form video user growth, and the significant encroachment of short-form video and AI-generated short dramas on users' fragmented time and attention, all within a persistent industry winter.

Data indicates that iQiyi's core challenge lies in the apparent ceiling for membership growth, coupled with the intensified conflict between raising subscription prices and mitigating user churn. Reports show that from January to March 2026, iQiyi's monthly active users (MAU) remained at low levels, with March MAU down 16% year-over-year. However, average online time per user increased significantly, peaking at 128 minutes per day in January (up 31% year-over-year).

Despite maintaining a market share advantage in Q1 2026, this did not translate into substantial financial gains. Data shows iQiyi held the top market share in total effective playbacks for long-form series during the quarter, featuring hits like "Crime Punishment 2" and "Chasing Jade" with high popularity metrics.

With traditional growth engines collectively stalling, iQiyi is placing its bets on AI technology. iQiyi's founder and CEO explicitly stated in the Q1 2026 earnings report that the company will leverage AI to reduce content production costs and accelerate the production pipeline.

iQiyi is moving swiftly in AI application. During Q1 2026, the "Bao Zhengxi · iQiyi AI Theater" launched 16 works spanning genres like sci-fi, thriller, and martial arts. Reportedly, these productions fully utilized iQiyi's professional-grade production platform "Nadou Pro," developed based on its self-developed intelligent system for film and TV production.

On April 20th, at the 2026 iQiyi World Conference, the company officially launched Nadou Pro. Concurrently, iQiyi's founder and CEO made the provocative statement that "live-action filming might become intangible cultural heritage," while announcing that over a hundred artists had signed on to join the AI artist library within the Nadou Pro platform. This remark instantly sparked the trending topic "#iQiyiIsCrazy#" online.

Although iQiyi responded that the purpose of establishing the artist library was to facilitate selection and efficient communication for AIGC creators, its radical stance has drawn considerable controversy. Nevertheless, the financially strained iQiyi still needs this new narrative.

In its Q1 2026 total cost bill of RMB 5.23 billion, content costs remained the dominant expense at RMB 3.74 billion. Moreover, iQiyi's free cash flow has declined for two consecutive years, dropping from over RMB 3.3 billion in 2023 to approximately RMB 2 billion in 2024, and further to less than RMB 10 million in 2025. It showed some recovery in Q1 2026, rebounding to RMB 110 million.

iQiyi stands at a critical crossroads in its corporate history. Whether it's promoting the narrative of AI-driven cost reduction through "Nadou Pro" or accelerating its secondary listing in Hong Kong for financing, these moves are fundamentally attempts to break the deadlock as its core business faces pressure. Finding a genuine balance between its AI strategy, its tight funding situation, and the live-action artistic creation essential for long-form video will determine whether this industry giant can truly glimpse the dawn of its next phase.