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China’s iQIYI in Talks for Indonesia Expansion

Chinese streaming firm iQIYI is in negotiations to expand further into Southeast Asia through a venture with Indonesia’s Media Nusantara Citra.

iQIYI announced its first step outside Chinese-majority territories in June, when it revealed a linkup in Malaysia with pay-TV leader Astro. It also operates in Taiwan.

In April, the company said that it planned to make its app immediately available in 10 countries and territories in Southeast Asia, and then systematically build up local operations.

Indonesia, Malaysia and Thailand, where Chinese rival Tencent Video has already launched, are regarded as prime areas for entertainment growth as their large populations become increasingly affluent.

The arrangement in Indonesia was announced as a done deal by MNC chairman Hary Tanoesoedibjo. But in a statement emailed to Variety, iQIYI said: “We are still in preliminary discussions and have yet to reach a final agreement.”

The MNC statement described a joint venture in which it would own 51% and the Chinese firm 49%. Operations are to start in the fourth quarter, MNC said.

The business model would provide free (AVOD) and paid-for (SVOD) tiers, though no pricing structure or billing system was disclosed. MNC said that the pair would pool their content libraries and that the joint venture company would additionally produce its own content.

“iQIYI will support the JV with their technology and its future development while MNC will be responsible for marketing and promotion as well as regulatory issues,” MNC said in its statement. “MNC has decided to choose iQIYI as a partner in the JV because of its advanced technology, quality Asian/Chinese content and [because it is] part of Baidu, which is the largest search-engine company in China.”

Earlier this week, NASDAQ-listed iQIYI published its second quarter results, which showed it losing a net $339m million (RMB2.3 billion) on revenues of $1.01 billion (RMB7.1 billion) in the three months from April through June. It also confirmed that subscriptions narrowly topped 100 million at the end of June.

The Indonesian OTT industry “is nascent and started developing only in 2016 as numerous players launched. Online piracy is high while the propensity to pay for content online is low. ” consultancy Media Partners Asia said. But the upside is large with 218 million people in Indonesia already using online video, and video advertising growing.

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