Tech and data play a huge role for iQIYI, China’s second-largest streaming platform, as a way to innovate and step out ahead of its competitors, iQIYI founder and CEO Yu Gong explained in a keynote speech Monday at FilMart.

“We don’t see a lot of innovation-driven entertainment companies yet. We want to be the one,” he said. “But innovation is not gambling. We need to be brave, but have the capacity to take calculated risks.”

Big Data is the key to ensuring the firm is putting its chips on the surest bets.

The iQIYI site currently has 200 million to 300 million viewers per day. It retains and analyzes “a huge amount of data” from all of them, Gong said, including info about logins, gender, location and what kinds of services are used and programs preferred, allowing the company to generate detailed assessments of what kinds of responses different content might elicit.

“We need predictions like this so we can lower the risks on our programs and other services. We need to know what viewers want to see and what we they don’t so that our [AI automated] recommendations won’t annoy them.”

A lot of work is put into classifying audience groups, determining who exactly is watching what. “I’m not talking about determining actual ages — I’m talking about people’s mentality. Some people just act like teenage girls” in their viewing choices, he said to laughs.

The company employs about 4,000 software engineers and has hundreds of server rooms in China. A number of them are at work stamping out the spread of fake data, as the country is full of companies that specialize in faking views, comments or reviews to trick algorithms — and through them, advertisers and investors — into thinking products are more popular than they are.

Gong said that while total detection of fakery was impossible, his teams had reached a 2% accuracy level, so low that now violators “are just spending money but not gaining any advantages” from trying to game the system. The company has eliminated YouTube-style view counts on its streaming platform, instead determining popularity via internal, hidden algorithms sharing stats only with advertisers and content creators.

“We believe this method is better than simply showing the number of views. This has become an industry standard and more and more difficult to cheat,” he said.

Numbers aside, the firm still believes that exclusive, quality content remains the key to success, especially as the Chinese online streaming landscape shifts away from user-generated content to professionally generated content. “I really believe in the impact of marketing, but content is in fact king. The Internet has brought the cost of communication way down, so when we have good content in our hands it can be easily promoted to everyone everywhere,” said Gong.

But the company is struggling to find standout, unique programming. “There’s too much homogenous content at the moment. We’ve seen a lot of proposals, but they’re all very similar It’s hard to find something that really leaves an impression,” he said, discussing variety shows, which have exploded as an online genre in China in recent years.

iQIYI lost $1.3 billion in 2018, largely due to higher spending on original content production.

The content creation landscape is changing now that a single season of such a show can easily command a budget of $2.9 million to $4.5 million (RMB20 million to RMB30 million), Gong said. With such a price tag, only the existing big Chinese streaming platforms are able to take on the necessary commercial risks of production at that scale.

“I think the quality of variety shows will get better and better, but the room for innovation will get smaller and smaller,” as the number of different content creators decreases and the field is consolidated, Gong said.