The Ghost in the Stream: Why iQIYI’s Aggressive AI Pivot is Backfiring

iQIYI CEO Gong Yu’s vision of replacing human actors with AI digital twins has sparked a massive industry backlash, as top stars deny participating in the platform's new asset library. Faced with a 97% valuation collapse and shrinking revenues, the streaming giant is attempting to use AI to slash costs and woo investors ahead of a Hong Kong listing, but risks alienating the talent and audiences essential to its survival.

A young man in formal attire smiles softly, standing in a park with a basketball hoop in the background.

Key Takeaways

  • 1iQIYI launched 'NaDou Pro,' an AI actor database, claiming 100+ celebrities had signed on, but many top stars immediately issued public denials.
  • 2CEO Gong Yu's 'Media 112 Law' envisions using AI to reduce production costs by 90% while increasing content volume by 100x.
  • 3The pivot is driven by severe financial pressure, including a 97% drop in Nasdaq share price and a return to net losses in 2025.
  • 4The move highlights a growing conflict between the 'efficiency' of short-form AI dramas and the artistic demands of high-end long-form content.
  • 5Industry backlash reflects deep-seated fears regarding digital rights, intellectual property theft, and the loss of human emotion in entertainment.

Editor's
Desk

Strategic Analysis

iQIYI's current predicament is the ultimate case study in the 'platform-talent' power struggle of the AI era. In its desperation to shore up a crumbling balance sheet and secure a Hong Kong IPO, the company has attempted to commodify the one thing that has traditionally been uncommodifiable: the human spark of a star performance. While the cost-savings of AI are mathematically undeniable, iQIYI is making a dangerous strategic bet that efficiency can substitute for cultural relevance. In the Chinese market, where 'short dramas' are already cannibalizing traditional television, iQIYI’s move to join the race to the bottom in production costs may inadvertently destroy the 'premium' branding that justified its subscription model in the first place. The fierce pushback from actors suggests that the industry is not ready to surrender its likenesses to a 'black box' algorithm without clear legal protections and equitable revenue sharing.

China Daily Brief Editorial
Strategic Insight
China Daily Brief

At the 2026 iQIYI World Conference, CEO Gong Yu delivered a provocative prophecy that would either signal the future of entertainment or the industry’s greatest existential threat. Gong suggested that within years, 100% human-made physical productions might become "intangible cultural heritage," mere relics of a pre-automated age. This rhetoric, intended to position the Chinese streaming giant as an AI pioneer, instead ignited a firestorm of controversy that has yet to subside.

Central to the backlash is "NaDou Pro," a digital asset library intended to house the likenesses and performance data of over 100 celebrities. Gong’s vision is a world where a top-tier actor’s workload could double while their physical time on set drops from months to weeks, thanks to a "digital twin" handling the labor. However, the plan hit a wall of reality when a wave of A-list stars, including Zhang Ruoyun and Yu Hewei, issued swift denials of ever signing such digital rights agreements, exposing a massive trust gap between the platform and its talent.

This aggressive push toward automation is not merely a technological whim but a financial necessity. iQIYI, once a high-flyer on the Nasdaq with a peak price of $46, has seen its valuation collapse by over 97% since 2018. With revenues declining for two consecutive years and the company seeking a secondary listing in Hong Kong to raise much-needed capital, Gong is desperate for a "new story" to sell to investors. The proposed "Media 112 Law"—aiming to cut costs tenfold while boosting output a hundredfold—is the centerpiece of this survival narrative.

Yet, the platform's quest for efficiency risks destroying the very soul of its product. While low-cost AI-generated short dramas have exploded in popularity among China’s mobile users, iQIYI’s core identity is built on premium, emotionally resonant long-form series like "The Knockout." Critics argue that by reducing actors to cold digital assets, the platform is ignoring the unquantifiable human empathy that creates a cultural phenomenon, potentially leaving audiences unwilling to pay premium subscription fees for algorithmic mimicry.

As the industry watches this "stress test" unfold, the rift between digital efficiency and artistic integrity has never been wider. iQIYI’s experience serves as a cautionary tale for the global streaming industry: technology can solve the problem of cost, but it cannot easily replace the human connection. If the platform continues to prioritize the "copying" of faces over the cultivation of creativity, it may find itself a leader in a marketplace that has lost its audience.

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