iQiyi.com Inc, the Netflix-like video streaming arm of Chinese online search engine giant Baidu Inc, has raised $1.53 billion of new funds to compete with its domestic rivals in the ongoing battle for market shares.

Baidu invested $300 million via the form of a convertible bond issuance. Other backers include Hillhouse Capital, Boyu Capital, IDG Capital and Sequoia Capital China, iQiyi said in a statement late on Tuesday.

Baidu Chief Executive Officer Robin Li, said: "iQiyi has been a quality asset and an important part of our ecosystem. With continuous support, Baidu will empower it with artificial intelligence technologies in the future."

In October, 2016, iQiyi said in an annual marketing conference in Shanghai it planned to invest at least 10 billion yuan ($1.45 billion), almost equivalent to the raised money, on content in 2017, covering self-produced dramas, virtual reality shows and other programs.

Ma Shicong, an analyst at Beijing-based internet consultancy Analysys, said: "I expect the money to be spent heavily to acquire patents and exclusive contents, produce originals and develop the paid subscription models."

Ma added that Baidu aimed to beef up the further development of its video streaming subsidiary and gained strengths to nail the Chinese entertainment market.

The video streaming sector has become hotly contested in China. Three major internet giants－Baidu Inc, Alibaba Group Holding Ltd and Tencent Holdings Ltd, the so-called BAT, has invested a lot in their entertainment arms, betting big on China' booming market.

Ma said: "China's video streaming market is growing rapidly. The three giants need to invest lots of money to fuel their subsidiaries' future development and then can take bigger parts of the market. The competition in the entertainment sector will become fiercer."

Statistics from app tracker App Annie showed that China's live streaming market was expected to reach $5 billion by the end of 2017.

According to App Annie, in the period from November 2015 to October 2016, iQiyi ranked the top video-streaming app by revenue in Chinese market. While its two major competitors Tencent Video and Alibaba-backed Youku Tudou Inc ranked in the third place and fifth separately.

Founded in 2010, iQiyi said it had 481 million monthly active end users at December 2016 with an above-average growth rate. And it announced in June 2016 that it had more than 20 million paid subscribers.