HONG KONG—Chinese internet giant Baidu Inc. is planning an initial public offering of its video-streaming site iQiyi.com that could value the unit at up to $5 billion, according to people familiar with the matter.

Baidu is considering listing iQiyi in either Hong Kong or the U.S. next year, the people said. The company is planning to issue a convertible bond or similar instrument to raise funds from investors before the IPO, the people said, although the size and timing of that fundraising wasn’t clear.

iQiyi is expected to raise about $1 billion through the IPO, according to one of the people, but the exact amount remains fluid and terms could change as the company negotiates with prospective investors.

iQiyi said at its annual marketing conference in Shanghai in October that it planned to invest as much as 10 billion yuan ($1.4 billion) to buy and produce content in the coming year.

A spokeswoman for iQiyi declined to comment.