author | Bai Lu
statement | The title image comes from the Internet. The original article of Jingzhe Research Institute, if you need to reprint, please leave a message to apply for opening.
Recently, the suspense drama " Punishment " produced by iQIYI has become the third iQIYI drama that has exceeded 10,000 popularity this year after " World " and " Freeland Jue ". It seems to be confirmed not long ago, iQIYI founder and CEO Gong Yu proposed at the 2022 annual marketing conference, from "opening sources and reducing expenditure" to "calm growth", focusing on the development of high-quality content in the head. The strategic change. According to the latest financial report data released by
iQIYI, iQIYI achieved operating profit for two consecutive quarters in the first half of this year, and its revenue in the first and second quarters decreased by 16% and 24% year-on-year respectively. Some people believe that the reason for iQiyi's continuous profitability is that the significant reduction in content production investment and the reduction of staff size have brought profit margins. However, whether it is the continuous profitable financial report data or the new strategy of "calm growth", iQIYI's current situation and choices have also opened up some new ideas for video sites that have maintained high investment for more than ten years.
video site is difficult to "cook without rice"
For video sites, the issue of profitability has always been a matter full of metaphysics. As early as 2010, there were media reports that iQIYI founder Gong Yu made an optimistic forecast that iQIYI would be fully profitable by 2013. , but the reality is that in the next ten years, from the copyright war to the "Aiyouteng" fierce battle for self-made dramas, to the new pattern of long and short videos, it has not been able to achieve the original goal. On the contrary, it was only after experiencing a huge "open source and throttling" that the "expected" result was long overdue. According to
financial report data, iQIYI’s total revenue in the first half of 2022 was 13.9 billion yuan, a decrease of 11% from 15.5 billion yuan in the same period last year. In addition, iQiyi achieved an operating profit of 219 million in the first half of 2022, compared with a loss of 2.136 billion in the same period last year. Looking at the cost part, the operating cost in the first half of 2022 was 13.7 billion yuan, a decrease of nearly 4 billion yuan compared with the same period last year, and the cost reduction was nearly 22.6%. From the perspective of alone, iQIYI does rely on cost reduction to achieve profitability.
Looking closely at the quarterly data, iQiyi's sales and administrative expenses in the first and second quarters of this year fell by 38% and 32% year-on-year. The 2021 annual report of iQIYI also mentioned that the number of employees of iQIYI has dropped from 8,889 in 2019 to 5,856, and the size of the organization has been reduced by more than 30%. Although the cannot bluntly say that the reduction in the number of employees has made a "significant contribution" to the reduction of sales and administrative expenses, the causal relationship is not false.
In fact, the reduction of content investment is more worthy of attention than the issue of personnel costs, because the entire video website industry, including iQiyi, is facing the problem of insufficient content supply. At the financial report meeting in the third quarter of last year, Gong Yu, founder of iQiyi, also pointed out that the biggest problem encountered by video sites is the serious shortage of content supply.
According to the official website of National Bureau of Statistics , from 2019 to 2021, the number of TV series produced in my country was 254, 202 and 194 respectively, and the output of TV series has declined for three consecutive years. As for the reasons for the reduction in production, there are not only the stagnation of content production directly caused by the epidemic, but also the adjustment of regulatory review policies, which has led to the delay of the launch of individual themed works.
It should be noted that due to the content production and review cycle, not all of the TV series currently being broadcast are completed this year. Although there is content inventory accumulated in the past, the trend of continuous decline in production in the past three years will inevitably affect the content supply of video websites. According to
public data, in 2020, the total number of online dramas on various video platforms will be 294. By 2021, this number will drop to 266, a drop of 10%. As a video website, 's revenue mainly depends on the membership payment and advertising revenue brought by the platform content. Once the content supply is reduced, the revenue will naturally be seriously affected.
members and content, together to improve quality and reduce the underlying logic of
video website business, is to put content"Sold twice". Before the content is officially launched, it is "sold" to brands to obtain advertising revenue, and then "sold" to users to obtain value-added service fees such as membership fees and on-demand fees after it is launched. In the case of 's reduced content supply, the reduction in advertising revenue is extremely difficult to recover.
iQIYI's second-quarter financial report shows that of the total revenue of 6.7 billion yuan, online advertising service revenue was 1.2 billion yuan, a year-on-year decrease of 35%. Membership service revenue reached 4.3 billion yuan, a year-on-year increase of 7%, accounting for 64% of total revenue. In contrast, iQIYI's advertising revenue not only plummeted, but its share of total revenue also dropped to 17%, less than half of membership revenue. You must know that iQIYI, which was once the best in drama series, often has an equal share of its advertising revenue and membership revenue. The reason why
happened is not only because of the scarcity of content supply, which directly led to the reduction of advertising, but also because of the adjustment of iQiyi's membership policy. The Jingzhe Research Institute found that iQIYI took the lead in raising membership prices in November 2020, with packages ranging from 15% to 30%. In December 2021, iQIYI announced a second increase in membership subscription prices, with an increase of 9% to 20%.
Generally speaking, the increase in membership price will dissuade a group of price-sensitive users, resulting in a significant decrease in the number of members, which is indeed the case from the financial report data. In the second quarter of this year, iQIYI had 98.3 million subscription members, which was not only lower than the 99.2 million in the same period in 2021, but also lost 3.1 million members compared to 101 million in the first quarter of this year. However, in the case of the loss of members, the ability to achieve a 7% increase in member income is not just an arithmetic problem.
In the history of China's Internet development, free has always been regarded as the core logic of the rapid rise of emerging industries. The video website also adopted an open and shared free model at the beginning of its development. Many netizens have also experienced the era of rampant pirated players. However, content production cannot go unpaid, especially when pirated videos are widely spread on the Internet, upstream content production companies have lost their motivation to produce content. If the goes on like this, not only will users face the result of no movies to watch, but the entire industry chain from content production to distribution will suffer disaster.
For video sites that are looking forward to entering the capital market, copyright risks cannot be ignored. Therefore, since 2014, major video sites have started a "copyright battle". Fueled by the capital behind it, video sites have invested in exclusive copyright regardless of the cost, resulting in a skyrocketing copyright price, which has even skyrocketed 30 times a year. During the
period, video websites also started membership business by relying on exclusive copyrighted content. They did not seek high-quality but large-volume content layout, which prompted the growth of online video users to gradually approach the ceiling. However, compared with Jinshan Yinhai, which invested in copyright, the membership business income is only a footnote in the IPO book, which reflects future expectations.
In November 2020, iQIYI adjusted the subscription fee for its Gold VIP membership service for the first time in 9 years, which also led to a price hike in the entire video website industry. From the results, the package price of iQIYI Gold VIP monthly card has been raised from 19 yuan to 22 yuan, which is not much different from the average product price of well-known brands of milk tea and coffee. For young users who have been chasing dramas for a long time, it is not Difficult to accept.
To a certain extent, the increase in membership fees is also "improving quality and reducing quantity" for users. Although will lead to a significant reduction in the number of users in the short term, from the perspective of user value, it has also screened out users who originally paid for high-quality content. Whether it is for video websites or the content production industry, it is a matter of long-term value.
video website needs more popular
A background that cannot be ignored is that Chinese video websites have been walking on thin ice for more than two decades. In the early days of
, the proliferation of copyright-free content violated the vested interests of TV stations and theaters, and video websites became the main target of supervision of the "copyright storm". Then, the influx of capital hot money set off a copyright war. Video websites focus on a bunch of operational data such as user scale and online time all day long, fighting to the death for exclusive copyright. after that, the self-made film and television comprehensive model has opened the era of the rational layout of the entire industry of video websites, but the self-made content has been repeatedly regulated by audit supervision. At present, with the rise of short video platforms, and create copyright content to provoke long and short videos.
Video sites don't have a moment when they really focus on content and users. And they have always regarded themselves as managers of Internet video traffic.
Youku founder Gu Yongqiang once said in 2010 that Youku's goal is to become Hulu with the scale of YouTube. Because Youku has professional videos that YouTube lacks, and the growing scale of Chinese netizens is unmatched by Hulu. Looking at this sentence 10 years later, I still can't find any faults, but the original "target" and comparison have no meaning.
Let’s look at iQIYI, which is known as the “Chinese version of Netflix”. In recent years, through a series of high-quality self-made dramas such as “ The Hidden Corner ”, it has polished up the “Mist Theater” signboard. "And other works out of the circle. However, whether can produce high-quality content for a long time, and rely on a mature business operation model to directly profit from the content, is still the biggest gap between iQiyi and the title of "Chinese version of Netflix".
Previously, iQIYI also responded to the outside world's question about its membership fee increase, saying that the membership subscription price of the video platform has been low, and this phenomenon has affected the healthy development of the industry. This set of rhetoric is reasonable. is just that video websites including iQiyi have never really wanted to solve the problems that the whole industry is facing. The
video sites have never thought about having to choose between the membership business and the advertising revenue. The high-quality content of is the "magic stone" for video sites. As long as the cast lineup is good, member users and brands will rush to pay for it. It's a pity that traffic stars and special themes are both limited now, and the rapidly declining industry environment has also led to the lack of access to high-quality content. As a result, the video sites that could "sell twice" content have no stock to sell, and the loss of member users and brand placement has become inevitable. An industry insider from
shared an interesting point of view with Jingzhe Research Institute: Based on industry competition, it is impossible for video sites to voluntarily give up any one of membership business and advertising revenue, because giving up is equivalent to giving it to other friends. . In addition, in the case of uncertainty about whether the content can become popular, advertising revenue is a profitable path with lower opportunity cost and uncertainty.
can see that in the past, in addition to purchasing a large amount of copyrighted content with their own traffic, video sites also launched advertising forms such as "exclusive" advertisements for members, in-stream advertisements, and small advertising theaters, as well as advanced on-demand and mobile phones, computers, tablets, etc. Differential paid membership services differentiated by different devices such as TVs, and these ways of increasing revenue, without exception, come at the expense of user experience. In the Internet industry with user experience as its core competitiveness, video websites are probably one of the few "rebels".
Of course, video sites aren't really at a dead end either. The video website believes that the membership price is too low, and hopes to increase the platform's income by increasing the membership fee, and then feed back the content production process to generate high-quality content. There is no problem with this logic. No one has had the opportunity to start this before, because the price increase means the loss of users, thus affecting the brand's willingness to launch. At present, the content supply has begun to decrease, and the brand has taken the initiative to reduce the delivery. Instead, it is the right time to take the initiative to "improve the quality and reduce the quantity" of the membership scale. Looking back on the development of video websites,
will find that every industry has an important development moment, and it is inseparable from the presence of high-quality popular content. From " Wonderful Flower Talks ", "The Hidden Corner", " Band's Summer " to "Canglan Jue", iQIYI itself is also a beneficiary of high-quality content, but video sites including iQIYI, We never dare to let go of our obsession with internet traffic business and focus more on high-quality content production.
is just like Gu Yongqiang once described, there is no shortage of use in China's Internet video industryThere is no shortage of professional content, but the gap in high-quality content has not yet been filled today after more than 10 years. Perhaps the goal of the "Chinese version of Netflix" should not be continuous profitability, but to continuously launch popular content based on user demand. Under iQIYI's strategy of "calm growth" in the second half of the year, I hope that members who renew their subscriptions on video sites can really wait for value-for-money content experience in the future.
Weekly number one
