Regarding Ali’s financial report, the industry has never aligned the granularity. The positive side of
is that Taotian gmv has grown by double digits and AI-related revenue has grown by triple digits, indicating that the money invested by Alibaba in the first quarter was not in vain.
On the negative side, the profit decline is real. Net profit fell 96% year-on-year, and U.S. stocks fell more than 8% intraday. Moreover, the growth indicators lack comparison with competing products, and it is difficult to say whether it will win back the market.
But there is a business that can be seen without aligning the granularity, which is quite cool. Throughout the fiscal year, Alibaba's goodwill was impaired by 10.5 billion, a year-on-year increase of 288%. The main reason for the impairment of goodwill was "Youku".
subtraction did not reduce Youku
In the first quarter, Alibaba did a lot of subtraction.
Taobao China has terminated its agreement with Xpeng Motors. It also plans to sell 33 million Xpeng Motors ads (American depositary shares) with a total value of approximately US$314 million. 10 million shares of Bilibili and 8.43 million shares of Zhiwen Group were cleared.
According to public information, in the past year, Kuaigou Taxi, SenseTime Technology, Enlight Media, and Huayi Brothers have all been "minusions" of Alibaba. There was even news of retail sales of Ele.me and Hema.
But only Youku has been holding back Alibaba, and it is terrifyingly stable. The last time
disclosed Youku's growth data in a financial report was in the second quarter of 2023, when Youku's subscription revenue increased by 5% year-on-year. The reason was the solo drama "Long Moon Ember", which had a Douban score of only 5.6 and became the highest-rated online drama at the time. In the third quarter, subscription revenue increased, but advertising revenue fell; in the fourth quarter, Youku’s goodwill impairment dragged down operating profits.
In the first quarter of this year, Great Entertainment became the only department among the six major business sectors to experience a decline in performance, with a year-on-year decrease of 1%. The reason for the decline is Youku again. Alibaba used the words "Youku's revenue declined slightly."
is actually not light.
refers to the past. In the four years from 2019 to 2022, Youku’s average daily paying users have increased and its losses have narrowed. Among them, 88vip members have played a key role. In the financial report for the fourth quarter of 2019, Youku’s average daily number of paying users increased by 59% year-on-year, and the contribution of 88vip members was mentioned. From then until the first quarter of last year, Youku no longer mentioned the related role of 88vip members.
This is a subtle change. Obviously, it is not that 88vip is failing. In the first quarter, the number of 88vip members exceeded 35 million, a double-digit increase year-on-year. The real reason can only be that 88vip cannot support the "adou" Youku.
Comparison is harmful. Tencent, which released its financial report on the same day, saw the number of paying members of Tencent's long video jump by 8% to 116 million due to the influence of dramas such as "Flowers", "Hunting Ice" and "Perfect World Season 4". In addition, the cost-effectiveness improvement of long-form videos also contributed to the overall gross profit growth.
Youku, once the number one long-form video company, is now dragging down revenue and profits, and has become a negative asset for Alibaba.
7 old IP, things are different and people are different
This year is the 10th year after Alibaba acquired Youku. In less than 10 years, Alibaba has become the industry's number one and "leading" in the industry, and there is no hope of overtaking Tencent and iQiyi.
In the beginning, Youku had a lot of highlights. "Never Expected" pioneered short plays. To this day, a number of short plays originally launched by Wanhetianyi are still widely disseminated on short video platforms.
In 2017, "White Night" set off a craze for domestic online dramas. This work, which once scored over 9 points on Douban, has exceeded 4 billion views on the Youku platform and was purchased by Netflix for overseas distribution rights. This show was very popular at the time, and viewers who saw the ending knew that this was a work destined to have a second season, or even more seasons. Youku said in October of that year that the project of "White Night Chase 2" was officially approved.
However, Youku failed to continue to produce high-profile works, and even delayed many works that could have been used while the iron was hot. The project of "White Night Chase 2" has been waiting for 7 years. The poster was not released until this year, and it is expected to be released in the summer. According to the materials, director Wang Wei, screenwriter's fingerprints, and main characters Pan Yueming and Wang Longzheng have all been retained.
However, things have changed in the past 7 years.The original chief producer Yuan Yumei resigned in 2019, the top leader at the time Yang Weidong was imprisoned for accepting bribes, and the leading actor Pan Yueming lost a lot of weight.
In the past 7 years, most users may have forgotten the plot of the first part. Users who are interested in spending time to complete the plot can imagine their demands for this drama after having their appetites whetted for seven years. If this drama fails to show a high standard, it is likely to be a big flop.
Even if this drama is successful, it is impossible to expect that a drama will be as good as water or fire. Referring to iQiyi's "The Hidden Corner", this drama was launched in June 2020 and also attracted national attention. However, iQiyi's revenue in the second and third quarters of that year increased by 4% and fell by 3% year-on-year respectively. The growth in the number of total subscription members in the second quarter was only one million, and then quickly dropped to the pre-broadcast level in the fourth quarter.
Youku’s turnaround requires continuous high-quality work output. But obviously, now, from Alibaba to Youku, there is neither the will nor enough resources to start new competition.
Now Alibaba’s focus is obviously on Taotian. In the past fiscal year, Taotian merged the Guangwang team and Taobao Live to form the Taobao Content E-commerce Division to integrate live broadcast with short videos, graphics and text. Taotian produces its own content, which creates a clear sense of separation between the entire entertainment industry and the group's business, and its strategic position is very awkward.
Youku’s long video logic seems lengthy. You must first consider what content users want to see, find ways to attract users to stay on the platform, and then think about commercial monetization. Moreover, for a long time, the income of long videos has only been subscriptions and advertising, which is not in line with Alibaba’s philosophy.
Alibaba has no content gene
If Youku is only considered in terms of business proportion, strategic position and other importance, then there is no need to discuss this former industry number one. But if you look at the small to see the big, Youku reflects the DNA of the entire Alibaba Group.
Alibaba’s main focus has always been to “make it easy to do business in the world.” "Business" is the core of Alibaba, and this is true for five of the six major sectors. From a business perspective, the first identity of users is “consumers” and contributors to the business.
Even in the current strategic adjustment period, Alibaba’s logic has not changed.
In the financial report, Alibaba said when talking about Taotian, "We are increasing strategic investment in areas such as price-competitive product supply, customer service, membership system rights and technology, aiming to improve user experience and thereby increase consumer retention rate. , and increase the frequency of purchases. "
It can be seen that Alibaba's ultimate goal is to increase the retention rate and increase the frequency of purchases.
can achieve this goal by serving users well and providing high-quality and low-priced products. The original deposit expansion, playing games in teams to unlock coupons, etc. can also achieve this goal. The difference is that the former has a positive effect on users, while the latter has a negative effect on routine users. For the platform, the conversion effect of the former is even worse than that of the latter.
Compared with this business perspective, from the content perspective, consumer experience is the first element, establishing a stable and strong relationship with consumers, and then improving commercial realization. Douyin, Kuaishou and even Pinduoduo all follow this logic.
Compared with Pinduoduo, Pinduoduo said in the 2023 Four Seasons Report, "We will continue to adhere to a high-quality development strategy, be committed to providing high-value and excellent services, and continue to build a prosperous community to benefit everyone."
here The focus is on community prosperity. This is not to say that Pinduoduo’s representation is correct and Alibaba must have problems, but it means that Pinduoduo, at least on the surface, pays more attention to the construction of platform ecology, that is, doing business on the basis of being less scolded.
If it is a content gene, Youku at least knows that the prerequisite for cost control is high-quality dramas and variety shows, not just "Long Moon Ember". VIP membership rights do not include TV screen projection, which may make consumers "curse" and buy memberships, but they will definitely not be loyal enough to the platform. Alibaba will also know that a series of complex discount algorithms may increase profit margins, but consumers will not feel happy from it.
In the past, relying on its dominant position in e-commerce, Alibaba was able to make these attempts freely. In the booming consumer market, this approach has brought Alibaba's performance to soar, but consumer complaints are noise that cannot be ignored.
Nowadays, Alibaba has canceled pre-sales and order collection, which can be regarded as an important change. But competitors don't have these complicated practices. Moreover, the premise of these changes is the pressure from competitors, which makes Ali realize that the past gameplay is unsustainable.
Perhaps, Youku’s decline is the epitome of Alibaba. Competitors know how to establish a positive relationship with users better than Alibaba. But now, when competitors reach 80 points and Alibaba reaches 80 points from 60 points, I am afraid it is not enough to change everything.
Source: Digital Business
Author: yoking
Statement: This article is only for knowledge sharing, just to convey more information! This article does not constitute any investment advice and anyone making investment decisions based on it shall do so at their own risk.
