The summer of the band, the winter of iQiyi.
Editor’s note: This article is from WeChat public account “iFeng Technology (ID: ifeng_tech), author Hua Zijian, editor Yu Hao.
IQIYI “Summer of the Band” becomes a popular variety show
2019 was a difficult year for Iqiyi, especially after the success of 2018. “The Summer of the Band” was a success. Many people said that “the band ushered in the summer,” but Iqi Art met the winter.
In the morning of August 20, iQIYI released its unaudited financial report for the second quarter of FY 2019 as of June 30. According to the report, iQiyi’s total revenue for the second quarter was RMB 7.1 billion (the same below, about US$1 billion), a year-on-year increase of 43%; the net loss was RMB 2.3 billion (US$339 million), the same period last year. The net loss was 2.1 billion yuan, an increase of 9.5% year-on-year.
Although loss is the norm for online video platforms, iQiyi experienced significant growth in the second quarter, with operating losses of 1.9 billion yuan and an operating loss rate of 26%. The data are 1.3 billion yuan and 22% respectively. Comparing with analysts’ expectations, iQiyi’s revenue in the second quarter was slightly lower and its losses were slightly higher.
iQiyi’s share price fell 9.29% in after-hours trading, down $1.68 from the closing price of $18.08 on Monday’s regular trading day, with a provisional offer of $16.4.
In the past 52 weeks, iQiyi’s share price has been up to $32.46 and the lowest is $14.35. Compared with the highest point, iQiyi’s share price fell by nearly 50% based on the latest quotation.
In returning to the financial report, iQiyi’s revenue in member services in the second quarter was 3.4 billion yuan, up 38% year-on-year; online advertising service business revenue was 2.2 billion yuan, down from the same period last year.16%; content distribution business revenue was 517.9 million yuan, down 4% year-on-year; other business revenue was 979.2 million yuan, an increase of 82%.
On June 22, iQiyi announced that its total number of subscribers has exceeded 100 million. But with 100 million members, there are a lot of uncertainties, including content innovation, content bounces, and policy changes.
The cost and risk of content innovation
In 2018, iQiyi’s “Yanqi Raiders” became the annual drama.
As of the end of August 30th, the total broadcast volume of “Yanlan Raiders” exceeded 15 billion, and the maximum daily broadcast volume reached 700 million. In addition, the number of topics on the Weibo has exceeded 11 billion, and the number of discussions has exceeded 6 million. The number of Weibo fans who have starred in the show has grown to around 2 million, and some even have 5 million.
In comparison, Tencent Video’s subsequent broadcasts such as Ruan Biography have not reached this level; Youku video lacks explosive content, and after re-injection to the Russian World Cup, continue to play with PP Sports on the live broadcast of the event. Cooperation; but in the series and variety, it is obviously behind the first two.
At the user level, their purchase of members is essentially a vote for content. Which platform has the explosive content, which platform can get more paid users. Explosive content is a necessity for the video platform and is the key to attracting and retaining users. But the charm of the content is that no one can predict which studio will succeed, nor can it predict which episode will fail.
The founder and CEO of Aiqiyi, Gong Yu, once said in an interview that long video is essentially a copyright business and a creative business. The randomness of creativity leads to no platform that can monopolize all content, especially explosive content, so competition is the eternal theme of online video platforms.
Therefore, even after the listing, Iqiyi’s investment in content continues to increase. The second quarter financial report shows that the cost of Aiqiyi’s revenue is 7 billion yuan, a year-on-year increase of 14%, which is basically the same as the total revenue, which is equivalent to the income of 1 yuan for 1 yuan. The main reason is that the content cost continues. rise.
In 2019, in addition to “The Summer of the Band”, Iqiyi lacks an episode of the explosion. On the contrary, Youku’s “Changan Twelve Hours” has been highly praised by the industry and will still be launched. The variety show is catching up with iQiyi. This is one of the intensified competition in the industry.