IQiyi said that the membership fee will increase in price
Editor’s Note: This article comes from WeChat public account “ Zinc scale “(ID: znkedu), text | Xu Wei, edit | Pan Juan .
Recently, Yang Xianghua, iQiyi’s member and president of the overseas business group, publicly stated: “IQiyi is brewing rising membership fees. It does not rule out that members will raise prices first, but there is no timetable.”
Yang Xianghua’s voice Not long ago, iQiyi released the third quarter of 2019 financial report. As the domestic “video streaming media first share”, this financial report data is indeed a bit bleak-the financial report shows that in Q3 2019, iQiyi ’s revenue was about 7.4 billion yuan, and the membership fee income was more than half of 3.7 billion yuan. It increased by 6.98%, but the growth rate slowed down, and the range of losses further increased, with a net loss of 3.6 billion yuan.
This is the biggest loss since iQIYI’s financial report was disclosed, which is about 480 million more than the same period in 18 years. At present, iQiyi’s members have exceeded 100 million, reaching the ceiling of the industry. This means that under the situation that the proportion of membership fee income increases year by year and the proportion of advertising revenue declines year by year, the membership fee must be doubled than the current one to turn a deficit.
However, the substantial increase in membership fees will inevitably face the huge loss of members. At least as of now, Tencent Video and Youku, the first echelon of the domestic online video industry, are not optimistic, and huge losses are a foregone conclusion, but no news of member price increases has been heard.
Once iQiyi takes the lead in raising prices for members, what should iQiyi do if content is not dominant and Tencent Video and Youku do not follow up?
Head loss video for years in a row
Iqiyi wants to increase the price of its members, in fact, there are many reasons that seem to make sense.
At present, the domestic online video industry as a whole is showing the competitive situation of iQiyi, Tencent Video, and Youku “Three Kingdoms Killing”. They are backed by Baidu, Tencent, and Ali, three Internet giants, firmly occupying the first echelon of the industry. .
2019 has been announced according to BATQ3 financial report shows that in terms of the number of paid users, iQiyi took the lead in breaking through 100 million, with paid members reaching 106 million, a year-on-year increase of 31%; Tencent Video ranked second with a total of 102 million paid members, an increase of 22% year-on-year Although the number of paid members was not disclosed, the average daily subscribers increased by 47% year-on-year. This growth rate is regarded as the first in the industry.
But these Head giants have to face the difficult situation of continuous rapid growth in revenue and number of users on the one hand, and high losses on the other-currently Second-line Mango TV claims to be the only platform to achieve net profit, but there is still a huge gap in the number of members compared to Atenyou.
For iQiyi, it has been losing money for many years now. According to iQiyi’s prospectus, iQiyi’s net losses in 2015, 2016, and 2017 were 2.575 billion yuan, 3.074 billion yuan, and 3.763 billion yuan, respectively.
After its listing, only from the data point of view, the loss situation has not improved. As for Tencent Video and Youku, they also made annual losses of 8 billion yuan at the beginning of the year.
Source: Titanium Media
However, it is difficult for the three companies to see a turnaround. Sun Zhonghuai, CEO of Penguin Films and Television, talked about the current pressure and the future of the industry, and bluntly said that this situation is unlikely to improve greatly in one and a half years. “The difficulty of our work is similar to that of Xitian.” p>
In addition to not knowing how to monetize the traffic that has been obtained, the advent of the demographic dividend period of the online video industry is further increasing the difficulty of turning around these video platforms and increasing the risk of loss.
Data from QuestMobile shows that as of June 2019, the number of monthly active users of online video was 964 million, compared with 942 million in the same period last year, which basically can be said to have not increased.
When the domestic market shifts from incremental competition to stock competition, whether it is entering a more “hot” competition stage, or seeking new incremental markets such as iQiyi going overseas, it means to relevant companies. MoreThis supply-demand relationship in bidding has also led to further increases in costs.
Although after the reorganization of the film and television industry, such as sky-high film pay, tax reform, and video content purchase costs have been controlled to a certain extent, they have not turned them around.
For example, in Q3 2019, iQiyi ’s content cost climbed to 6.2 billion yuan, accounting for 84% of total revenue, but only 76% of total cost. This means that revenue cannot even cover costs, let alone profit.
Besides the high cost, For these head platforms, there is another key problem: how to monetize the traffic after seizing the market.
At present, there are only two main monetization methods in the industry: one is from the realization of traffic to advertising, and the other is to attract users to pay for viewing through scarce content (although there are other commercial monetization channels such as malls, derivatives, and literature novels, but The actual effect is far less than both).
However, the “2018 China Advertising Market Review Report” shows that from the perspective of overall advertising trends in 2018, advertisers have become stricter in controlling advertising budgets.
In the case of tight budgets, advertisers are more inclined to deliver media that are more direct and easy to measure, as well as media platforms with strong exposure, strong influence, and large scope. For example, elevator advertising and short video platforms such as Douyin and Kuaishou.
Iqiyi CEO Gong Yu revealed in the third quarter of the 2019 financial report conference call that “the bottleneck of the revenue growth of brand advertising is that advertisers’ budgets have been significantly reduced compared to last year.”
As for attracting users to pay through scarce content, first of all, it is necessary to invest huge amounts of money to obtain scarce content resources, which will undoubtedly increase the cost burden; secondly, as iQiyi envisages, reducing operating costs through price increases, Cultivation was achieved after the industry burned more than a decade of money. It is also unknown whether the price will rebound after the price increase.
Overall, At present, if you simply rely on the two mainstream monetization methods, it may be difficult to achieve loss or even profit. Head online video platforms such as iQiyi urgently need to find the correct commercial monetization model to deal with the worse Living environment.
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Where is the “China Netflix”?
Perhaps from the perspective of iQiyi, looking at the world and continuing to burn money, there have been successful cases through the model of member price increases, such as the US streaming media giant Netflix (Netflix)-in January this year, it announced a comprehensive increase Membership fees range from 13% to 18%.
In October this year, Netflix’s third quarter financial report showed that total revenue was 5.245 billion US dollars, a year-on-year increase of 31.1%, and the number of new paid users was 6.8 million. Net profit attributable to Netflix was $ 665 million, a year-on-year increase of 65
2019 has been announced according to BATQ3 financial report shows that in terms of the number of paid users, iQiyi took the lead in breaking through 100 million, with paid members reaching 106 million, a year-on-year increase of 31%; Tencent Video ranked second with a total of 102 million paid members, an increase of 22% year-on-year Although the number of paid members was not disclosed, the average daily subscribers increased by 47% year-on-year. This growth rate is regarded as the first in the industry.
But these Head giants have to face the difficult situation of continuous rapid growth in revenue and number of users on the one hand, and high losses on the other-currently Second-line Mango TV claims to be the only platform to achieve net profit, but there is still a huge gap in the number of members compared to Atenyou.
For iQiyi, it has been losing money for many years now. According to iQiyi’s prospectus, iQiyi’s net losses in 2015, 2016, and 2017 were 2.575 billion yuan, 3.074 billion yuan, and 3.763 billion yuan, respectively.
After its listing, only from the data point of view, the loss situation has not improved. As for Tencent Video and Youku, they also made annual losses of 8 billion yuan at the beginning of the year.
Source: Titanium Media
However, it is difficult for the three companies to see a turnaround. Sun Zhonghuai, CEO of Penguin Films and Television, talked about the current pressure and the future of the industry, and bluntly said that this situation is unlikely to improve greatly in one and a half years. “The difficulty of our work is similar to that of Xitian.” p>
In addition to not knowing how to monetize the traffic that has been obtained, the advent of the demographic dividend period of the online video industry is further increasing the difficulty of turning around these video platforms and increasing the risk of loss.
Data from QuestMobile shows that as of June 2019, the number of monthly active users of online video was 964 million, compared with 942 million in the same period last year, which basically can be said to have not increased.
When the domestic market shifts from incremental competition to stock competition, whether it is entering a more “hot” competition stage, or seeking new incremental markets such as iQiyi going overseas, it means to relevant companies. MoreThis supply-demand relationship in bidding has also led to further increases in costs.
Although after the reorganization of the film and television industry, such as sky-high film pay, tax reform, and video content purchase costs have been controlled to a certain extent, they have not turned them around.
For example, in Q3 2019, iQiyi ’s content cost climbed to 6.2 billion yuan, accounting for 84% of total revenue, but only 76% of total cost. This means that revenue cannot even cover costs, let alone profit.
Besides the high cost, For these head platforms, there is another key problem: how to monetize the traffic after seizing the market.
At present, there are only two main monetization methods in the industry: one is from the realization of traffic to advertising, and the other is to attract users to pay for viewing through scarce content (although there are other commercial monetization channels such as malls, derivatives, and literature novels, but The actual effect is far less than both).
However, the “2018 China Advertising Market Review Report” shows that from the perspective of overall advertising trends in 2018, advertisers have become stricter in controlling advertising budgets.
In the case of tight budgets, advertisers are more inclined to deliver media that are more direct and easy to measure, as well as media platforms with strong exposure, strong influence, and large scope. For example, elevator advertising and short video platforms such as Douyin and Kuaishou.
Iqiyi CEO Gong Yu revealed in the third quarter of the 2019 financial report conference call that “the bottleneck of the revenue growth of brand advertising is that advertisers’ budgets have been significantly reduced compared to last year.”
As for attracting users to pay through scarce content, first of all, it is necessary to invest huge amounts of money to obtain scarce content resources, which will undoubtedly increase the cost burden; secondly, as iQiyi envisages, reducing operating costs through price increases, Cultivation was achieved after the industry burned more than a decade of money. It is also unknown whether the price will rebound after the price increase.
Overall, At present, if you simply rely on the two mainstream monetization methods, it may be difficult to achieve loss or even profit. Head online video platforms such as iQiyi urgently need to find the correct commercial monetization model to deal with the worse Living environment.