After the layoffs, can iQiyi save itself by raising prices?

Economic Observation Network reporter Ren Xiaoning On the morning of December 15, iQiyi announced that the membership fee increased. Among them, the continuous monthly subscription is raised from 19 yuan to 22 yuan, the continuous season card is raised from 58 yuan to 63 yuan, the ordinary monthly card is raised from 25 yuan to 30 yuan, and the ordinary season card is raised from 68 yuan to 78 yuan, and the annual card membership fee remains unchanged.

iQiyi responded to the Economic Observation Network that the subscription price of the video platform has been low, and this phenomenon has affected the healthy development of the industry. In order to establish a more benign industrial ecology, let excellent content producers have a return, and ultimately provide members with more and better content, we decided to adjust the price of members.

This is iQIYI's first increase in membership fees after its first price increase in November last year. It is also a big move by iQiyi after the recent layoffs.

Zhang Yi, CEO of Ai Media Consulting, told reporters that iQiyi's recent layoffs and price increases are a two-pronged "self-help" approach, and there will be some cost reductions and revenue improvements in the short term. However, for iQiyi in a dilemma, it is more fundamental to do innovation, whether it is content innovation or business model innovation, it needs to be tried, "there is no opportunity without innovation." ”

After the price increase

In November last year, iQiyi announced a membership fee increase for the first time after nine years of no price increase, which triggered a discussion about whether members would lose.

In terms of the number of members, in Q4, which announced price increases last year, the number of iQiyi members was 101.7 million. This year,iQIYI's latest Q3 financial report data is that the number of members is 103.6 million, and the total number has risen slightly.

From the perspective of membership income, last Q4, iQIYI's membership service revenue was about 3.8 billion yuan. In Q3 this year, membership service revenue was 4.3 billion yuan, and membership revenue increased.

After iQiyi announced the price increase last time, Tencent Video also announced a price increase, and Mango TV also said that it would fully consider the demand and rhythm of price increases as a whole. In this regard, a large number of netizens said that after the membership expires, it will not renew the fee to show resistance.

After iQiyi announced the price increase today, as of press time, other video platforms have not yet reported price increases. The reporter asked Tencent Video and Youku whether they would follow the price increase, and there is no response at present.

On social platforms such as Weibo and Zhihu, some users expressed dissatisfaction with iQiyi's price increase and decided to cancel their membership. However, now there is also another voice, some users said they would support iQiyi, hoping that it would survive, and attached a crying face.

A video industry practitioner lamented to reporters that price increases are a dilemma, "up, users do not buy it." If it does not rise, everyone on the platform has lost money like this, and it is difficult to survive, what to do. He feels that the online consumption habits of domestic users have not really been cultivated, "it is still quite difficult." ”

Can you save yourself?

Whether it is the recent layoffs or the current price increase, it is a kind of open source and cost-saving "self-help" practice of iQiyi. iQiyi has never made a profit in its 11 years, with a cumulative loss of 40 billion yuan and a higher cost. Can layoffs and price increases play a self-help role?

The above-mentioned video industry practitioners believe that the previous layoffs should not affect the foundation of iQIYI, "iQIYI's problem is that the number of employees is too much, even if this time according to the proportion of up to 40%, the number of employees after the layoff is still more than the other several." And iQIYI employees are generally paid less, and we have felt in the circle before that it is better to spend high salaries to invite some more professional people to better retain talents. ”

From the experience of foreign Netflix, price increases are a useful strategy. Netflix, a profitable U.S. video company, has raised its membership fee dozens of times over the past 13 years, raising the north American standard membership fee by 75 percent from $7.99 to $13.99 (about 88 yuan). The most recent price increase was an increase in The fee for South Korean memberships in November. Taking advantage of the popularity of "Squid Games", Netflix announced that the standard fee for two people online at the same time in South Korea will be raised from the current 12,000 won (about 65 yuan) to 13,500 won (about 72.5 yuan), and the premium fee for up to four people online will be raised from 14,500 won to 17,000 won, an increase of 12.5% and 17.2%, respectively.

At present, iQIYI's membership fee accounts for more than 56% of total revenue, but the total number of members is close to the ceiling. As early as the second quarter of 2019, iQIYI's membership exceeded the 100 million mark, and in Q3 2021, the number of iQIYI members is still hovering around 100 million. After the number is close to the ceiling, if you want to get more income, the price increase becomes an inevitable choice.

The same is the experience of Netflix, after the general price increase, the financial performance will increase to a certain extent. After the price increases in 2014, 2015, 2017 and 2020, the number of Netflix members and revenue increased year-on-year and month-on-month.

Good content is needed

However, every time Netflix raises its price, it is accompanied by the birth of a blockbuster drama. Among the dissatisfied users of iQiyi's price increase this time, some people mentioned that there is too little content for iQiyi to watch, especially this year, "There is no good drama, who wants to buy it." ”

In previous years, iQIYI always had one or two explosive programs or variety shows every year, such as "Strange Story", "China Has Hip Hop", "Yanxi Raiders", "Son-in-law", "Hidden Corners", etc. In contrast, iQIYI's explosive content this year is less, which is related to iQIYI's strategy of continuous loss reduction in the past two years.

As a video platform, content is fundamental. Gong Yu also mentioned in an interview earlier that he believes that the main motivation for users to pay is because there is good solo head content, and most of this content comes from original and self-made content.

Zhang Yi also believes that the price increase needs to have a premise, that is, to have independent good content, otherwise users will run away immediately.

After December, some of the dramas and variety shows launched by iQiyi have been recognized again, after the first two "duds" of the Mist Theater, the third "Who is the Murderer" Douban score of 7.1, "Wind Rises Luoyang" is also on the hit list, and the variety show "Annual Comedy Competition" has repeatedly been out of the circle on the hot search. Perhaps, it is these recent hit programs that have given iQiyi the courage to raise prices at this moment.