Author | Zheng Xuan
In the turbulent times, iQiyi made a "dangerous move".
At noon today, iQIYI announced a comprehensive increase in membership prices. From 0:00 on December 16, the Gold VIP ordinary monthly subscription members were raised from 25 yuan to 30 yuan, and the continuous monthly subscription members were raised from 19 yuan to 22 yuan, an increase of about 20%; the ordinary season card members were raised from 68 yuan to 78 yuan, and the continuous season 58 yuan was raised to 63 yuan, an increase of about 10%; the price of ordinary and consecutive annual card members remained unchanged.
iQIYI released the price increase news through the Weibo account "iQIYI VIP Member" instead of the official micro of iQIYI, perhaps to deal with it in a low-key manner, but contrary to expectations, the news of "iQIYI member price increase" still rushed to the first place in Weibo hot search within a few hours. Comments are also diverse, with some users expressing dissatisfaction with the price increase, and some users, although they agree with the appropriate price increase, but believe that the premise is that the video platform can provide more high-quality content.
In response, iQIYI responded to Geek Park: "The subscription price of the video platform has always 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. We will continue to strive to do a good job in content, products, and services to users. Thank you for your understanding and support."
25 yuan / month iQIYI gold membership, low?
Before the price increase, iQIYI's standard membership price was 25 yuan / month (19 yuan / month for consecutive monthly subscriptions), which is not low in the eyes of many ordinary consumers.
Their basis is mainly to compare horizontally with other domestic mainstream video platforms, Tencent Video's current membership subscription price is VIP monthly card 30 yuan / month, continuous monthly subscription 20 yuan / month; Youku VIP price is 19 yuan / month, but if you become Ali 88VIP, you can enjoy Youku membership at the same time; B station large membership price is 1250 points a month, to get these points need to contract (Note: for B station drama) worth 25 yuan of drama.
Compared with the main competitors, iQIYI's membership price is not low, but as the announcement responded, iQIYI believes that it is not too low compared with domestic counterparts, but that the price of domestic video platform memberships is generally low.
Netflix US subscription price (from: Netflix official website)
Taking iQiyi's benchmark Netflix (Netflix) as an example, the subscription price of the basic version of the US region is 8.99 US dollars / month (about 60 yuan / month), the standard version subscription price of the standard version that can watch HD videos and use on 2 mobile devices is 13.99 US dollars / month (about 91 yuan / month), and the premium version of the premium version that can watch ultra-clear videos is 17.99 US dollars / month (about 128 yuan / month). Even after iQIYI's price increase, Netflix's equivalent standard membership service price is 4-5 times that of iQIYI.
In major developed countries and regions such as the euro area, Japan and South Korea, Hong Kong, and Taiwan, the subscription price of Netflix is basically equivalent to that of the United States after conversion according to the exchange rate. There are certain discounts in developing countries, the lowest of which is the populous Indian region, and the cheapest basic subscription price is only 149 rupees / month (about 12 yuan), only about half of the Youaitengs.
The global pricing strategy of other overseas video platforms is similar to that of Netflix, with Disney+ currently costing $8.99/month (about $60/month) and YouTube subscription service Premium at $11.99/month (about $76/month). The price of its subscription service is basically 2-4 times that of its Chinese counterparts.
There are differences in the consumption level between China and the United States, and there is also an objective gap in the quality of content services provided by Youaiteng and Netflix and Disney, and the prices of the two cannot be directly compared, but at the moment when the cost of domestic content production continues to rise and the growth of subscribers begins to touch the ceiling, increasing the unit price of subscription members is also an inevitable choice for domestic video platforms.
iQIYI's net loss reached 7 billion yuan in 2020 and 4.4 billion yuan in the first three quarters of 2021, and the narrowing of losses is very limited while revenue growth is stagnant. In order to achieve a turnaround, in addition to layoffs and reduce expenses, increasing the subscription income of members, which accounts for more than half of the total revenue, is the key.
But subscriber growth on long-form video platforms has hit the ceiling. iQIYI and Tencent video subscribers both broke through 100 million in the second half of 2019, and since then, in addition to a brief surge in the first quarter of 2020, which is seriously affected by the epidemic, the number of iQIYI subscription members has remained around 100 million for the next six quarters. As long videos shift from incremental competition to stock operations, it is no secret that iQiyi wants to increase the price of members.
At the end of 2019, iQIYI CEO Gong Yu said at the earnings conference that in 2020, the ARPU value of subscription members will be increased by reducing promotions and increasing the standard membership price (Note: average revenue per user), but because of the sudden epidemic, Gong Yu changed his mouth in early 2020, saying that he would consider price increases after the end of the epidemic.
But from Delta to Omicron, the epidemic has become a tug-of-war, and Gong Yu, who can't wait, sacrificed a three-plate axe after the bad three-quarter report, first a large-scale layoff to reduce costs, and increasing the price of members is the second move to increase income.
Price increases don't necessarily solve iQiyi's crisis
The membership price is indeed a big shackle on iQiyi's neck, but the price increase may not be enough to solve all problems.
iQIYI lost 4.4 billion yuan in the first three quarters of this year, and currently has about 100 million subscription members, increasing the ARPU value by 3-5 yuan per month, which can bring 2.7-4.5 billion yuan in revenue, which can theoretically help iQIYI turn losses into profits in one go. Even considering the constant price of the annual membership and the fact that some users who have already subscribed will not adjust the price in the short term, iQIYI's actual increase in ARPU will be lower than the increased membership price, but it can still significantly narrow the loss.
However, here is a premise: the number of iQIYI member subscriptions will not be significantly lost as the subscription price increases. Judging from the situation of Tencent Video next door, this problem does not seem to worry too much, after raising the membership price in April this year, Tencent Video has hardly seen a wide range of user loss.
But for the current iQiyi, this is a problem that has to be cautious. In fact, this year, iQIYI is in a dilemma at the content production level, and the three mist theaters "Goodbye, That Day", "Octagon Pavilion Mist" and "Fatal Wish" that have high hopes this year have performed mediocrely, and the average rating of Douban is less than 6 points, which is very different from last year's hits "The Hidden Corner" and "The Silent Truth", which is also considered to be an important reason for the stagnation of iQIYI's subscription membership growth this year.
In addition, iQIYI's self-made variety show section has also been hit hard, and in August this year, iQIYI announced the complete cancellation of the draft variety show, which has been one of the keys to iQIYI's user and advertising growth in the past two years.
In the case of the overall lack of content this year, iQiyi is saddled with a lot of risks, but in the long run, this is not necessarily a bad thing.
The content industry can not always rely on capital to burn money, in the market education has been completed, user growth touched the ceiling of the moment, so that a platform such as Youaiteng has enough hematopoietic ability to feed themselves, there is spare energy to invest in the production of more and better film and television content, for enriching cultural life, and even further going to sea to improve the competitiveness of Chinese culture, are very necessary.
However, if the price increase can not provide better content, standing still or even backwards, users are not obliged to pay for the loss of Youaiteng. In the final analysis, iQIYI needs to continue to work hard to do a good job in content, products, and users, as promised in its reply, and increase prices to really become a turning point for iQIYI, otherwise this will become the beginning of iQIYI's downward spiral.