Trapped at home and abroad, iQiyi once again tried to raise prices to break the situation. On December 15, the official Weibo of iQIYI VIP members announced that it will increase the subscription price of iQIYI Gold VIP members from 0:00 on December 16. At the same time, for users who have purchased iQIYI Gold VIP members' continuous monthly/season/annual subscription services before 0:00 on December 16, and have not cancelled until 23:59 on December 15, 2022, the service of maintaining the original price for one year is provided.
iQiyi said that the price of the annual pass remains unchanged, and the increase is mainly for monthly and seasonal cards. The reporter calculated that after the price increase, the gold VIP ordinary monthly subscription members increased from 25 yuan to 30 yuan, an increase of 20%; the continuous monthly subscription was raised from 19 yuan to 22 yuan, an increase of 16%; the ordinary season card members were raised from 68 yuan to 78 yuan, an increase of 15%; the continuous package season was raised from 58 yuan to 63 yuan, an increase of 9%; the price of ordinary and continuous annual card members remained unchanged, 248 yuan and 218 yuan, respectively. Star Diamond membership prices remain unchanged.
The reporter's horizontal comparison found that after the increase in iQIYI members, the fees have been basically the same as or even overtaken by Tencent Video, and they no longer have a price advantage. At present, the unbalanced prices of Tencent Video's monthly, seasonal and annual subscriptions are 20 yuan, 58 yuan and 218 yuan respectively, and the prices of non-consecutive member monthly, seasonal and annual cards are 30 yuan, 68 yuan and 253 yuan respectively.
For this price increase, iQIYI responded: "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 isn't the first time iQiyi has made adjustments to its membership prices. In November 2020, iQIYI made its first adjustment to the subscription fee for the Golden VIP membership service in 9 years. Subsequently, Tencent Video also raised the membership price.
iQIYI's re-increase in membership prices this year has long been foreshadowed, and CEO Gong Yu has repeatedly said that iQIYI's membership price cannot cover the cost of content.
"The rise in membership fees is not innovation, it is an inevitable trend in the development of the industry." In May this year, Gong Yu claimed that even if it does not rely on copyright procurement, the cost of copyright procurement is increasing, "everyone can watch the drama, basically from two million yuan per episode." If it is broadcast alone, it may be six million, eight million, so the cost will increase, and the profit requirements will also rise. ”
In August 2020, Gong Yu said on the second-quarter earnings analyst conference that the monthly subscription fee is still iQiyi's main revenue, "there has been no price increase for so many years, mainly because of competition, but this price is still too low to cover our content costs." ”
The price increase is not without cost, and the most intuitive reflection is that the number of members has plummeted. After the first price increase, iQIYI's membership size fell by 5.2 million from 106.9 million in 2019 to 101.7 million at the end of 2020.
Behind iQIYI's continued price increase, knowing that it is facing the pressure of member loss, is the reality of continuous expansion of losses and weak growth. According to the third quarter report of 2021, iQIYI's revenue was RMB7.6 billion (US$1.2 billion), an increase of 6% year-on-year, and a net loss of RMB1.7 billion (US$268.4 million), compared with a net loss of RMB1.2 billion in the same period last year. Specifically, membership service revenue was 4.3 billion yuan, an increase of 8% year-on-year; online advertising service revenue was 1.7 billion yuan, down 10% year-on-year; content distribution revenue was 627.1 million yuan, an increase of 60% year-on-year; other revenue was 1 billion yuan, an increase of 3% year-on-year.
As the largest source of revenue for membership services, the 8% growth is obviously driven up by price increases. Industry analysts believe that iQiyi chose to raise prices again, or will inject another shot of strength into the revenue of membership services, but also risked increasing the loss of members.
At the same time, iQiyi's cash flow has also begun to tighten. At the end of the quarter of the first three quarters of 2021, iQIYI had cash, cash equivalents, restricted cash and short-term investments totaling 13.3 billion yuan in the first quarter, 12.3 billion yuan in the second quarter and 11 billion yuan in the third quarter, respectively, and the number continued to decrease.
A number of brokerages have expressed concerns about iQiyi's cash flow. Haitong International said in the research report that looking ahead, considering the uncertainty of supervision and the strict budget of advertisers, it is not expected that there will be a significant marginal improvement in iQiyi in the fourth quarter of 2021, and at the current rate of burning money, the company theoretically needs to make another round of financing within 3 to 4 quarters. CITIC Securities Research Report also mentioned that financing difficulties will lead to cash flow disruption risks.
Image source: iQiyi, Tencent