Image source @ Visual China
Wen 丨 Pole Business, Author 丨 Yang Ming, Editor 丨 Liu Shanshan
In the first two months of 2022, the news about the long video industry mainly revolved around several aspects:
First, the suspense drama "Beginning" was launched, because the novelty of the theme "loop" attracted a lot of attention, which was the first explosion of the long video year, and because of the bad ending of the big ending, it was scolded on the hot search;
Second, iQiyi, which has suffered huge losses, is still in the midst of overwhelming rumors of "selling it" after it began to drastically reduce personnel and expenses at the end of 2021;
Third, long and short videos have re-emerged in disputes. Some media said that "Chosin Lake" has just been launched in Aiyouteng, that is, a large number of cut-out content appears on the short video platform; the short video responded that the relevant content is part of the promotional cooperation with "Chosin Lake" producer Bona Film, the total length of the relevant video is less than 6 minutes, and the "half-hour-long cut-out" transmitted by the media is untrue.
Fourth, on February 10, the State Administration of Radio and Television officially issued the "14th Five-Year Plan for the Development of Chinese Television Dramas", which gave specific binding clauses in response to the problems of "sky-high film remuneration", "tax evasion" and "yin and yang contracts" that have attracted much attention in recent years.
To put it simply, the above news is the embodiment of the current survival dilemma, competitive environment, and frequent chaos in the industry.
In terms of tudou's launch in 2005, long videos have gone through 16 years: from the rampant piracy and barbaric growth, to the formation of a three-legged oligopoly pattern of Youaiteng, through burning money to have more and more heavy voice and control in the industry, you chase after me, love and kill each other, until the rise of dou fast short videos, "hugging the group" denounced the short video platform.
From the timeline point of view, losses have always been the biggest problem in the development of the long video industry. There are data that show that the three companies of Youaiteng have burned nearly 100 billion yuan in the past ten years, and they have not brought a dollar of profit. In addition, Station B is also in a huge loss, the only exception may be the mango super media that claims to be profitable.
Desperate for the industry, making money looks far away. Fan Luyuan, president of Ali Entertainment Business Group, once spoke publicly at the conference: "According to the current living environment, it is wishful thinking that profits are just around the corner. ”
iQiyi's 2018-2021 Q3 loss exceeded 43.6 billion
Compared with Netflix on the other side of the ocean, its book profit margin has increased by an average of about 3 percentage points per year since its birth in 1997, from 4% in 2016 to 13% in 2019. In Japan, streaming brands Hulu Japan, dTV, U-NEXT, and FOD are fiercely competitive, but almost all of them have achieved profitability in four or five years.
As we all know, youaiteng's dream has always been to become China's Netflix, and the content and business model can see the shadow of the benchmarking Netflix. The reality is very harsh, not only has not seen the back of Netflix so far, but it is not as good as the japanese streaming media companies - although the number of paid members and user scale of Youaiteng are far more than Japanese streaming media, and even whether iQiyi can continue to survive is a big question.
Long videos are considered by more and more people in China not to be a good business. When the youaiten pattern has been ten years, it is necessary to seriously consider the deep reasons why long videos have been huge losses, inferior to Netflix, and the game logic with medium and short videos. At the same time, looking forward to 2022, can long video cross the hill and fundamentally reverse the dilemma of the long video industry?
01, membership + advertising, the business model is a dead end at the beginning
Before thinking about the above questions, we need to clarify a question: how to calculate the profit and loss of the long video industry?
In terms of economic common sense, profit = gross domestic product - production cost, loss = operating income - operating expenses - other messy expenses. Applied to the long video industry, it is mainly related to operating income (membership payment, advertising revenue) and content cost (procurement, self-made film and television costs).
Some people in the industry previously believed that the long video industry had a single profit model, low membership prices, and too high content costs. "If domestic long video is to achieve profitability, the means are mainly two aspects. The downstream C-end increases the price of user membership and increases advertising implantation; the upstream B-end reduces the cost of procurement and self-production. Some film and television industry insiders said.
In order to increase revenue, the means often used in domestic long videos are members to raise prices. Since the beginning of 2019, the major long video platforms have attributed the reasons for the loss to domestic audiences who are unwilling to pay for the works, and have successively expressed that "the pricing of domestic video members is low, affecting the healthy development of the industry", laying the groundwork for future price increases.
At the end of December last year, iQiyi, Mango TV and others announced a new round of membership price increases. Judging from the latest member price, the price of domestic user membership is more expensive than Netflix - Youaiteng After the price increase, the member price is 22 to 30 yuan / month, according to the domestic per capita monthly salary of 2927 yuan (the National Bureau of Statistics announced that the per capita income of national residents in 2021 is 35128 yuan), accounting for more than ten thousandths. The Netflix membership fee is 9.99 to 19.99 US dollars / month, which is calculated according to the per capita monthly salary of 3500 US dollars in the United States, accounting for less than 6/1000.
From the perspective of profit model, Netflix is simple and clear, that is, 99% of the membership income (the other 1% is DVD service) - so far Netflix insists that the platform does not have any advertising model, and has not chosen to subscribe to the two-legged walking model of advertising, which is wiser than Youaiteng.
Netflix adheres to an ad-free business model
In the exploration of domestic long-term video profit model, it is actually very complicated: in addition to the two main monetization methods of membership + advertising, it has also tried a variety of payment models such as advanced on-demand, games, live rewards, live e-commerce and content distribution.
Advanced on-demand has been cancelled after the user complained and the supervision came out, the game, live broadcast tip, etc. are counted as scraps, the revenue-generating channels such as talent shows and delayed dramas are blocked, and the domestic long video revenue is still mainly based on membership and advertising revenue.
According to the reason, the price of domestic long video memberships has been more expensive than Netflix, more expensive than Japanese streaming media, and there are many other business models such as advertising, so why is there a huge loss?
On the surface, the slow growth of paid subscriptions directly affects youayteng revenue. Netflix's total global subscriber base reached 222 million, and despite slower growth, it still recorded a net increase of 8.28 million in Q4 2021. Youaiteng adds up to only more than 300 million, and after 2020, not only the growth slows down, but even declines.
Taking iQIYI as an example, the number of iQIYI members in the third quarter of 2021 was 103.6 million, a decrease of 1.1% year-on-year and a decrease of 2.4% from the previous quarter. And that wasn't the only quarter in which its membership numbers declined.
The gap between Youaiteng and Netflix members has many factors, including the market environment (domestic vs international), user payment habits, but also in line with the overall trend of the Internet industry: any market has a user ceiling, for long videos, after ten years of rapid development, has entered the stock market, continue to maintain the previous high growth has been unrealistic, so not only Youaiteng, including Netflix is also showing a downward trend.
This means that the paid membership subscription system has been a dead end from the beginning – although this business model can make the platform grow rapidly in the early stages, in the middle and late stages, there will be a bottleneck of slower user growth and continuous cost increase.
It is also important to note that, according to Daniel Kahneman and Amos Tversky's famous paper "Expectation Theory: Analysis of Decisions under Risk Conditions" in 1979, people have a natural "loss aversion" mentality.
Coincidentally, the domestic long-form video paid subscription model has been constantly strengthening the experience of loss aversion: opening a membership does not mean that you can watch all movies, episodes, and other charging methods such as "separate payment" and "advanced on-demand" of the film - this nesting doll-like payment method can only play a role in fishing in the mountains, burning the forest and hunting, even if the user pays money, it will produce a sense of coercion, and eventually burn himself.
Content is the first element of a user's choice of platform
Compared with Japanese streaming media, it also makes Chinese users not taste. Amazon Prime Video is currently the most used long video platform in Japan, and while it also requires payment, any Amazon Prime member (only 408 yen a month, less than 22 yuan) can watch any content directly for free.
At the same time, domestic users can not completely skip advertising after opening a membership, domestic long video advertising forms, from patches, interstitial ads, implanted advertisements, naming, etc., more and more forms, penetration is getting deeper and deeper - too many ads will bring a bad experience to users, users will vote with their feet, preferring to watch 150 seconds of advertising rather than open members, precisely because users have aversion to this.
Therefore, in terms of business model, the long video industry has been in the "dead cycle" of membership growth and commercial advertising for more than a decade, and it is unable to achieve balanced growth.
02, exclusive copyright for ten years, serious overdraft of the vitality of the industry
The business model is stuck in a "dead loop", and the deeper reason is that there is less high-quality content for long videos in China, and it is difficult to attract users to continue to pay. "Long video is an industry with low user loyalty, and you can go where the content is more attractive." According to people in the film and television industry, only by maintaining enough high-quality content can we attract users to pay for content and become loyal users of the platform.
Buying copyrights and making self-produced dramas has become the biggest cost of major platforms - for example, in order to cultivate user loyalty, Netflix is willing to spend money on content production. In 2021, Netflix's content costs rose to $17 billion, and HBO and Disney invested less than $3 billion in the same period.
Domestic long videos are not to be let go. Starting with the exclusive copyright "burning money war" launched by various video websites in 2011, Youaiteng burned more than 100 billion yuan in ten years, and the content cost accounted for the majority of it, becoming the main reason for loss.
Content costs are the bulk of domestic long-form video spending
Objectively speaking, there is nothing wrong with Youaiteng spending a lot of money on content costs, because this is the business logic that long videos should tell: when the content pool accumulates large enough and deep enough, even if the experience is not perfect, users are willing to pay for the content, and the lower the marginal cost of attracting new users.
The question is, why is YOUAITENG in a situation where the huge input and output are seriously disproportionate?
The biggest difference is that Netflix is a continuous output of high-quality content. Similarly, Japanese long-form videos are less expensive to produce and the price of copyright sales is within a reasonable range.
The hundreds of billions of yuan burned by Youaiteng are for exclusive copyright under the "inner volume" - in simple terms, it is a homogenization strategy that tries to monopolize the market, resulting in high content costs, which is the main reason why it is impossible to make a profit.
The industry recognizes that most of the hundreds of billions of Youai Teng's burning has been invested in exclusive copyright and popular IP procurement. From Sohu Video's purchase of "Great Qin Empire" for 25,000 yuan in 2009 to "Tomb Robber Notes 3" exclusively authorizing iQiyi at a custom price of 24 million yuan per episode in 2017, the purchase cost of long video copyright has increased by more than 400 times.
Such sky-high copyrights abound. "The value of exclusive copyright lies in the fact that in the short term, it will play a role in gathering traffic and pulling new users, and become a weapon to change the competitive landscape of long-term videos." Some insiders said that this is the reason why long video platforms are overly chasing content exclusivity.
From an early point of view, the exclusive copyright is indeed the reason why Youaiteng defeated other opponents, completely broke the original market structure and model of the Chinese TV drama market, and formed a three-legged pattern. In 2014, Gong Yu attributed the rise of iQiyi to "burning money".
The particularity of the content industry is that there is no law in whether huge investment can become a blockbuster - however, It is impossible for Youaiteng to give up the "explosive model" to the opponent, so it can only continue to adopt an exclusive strategy in the competition, and no one is willing to give up, which will lead to rapid cost growth.
A widely circulated case is that when competing for "Ruyi Chuan", the two parent video platforms originally agreed to pay 600 million yuan each to win the dual platform broadcast rights, but one of the teams was convinced that "Ruyi Chuan" would become the second "Zhen Huan Chuan", shouting out 1.3 billion yuan to grab the exclusive broadcast rights, and finally failed to copy the glory of "Zhen Huan Chuan", and the membership + advertising revenue was not enough to cover its sky-high cost.
Sky-high prices continue to grow and break records. As a result, in addition to the platform has been losing money, other copyright prices, IP prices, and traffic star remuneration have soared for many years, driving the cost of long video content to rise steadily.
In order to ensure ratings, the false prosperity of "hot IP + traffic stars" was once very marketable. A platform head S-class project, 52 episodes of investment of 220 million, traffic star remuneration as high as 80.62 million. Zheng Shuang was exposed by the media for 160 million films in 77 days in "The Ghost of Qiannu", and 2.07 million a day was jokingly called Yishuang.
The most direct impact of the "sky-high film remuneration" is the imbalance in the distribution ratio of drama production, which has given birth to many low-quality content with serious water injection and homogenization. Angelababy's costume drama "Lonely Fang Doesn't Appreciate Itself" broadcast in 2016 was exposed to be paid 80 million, but it was deeply trapped in the "cutout door". Even if Youaiteng later embarked on the road of self-control, because of the "sky-high film remuneration", it is difficult to hide the pain of high production costs.
After the introduction of the "star salary limit order", it did not fundamentally reverse the upside-down pattern of industry costs and benefits, until Youaiteng set its sights on the self-made draft variety show, and only then did it see the hope of pulling new users and increasing advertising revenue - marked by iQiyi's launch of "Idol Trainees" in 2018, the long video platform began to vigorously select variety show activities, focusing on the whole chain of rice circle star-making, content production, and follow-up derivatives.
The problem is that the talent show still focuses on "idols" - essentially a traffic star mentality. In 2021, due to the many irrational behaviors and waste of resources, this model has completely "overturned".
So far, the long video has talked about the exclusive copyright for ten years, but it has not established a deep enough content "moat", but seriously overdrawn the vitality of the industry, when the relevant departments vigorously rectify the rice circle culture, advanced on-demand, talent shows have become history, the platform only wields a scythe to members to increase prices, the cost premium transferred to the user.
03, downstream to upstream, long video discourse power is getting heavier and heavier
Objectively speaking, long videos burn more than 100 billion yuan in ten years, not without gains.
From the perspective of the general environment, although most of the domestic dramas from purchase to self-production are shoddy, there are also some episodes and theaters that perform well, such as "The Hidden Corner" and "The Silent Truth" broadcast by the "Mist Theater", which to some extent reflect the development of China's film and television industry to industrialization.
In this process, long video is also strongly involved in the upstream and downstream of the film, television and variety industry, resetting the rules and gameplay: from entering the upstream of the film and television industry chain, participating in the film and television project shooting and production, to the platform's multi-channel penetration into film and television publicity, and gradually forming the control and bargaining power of the long video platform over the whole process of production, production and publicity of the film and television industry.
Ahead of the on-demand users complained
For example, in the downstream, it is easy to find pricing strategies with similar prices and similar advertising quotations for members of several long video platforms. This can be seen from the price increase of long video members at the end of last year, the price increase is similar, and the simultaneous launch of advanced on-demand.
This means that several long video platforms are adopting corresponding strategies based on each other's every move. In line with the demand theory model established by the American economist Paul Swich, although oligopolistic companies will game with each other, there is no difference in product homogeneity, and when any manufacturer makes a decision, it usually advances and retreats with competitors.
Under the high concentration of the vast majority of IP content in the industry, long videos also have strong control over the upstream industry chain, dominating the evaluation of the content level and market value of the series, and controlling their right to speak and finally judge.
Previously, Yang Li, the producer of "If You're Okay is a Sunny Day", openly tore up with You'ai Teng on Weibo, saying that it was a cost reduction, and the platform side jointly suppressed the price of copyright dramas, "In terms of pricing, how much they say is how much." Almost all film and television companies, especially state-owned and small and medium-sized film and television companies, have suffered from it. ”
Not excessively interfering in production, the evaluation system is scientific, objective and reasonable, is the core element of the healthy operation of the sub-account market. This may be another huge gap between domestic long videos and Netflix - in content production, Netflix's successful experience is only responsible for giving money, but does not intervene in creation, and there is a steady stream of high-quality content, which can use high-quality content to attract traffic and achieve commercial realization.
For domestic long videos, because high-quality content is not sustainable, it can only be made into a traffic closed-loop business that grabs exclusives, stars, and IP. Therefore, when short videos are preferred by the public because of their rich and diverse, massive free, and freely selectable content ecology, the nerves of long videos become more and more sensitive.
In April last year, the long video once again held the united front ten years later (the last time was in 2012, when Youku Tudou merged, Soai Teng formed VCC), full of firepower sniper B station, short video platform film and television spit /commentary, mixed cut, ghost animal secondary creation, the huge "copyright defense war" has been played until now, becoming the main focus of the long video industry in the past year.
Although netizens' discussions about the boundaries of editing infringement and the space for creative freedom have not yet been clearly answered. However, many lawyers and scholars pointed out that intellectual property rights have increasingly become the core elements of the cultural industry, and from the perspective of film and television copyright protection, it is indisputable to respect the rights of creators, but it is not advisable to blindly accuse short videos of copyright.
On the one hand, whether all the two creations constitute infringement still needs to be identified, such as film reviews, inventory, commentary and other short videos of the two creations are still unclear. The "Standard Rules for the Review of Online Short Video Content" opposes not secondary creation, but unauthorized secondary creation, and short video platforms are also actively combating infringement and strengthening copyright protection. For example, the dispute from "Sweeping Black Storm" to "Chosin Lake", the short video said that it was a publicity cooperation carried out by the producer.
On the other hand, short video platforms have broken through the siege, in addition to catering to the needs of users' fragmented time, it is more important to build its own industrial chain, derive a very rich group of creators, and the content ecology is increasingly diverse. For example, the works of internet celebrities "Classmate Zhang", its plot logic, lines, BGM, etc., far exceed many high-heat dramas with procrastinating plots and too many water injection plays.
The original intention of "copyright" is protection, which is to inspire the birth of more high-quality works, but it should not become a weapon to attack opponents and oppress the living space of creators. After all, in the era of barbaric growth of long videos, it is also the initial traffic pool that is accumulated by user spontaneous uploading.
Netizen discussions also mentioned this point: long video platforms often launch "two innovation competitions" for broadcast dramas. If it is not to confirm the traffic logic and publicity effect brought by the short video, why should the official take the initiative to invite fans to make a video?
In the final analysis, although the consumption scenarios of long and short videos are different and the production models are different, they are also video carriers of content, forming a de facto "symbiotic" relationship - with the changes in the industry environment, user demand iteration, the upstream and downstream industry chain of long videos cannot leave short videos, and short videos cannot eliminate long videos. What determines all this is still that the excellent content is rich enough.
The reasons why excellent content of long videos are difficult to sustain have been discussed above, and from the perspective of short video creation, because IP resources are bound by long videos, the road to short videos will be quite difficult. For example, Douyin once proposed to the filmmaker to purchase the second creation rights of the short video of "Eight Hundred" and "Detective Chinatown 3", but the filmmakers were worried about cooperation with long videos and did not realize it.
For the chaotic domestic long video industry, the slogan of "content is king" has been shouted for ten years, and now although the specific constraints on "sky-high film remuneration" are given from an administrative point of view, as long as the monopoly of resources, IP and other content is still there, can it really become better?
04, summary: dare to give up, in order to tell a new story
Short videos are the main culprits of long video losses, and this statement is of course nonsense.
If you follow the current development path of long video, it is foreseeable that within a few years, the problem of huge losses will still be difficult to solve: the upstream production cost is high, the downstream users feel that the membership fee is various, and the brand advertising sponsorship continues to decline because of competition and the general environment.
Because it is difficult to benchmark Netflix from the essence (quality content), the domestic long video has taken ten years to prove that it has gone a dead end. The solution to the above dead end is either to deepen the cultivation of high-quality content while streamlining costs, or to completely transform the business model, break the "only home, only members" theory, and find a glimmer of vitality from it.
Refer to the online music industry: the music industry copyright protection is also paying more and more attention, but after the anti-monopoly penalty, the upstream copyright can be disclosed, through reasonable version authorization, online music, short videos have begun to support the creation of high degree of creation, win more traffic at the same time, through differentiated strategies and model innovation, music has explored more ways to monetize.
In fact, this is also the secret of Japan's long video profitability: U-NEXT has sought model innovation since its independent operation in 2017, claiming to be a DVD rental company in the digital world, and one of its main strategies is to reserve the most extensive copyright content library in the market, rather than the so-called exclusive content or original content, through the richest content selection, attract more consumers to become paid members, and finally successfully achieve profitability.
For domestic long-term video, the premise of taking this road is to dare to give up the current "upstream and downstream content, resource monopoly", including the bargaining power will be completely broken, in order to achieve win-win cooperation with various industries. The difficulty is tantamount to a self-revolution.
If you can't catch up with Netflix, you can learn Japan first. In any case, entering 2022, the living space and business model of long video have reached a turning point in fate. Youaiteng, you have to make a choice.