Tech Planet (WeChat ID: tech618)
Wen | Yang Xiaohe
Cover source | Visual China
At the beginning of the new year, some employees of iQIYI Building in Zhongguancun are packing up their things and moving to the iQIYI Youth Center in Sanlitun. After an estimated 2,000 layoffs, iQiyi is implementing the final open source throttling measures and shrinking office space.
After many rumors of selling itself, iQiyi is still struggling to develop independently. In fact, iQiyi is "unfavorable to non-soldiers and not good at war." iQIYI's self-made variety shows and online drama capabilities are also eye-catching in the long video camp represented by "Youaiteng" (Youku, iQiyi, and Tencent Video), but compared with Tencent Video and Ali behind Youku, Baidu's thighs are not thick enough. Baidu has also gradually realized that long videos are a "small child".
Not only is the long video industry sad, in the field of fresh e-commerce, recently, Meicai has also laid off thousands of people, the office merged into Xizhimen, the office area is only a quarter of the original; meituan preferred, which has been seeking stability, has also been exposed to large-scale layoffs in recent days, and insiders told Tech Planet: "The year after the year has been laying off employees, the original independent operation of the management has also merged into the group." ”
The days are also not good in the field of shared travel, Didi recently exposed a large-scale layoff of 20% of the full business line, meituan bicycle is also the main force of the meituan loss, independent Hello seeks to list the loss state, so far has not been successful.
Unlike Amazon's loss of 20 years, the capital market is still highly recognized because it is seen that Amazon maintains 30% growth all year round, and even if it loses, it maintains the ability to make a profit at any time. It can be said that when the three major businesses of long video, fresh e-commerce selling vegetables, and sharing bicycles can "make money to support the family" is still a problem.
This kind of business that does not see when losses stop and when the war ends is like the "poison" of the Internet. The average daily high-frequency single volume of tens of millions of dollars has made countless enterprises flock to it, but the victors now seem to be "drinking and quenching thirst", the more they invest, the more they lose money, and tomorrow is still unknown.
Burning money can't burn the first place
The Internet money burning war that many people deeply remember is precisely the "war that began with long videos, enjoyed shared travel, and finally sold vegetables".
In October 2015, Alibaba acquired all of Youku Tudou's shares for about US$4.5 billion, and at this point, in the field of long video, Tencent Video, Alibaba's Youku, and Baidu's iQiyi, a three-legged situation was officially formed.
Image source: Visual China
But the origin of the competition is that in 2012, LeTV bought the "Biography of Zhen Huan" that was later popular with 300,000 yuan / set of network copyright fees, so that everyone realized that the blockbuster can bring high returns. Therefore, when it came to "Ruyi Chuan", Tencent tore up the agreement to buy together with Youku, exclusively spent 1.3 billion yuan to win, and the cost of a single episode of network exclusive broadcast rights reached 9 million yuan, and the copyright war was raging.
In 2017, iQiyi exclusively purchased the third season of "Notes from the Tomb Robber" for 288 million yuan, with an average of 24 million per episode, which was 80 times higher than the copyright fee at the time of "The Biography of Zhen Huan". Among them, in 2018, Youku won the live broadcast rights of the World Cup for 1.6 billion yuan, which is a case of burning money without blinking.
Upstream burn money to buy dramas, downstream through buy one get one free one and other ways to send members, youaiteng's loss is naturally a steep upward curve. After burning hundreds of billions of funds in 10 years, Youaiteng has been in a state of transitional competition, but the market share of the three has hardly changed.
The same is true of the market of shared travel, which was at the beginning of the promotion of mobile payment, so shared bicycles were targeted by Internet giants early on and became the shura field of giant wrestling. Xiao Li of Beijing TiantongYuan still remembers that at the beginning, several also needed deposits, and then Hello took the lead in free deposits, and then each family rode for free. What he regrets most is that when Didi briefly took over ofo, there were two kinds of deposit refund schemes, one of which was to change the amount of didi's online car travel, and there was no time to convert, and Xiao Li became ofo's more than 10 million users who have not returned their deposits so far.
Originally, shared travel may also copy the script of Youaiteng and be taken over by giants such as BAT. Because of the personal will of ofo founder Dai Wei, the market eventually did not form a situation in which the three small giants of TMD took over. After Mobike was acquired by Meituan, it was renamed Meituan Bicycle; Didi integrated several bicycle businesses to independently become Green Orange Travel; Hello, which was once invested by Ant Group, is now seeking an independent listing.
After sharing travel, the last subsidy war of the mobile Internet may be the war of selling vegetables in the field of fresh e-commerce. In the pre-warehouse model of Dingdong to buy vegetables, daily excellent fresh, Meituan to buy vegetables and other businesses, after many years of dark war, the community group buying war in 2021 set off the final climax. According to the estimated losses of the vegetable selling business in the financial reports of Meituan, Didi and Pinduoduo, in just one year, the community group purchase has burned at least 60 billion funds.
In the competition for community group buying and burning money, the "old three groups" such as the Shihui Group have gone bankrupt and collapsed one after another, and the "new three groups" such as meituan preferred are struggling in the fate of layoffs and shrinking the city.
The end result is that none of them have burned a monopoly scale. Instead, competitive costs put everyone at a loss. Therefore, orange hearts can only retreat to the city to survive, and the rest rely on giant funds to resist hard.
A business model that tends to be traditionally commercialized
The three areas of long video, vegetable sales war, and shared bicycles have different views on the reason why they continue to lose money.
For example, in the field of long video, everyone believes that the cost of content production remains high, and the invasion of short videos has become the main reason. In the vegetable selling war, the loss of dishes is large, and it is difficult for users to develop habits; in the field of shared bicycles, there are problems such as high operating costs and large discount rates of bicycles.
Through these superficial phenomena, it will be found that the common problem of the three major poison businesses is "low gross profit and high performance cost".
Represented by the independently listed iQIYI, in the Q3 quarter of 2021, iQIYI's gross profit was 560 million, the gross profit margin was 7%, and the cost of revenue was 7 billion yuan, accounting for 92% of the total revenue, and the situation of Youku and Tencent Video would not be significantly better than that of iQIYI.
In the field of selling vegetables, a large factory selling vegetables compliance personnel told Tech Planet that everyone's gross profit margin is 15-20%, although Meituan Preferred has the basis of fast donkey and grocery business, but preferred to lose more money than the To B model, or do not make money. Xingsheng Preferred is known as the only profitable community group buying enterprise, which is expected to be before the community group buying has no giants to enter.
Hello, which has developed independently in the field of shared mobility, knows how difficult it is to make money. According to the prospectus, Hello shared bicycles turn around 1.39 times per car per day, and the unit price is 1.08 yuan, so the daily income of a single car is 1.51 yuan. The daily cost of a two-wheeler is 1.41 yuan (of which the depreciation expense is 1.33 yuan), so the daily gross profit of a single two-wheeler is only 1 cent.
The three major poison businesses, under the meager gross profit, need to be refined to do operations.
Industry insiders analyze the reason why Orange Heart Preferred and Ten Huituan are the first to go out, in addition to blindly pursuing scale, even if there is no policy supervision, the immaturity of the supply chain will also drag down its future development. "The sorting method in the warehouse can also be divided into fruit picking method and sowing method, etc., transportation to the regimental leader have different modes, various operational combinations to dozens of kinds, many have not yet tried the optimal solution, there is no money to burn." Therefore, refined operation also requires a very expensive time cost.
Then, even if the optimal solution for operation is tried, for capital that likes marginal effects, long videos gradually move towards selling films, selling vegetable platforms gradually become three batches of four batches of distributors, and sharing bicycles is slowly leased, which is not the best business model, and the Industry 1.0 model of reselling is difficult to make a lot of money.
"Microsoft's market value from the bottom to 3 trillion, not only Nadella's efforts, but from the early sale of office to the SaaS model." For long videos, vegetable wars, and shared bicycles, they have taken the opposite path, gradually moving from Internet business to traditional business models.
With the larger the scale, the cost of buying dramas for long videos is also rising, and the profit is the middle difference between buying and selling films; for shared bicycles, the gross profit of riding once is almost all profits, and the expanded Internet local life business is still difficult to become a source of profit; the same is true for Internet vegetables, and the profit of each single few cents is the core source of profits, and it is not realistic to load point Internet advertising.
Each struggled to find a way out
For a long time, there is a common question on the Internet is, "Why can't Netflix be born in Youai Tengzhong?" ”
It is especially difficult for iQIYI to answer, the size of iQIYI's team before the layoffs is not much less than Netflix, but Netflix's revenue in 2021 is 6 times that of iQIYI. If you use "domestic users are not willing to pay" and "lack of explosive drama production capabilities", it seems that many people will not agree.
For long videos, the core problem is actually "uncertainty". It is reported that Youku president Fan Luyuan once cheered up internally: "From the first film I chose "Fanghua", to "Red Sea", "I am not a medicine god", "The richest man in Xihong", "The Wandering Earth", "My Motherland and Me", etc., it has laid a very strong market mentality, for me personally, from making movies to dramas and variety shows, this is a gradual, constantly looking for feelings process. ”
Extreme reliance on blockbuster dramas makes long videos feel like "looking forward to the harvest". Where is the next "Biography of Zhen Huan" and "Wolf Warrior", no one can answer. But the well-known IP adaptation will definitely be popular, so Tencent Video's "Three-Body" movie in 2022 has also been given high hopes, and the rest can only watch the market reaction, almost resigned to fate.
In 2022, you will launch a series of episodes
Image source: Network
On the other hand, the evolution of Netflix seems to be able to point out a way out for the development of domestic long video tracks. Netflix has a system for disassembling episodes and predicting bursts, gradually improving the certainty of video content explosions; at the same time, it is recommended to the "same taste user group" through the recommendation system Cinematch. Although iQIYI also has a system of intelligent creation/intelligent distribution, in the live broadcast of the Spring Festival Gala of the Year of the Tiger, iQIYI Live broadcast has a malfunction and has been displaying "502 error".
In the vegetable selling war, Ali MMC (buying and buying vegetables) also proposed a plan to remove intermediate links and improve certainty.
That is, to upgrade 6 million mom-and-pop stores in the digital supply model, remove the middlemen of traditional retail, the leader of the community group purchase, etc., and achieve a 40% loss reduction in the way of goods distribution. However, how idealistic this model is, it still needs time to verify, after all, the current direct sales business of one acre of land and American vegetables is very difficult.
For the shared bicycle business, whether it is a shared bicycle or a shared motorcycle, it is a loss-making business. Judging from Hello's prospectus updated in May 2021, the more certain growth business is to sell self-made electric vehicles, "selling 70 million yuan in the first quarter, more than the sales volume of the whole year last year".
The Internet business model is changing from the previous high-frequency band and low frequency to uncertainty-driven certainty. Only a deterministic business can make the "poison" business form a scale effect and get out of the quagmire of losses. But how to eliminate uncertainty and find a business with certain profitability is still the biggest problem for everyone.
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