Per reporter: Wen Menghua Per editor: Yang Xia
After the layoff storm, the "slimming" iQiyi handed over the 2021 report card.
Image source: Visual China
According to the unaudited fourth quarter and full year financial reports as of December 31, 2021, iQIYI's total revenue for fiscal 2021 was RMB30.6 billion, and the full-year non-GAAP operating loss was RMB3 billion, narrowing the operating loss ratio to 10% from 15% in the same period last year.
The narrowing of operating losses seems to have given iQiyi a glimpse of profitability. Gong Yu, founder and CEO of iQIYI, gave a profit schedule in the earnings report: "Our goal is to achieve breakeven at the operational level of non-GAAP for the whole year of 2022 and achieve breakeven at the operational level of quarterly non-GAAP as soon as possible." ”
Video platforms have been struggling to make money for a long time. Since its listing in 2018, iQIYI's net profit attributable to the mother has accumulated a loss of about RMB32.641 billion. At present, as China's long-form video industry enters a new stage of pursuing efficiency and pursuing loss reduction, can iQiyi, which has been losing money for ten years, still usher in a profit inflection point?
The initial effect of "slimming down": the operating loss ratio narrowed
Under consecutive years of losses, the obvious narrowing of the operating loss rate has made iQiyi in distress a boost. At the close of trading on March 2, iQiyi's shares rose 21.5% to close at $5.03 per share, with a total market capitalization of $3.94 billion.
In fiscal 2021, iQIYI's net loss attributable to the parent company fell to $6.2 billion from $7 billion in the same period last year, and under non-GAAP, the operating loss ratio narrowed to 10%. Among them, the operating loss ratio of non-GAAP in the fourth quarter narrowed to 7% from 13% in the same period last year.
iQIYI's loss narrowed, mainly due to cost control under open source throttling. In the past year, in order to survive, iQIYI has made drastic moves and made continuous moves: canceling advanced on-demand, member price increases, layoffs, and reducing film and television projects.
At the earnings conference call, Gong Yu said frankly: "In order to reduce losses, we optimize the organizational structure and save some costs and expenses related to people; at the same time, content production, content procurement and content operation do refined operations, head content will not be reduced, and at the same time more strictly control the content with bad broadcast effect, reduce procurement, and reduce the output of 'bad content'; the third is the content-related film library content and long-tail content, so that it can exert greater value and generate more advertising inventory or membership income." ”
According to the data, iQIYI's content cost in the fourth quarter was 4.9 billion yuan, down 5% compared with the same period in 2020; the annual content cost in 2021 was 20.7 billion yuan, down about 1% compared with 2020.
For a long time, the cost of content has been a "burning money" mountain on the video platform, and related financial reports show that in the past decade, the "Aiyouteng" three parent video platform has burned more than 100 billion yuan. Although the major video platforms have achieved certain results in content cost control, in the long run, in order to maintain the growth and retention of high-paying users, video platforms' investment in content is still the largest.
The average number of daily subscription members fell below 100 million in the fourth quarter
"30 yuan a month, even if "The World of Man" is good to look at, I am not willing to buy it, it is too expensive to be cost-effective." A video platform user complained to every reporter.
In the past year, video platforms have eliminated the controversial "advanced on demand" model, but the price of membership has risen higher and higher. Since the end of 2020, iQIYI and Tencent Video membership prices have been adjusted many times.
The benefits and impact of price increases are also clearly reflected in the financial report figures.
From the perspective of revenue, membership income is still iQIYI's largest source of income. Thanks to the increase in average monthly single member revenue, iQIYI's membership service revenue in the fourth quarter was 4.1 billion yuan, an increase of 7% year-on-year, and the full year's membership service revenue was 16.7 billion yuan. However, in terms of the size of subscription members, iQIYI's average daily subscription membership in the fourth quarter fell below 100 million, a total of 97 million, a decrease of 5.7 million year-on-year.
Gong Yu said: "There are many negative factors for membership growth. The first is the uncertainty of content launch, which is also the biggest negative factor, which involves the cause of the epidemic, the reasons for our own production, and the reasons for content moderation. In the future, with the easing of the epidemic, this negative factor is gradually alleviating; another negative factor is mobile. The total length of the long video market is declining, has become an objective reality, and has been going on for some time. ”
After video platform members entered the "over-100 million era" in 2018, the growth rate of membership scale slowed down significantly. Video platforms will turn their attention to ARPU value, whether it is member price increases, or advanced on-demand, single-series payment, is an attempt to increase ARPU value.
For the growth prospects of paid members in the future, Gong Yu believes that on the one hand, the rigid demand for film and television dramas by users, especially for diversified and high-quality film and television dramas, is more vigorous; on the other hand, the rapid growth of large screens outside mobile phones will have a particularly positive effect on the addition of members and the increase of ARPU value; in addition, copyright protection has also created a favorable content charging environment.
Long videos have entered a new stage, and content investment has been concentrated on self-production
Before there was profit pressure on the head, after the short video to compete for users, Gong Yu personally felt the anxiety and change of the long video.
"We believe that China's long video industry has entered a new stage of pursuing efficiency, pursuing loss reduction, and ultimately pursuing profitability, rather than the previous pursuit of market share and rapid growth, and the turning point has now arrived."
Change is coming, and competition remains unabated, especially in the content space. Gong Yu pointed out that in 2022, iQIYI's original content supply will be richer and will get rid of the stage of short supply in the past.
"At present, the content investment of long video head enterprises is basically focused on content self-production. The biggest difference between self-control and copyright procurement is that it is relatively weakly competitive, and the key points of competition in copyright content procurement are scattered in all aspects of procurement. Gong Yu observed.
Since 2020, the proportion of self-made dramas on major video platforms has increased significantly. According to the "Research on the Change of The Market Pattern of Dramas from 2018 to 2020", the number of self-produced dramas on video platforms was 84 in 2019, and the number increased to 143 in 2020.
A few days ago, Wang Xiaohui, iQIYI's chief content officer, used "four abandonments" to summarize how iQIYI will do content in 2022: abandon content that simply caters to the direction, abandon the content that is suspended to the direction, give up the content that obviously loses money, and give up the content that has no innovation.
Wang Xiaohui believes that the most important change in the industry in the past year is the era of pursuing quality and discovering new needs, with the Internet has become the consumption scene of most people, the demand of the people and the quality standards of the people: traditional immortality, era empathy, visual novelty, one of the most distinctive representatives is "The World of Man". At present, the peak content popularity of the drama in iQiyi station has exceeded 10,000.
According to the statistics of the third-party platform, the peak content popularity of "Human World" in the iQiyi station exceeded 10,000 Image source: Screenshot of third-party software
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