Image source @ Visual China
Text | Rhino Entertainment, author | Fat Department, editor| Xia Tian
After iQiyi released its new earnings report on March 1, the stock price closed up 21.50%, and the intraday increase was close to 40%.
The main positive information in the earnings report is the narrowing of losses. According to the financial report information, iQIYI's non-GAAP (non-GAAP financial indicator) operating loss for the whole year was 3 billion yuan, and the operating loss ratio narrowed from 15% in the same period last year to 10%, and the operating loss ratio in the fourth quarter narrowed sharply to 7%.
In the past two years, whether it can reduce costs and increase efficiency and achieve narrowing losses has become one of the main competitive indicators of domestic video platforms. In the financial reports that have been released by various platforms, special emphasis has been placed on this aspect.
Ali's financial report mentioned that Youku continued to improve operational efficiency through prudent investment in content and production capabilities, thereby narrowing its losses year-on-year; and Mango Super Media, the only one to achieve profitability, said that the net profit attributable to shareholders of listed companies in 2021 was 2.114 billion yuan, an increase of 6.63% year-on-year.
Regardless of whether the breakeven can be achieved next year, the long video platform that has entered the stock era has entered a more refined and intensive operational logic without exception, and the key points of force are to alleviate until the loss is solved, and the second is to truly complete the content iteration, first open up the lifeline into a healthier state, and then try to enter the possibility of the next growth period.
Is it possible to break even in 2022?
Loss, the gangrene of the long video platform, the heart of the heart.
Objectively speaking, this is also a common problem in global video streaming, and Netflix, which has outperformed the loss, gives the answer to building a brand effect by steadily outputting high-quality content. Before that, domestic platforms have also tried a series of ways such as open source and throttling.
Let's start with open source.
As early as 2019, the industry proposed solutions to enhance ARPPU and pull user payment. According to iQIYI's financial report, member service revenue has always been the main source accounting for more than 50% of total revenue, with a total revenue of 30.6 billion yuan and a membership service revenue of 16.7 billion yuan in 2021.
However, in 2021, with the tightening of Internet industry control and entertainment industry supervision in the objective environment, the advanced on-demand mode of improving the ARPPU model has been cancelled in the case of large user response.
At the same time, the main problem of revenue also comes from online advertising. The marketing value of long videos is still relatively uncompetitive in the market, according to Questmobile data, in 2021, the typical media type advertising market share of comprehensive video accounted for only 4.2%, short video reached 18.6%; comprehensive video advertising year-on-year growth rate of 17.7%, short video advertising is 31.5%.
Against this backdrop, long-form video platform members made a general price increase last year. In November 2020 and December last year, iQIYI adjusted the membership price twice, raising the monthly subscription fee to 22 yuan consecutively; Tencent Video and Mango TV also had price increase measures.
In the short term, this will inevitably affect the total number of members, but as the experience of Netflix in the past, in the long run, price increases are inevitable for the development of the platform, promoting the platform into a positive financial cycle, and the increase in the unit price of customers in the short term will hedge the impact of the decline in the number of paid members. iQIYI's fourth-quarter membership services revenue was RMB4.1 billion, up 7% year-on-year.
This is also why the reduction of iQIYI's membership to 96.4 million has not brought a huge impact, and this reduction in the market has been predicted in advance.
Throttling has become a more effective short-term way for video platforms to cope with losses.
The first is the cost reduction and efficiency increase in content production and copyright purchase, which has become one of the main winds of the industry in 2021. iQiyi and Youku have both proposed the establishment of a content middle office in 2021 to form a standardized and scientific system from development to production management; Mango TV Express also mentioned that the platform has established a "film and television drama planning committee" and a "program production center" in variety shows.
According to the financial report, in the fourth quarter of 2021, iQiyi's content cost was 4.9 billion yuan, down 5% year-on-year; the annual content cost was 20.7 billion yuan, down 1% compared with 2020.
The layoffs also mean the cutting off of some non-profit business segments, after Wang Xiaohui, president and chief content officer of iQIYI PCG, said: "Businesses with poor benefits should do some subtraction." In the period of high-speed growth, you must make up for the shortcomings; in the expected instability, you must strengthen the long board... Only by making the long board more valuable can we survive the cold winter of the industry. ”
It should be considered that the slimming strategies of these businesses and expenditures are largely a stopgap measure for long video platforms to get out of the winter. However, from the perspective of the effect of narrowing losses on various platforms, this year will most likely achieve a better cost-benefit ratio. In terms of long-term strategy, iQiyi and others must outperform and lose money, or they must play the content card like Netflix.
The era of content intensification: strengthen the long board and enhance the value of content
At the beginning of 2022, the two projects of Tencent Video and Youku have become hot topics in the industry. The first is Tencent Video, where more than 70 projects have only passed 2; at Youku's project establishment meeting, 53 episodic projects have only locked one IP.
From the perspective of the industry, the long video platform has released a clear signal that content iteration is already a just need that the entire industry must pay attention to; and from the perspective of the platform itself, this is also a certain adjustment of its content power in the next stage.
For high-quality content with strong communication and appeal, the demand for long videos is unprecedented. In addition to market doubts, there are also changes in the objective environment, in 2021, the draft was completely stopped and the absence of American dramas was delayed, making the important traffic and monetization sources of long videos invalid.
The current content plan is to create S-level content with a wider audience and more innovative themes, and the second is to transmit the main theme of positive energy and traditional cultural masterpieces.
Let's start with the former, which is why the two green lights will become "red light clubs".
At the end of 2021, the rise of the "Middle and Beauty Dark Horse" has become a new feature often mentioned by the industry in reviewing the drama market this year, which seems to be in line with the reference of the development strategies of various platforms to return to the value of content. But from the platform logic, the next bet will not be more mid-rise and below.
It is generally believed that platform content should be head content, mid-waist boutiques and small-cost vertical works to form a product echelon, which is also the content distribution of Netflix. But the difference in the domestic industry may be that there is no industrialized industry base to ensure the lower limit of the product, and there will be a concentrated low-reputation content. In this environment, if the platform wants to create a product reputation, it must first ensure the controllability of content output.
That is to say, Wang Xiaohui, chief content officer of iQiyi, said earlier, "Eliminate the pseudo-waist", "In the past, we thought that the especially small vertical category was seen by someone and could be calculated." Now it seems that the opportunity cost is too high. With this energy and time, it is better to develop A+ and S grades with a wider audience and more innovative themes. ”
In this environment, the contraction of the custom drama market will become a new wind, and the suppliers of mid-waist dramas will usher in a round of industry reshuffle, and this part of the practitioners may mainly rely on word of mouth to earn income in the form of sub-accounts. It can also be considered that the value of the sub-account drama also lies in supplementing the laddered content of the platform and allowing the platform to concentrate on the head.
Head content mainly comes from head companies with brand effects, as well as the platform itself, which has become more powerful in self-control. According to the data, iQIYI's self-made content in 2020 has accounted for 66%; the latest financial report shows that Mango TV has established 26 variety production teams, 29 film and television production teams and 34 "New Mang Plan" strategic studios.
Let's talk about the main theme.
It should be emphasized that the value of this part of the content lies not only in the increasingly prominent industry advantages in terms of resources such as production, scheduling and publicity, but also in the fact that the content value is becoming more and more recognized by the market, and the recent popularity of "Human World" iQiyi is also a very typical example.
Long video platforms naturally become the frontline for delivering relevant content, and the benefits brought by these contents cannot only be counted as economic accounts. For each platform, whether it can develop high-quality main theme content that truly opens up the public mood and has social benefits will realize the vitality of the platform in a longer period, and it is also an important indicator to test the content capability of the platform and highlight the advantages of long video.
Content is the long board on which long videos survive, and it is also the core ability that determines whether each platform can outperform losses and enter the next period of growth. The industry has clearly entered an era of intensification.
Short dramas, new vertical categories, commercialization, which is the new growth point?
In the past year, we have also seen the action of new growth points on various platforms.
These growth points are often combined with the characteristics of long video platforms, and form a certain supplement to the platform business by exerting specific vertical categories or strengthening certain aspects of capabilities. While some of the moves are intended to provide imagination to the market, it is not excluded that some of these developments will bring long-term benefits.
For example, short dramas, in addition to Youku, Tencent Video and Mango TV will also end up with new self-control and accounting rules in 2021. According to the financial report, the "Da Mang Plan" launched 84 micro-short dramas last year, and the annual hit "Attack queen" played more than 500 million.
This can be seen as a platform strategy after the escalation of the battle over length and length in 2021. For long video platforms with stronger production capabilities, cutting into short dramas has become a fast lane to open up the short and medium video market, and has also opened up the growth space for platform users and use time.
In terms of new vertical categories, sports copyright, animation and children's programs have become the main aspects of each company's efforts since last year.
Taking sports content as an example, this kind of heat has its own particularity in the event period, but it has indeed played a good role in advertising revenue and user usage time, such as iQiyi's cooperation with Heineken beer, a global partner in the European Cup, during the European Cup; the Tokyo Olympic Games, Tencent Video has achieved a cumulative playback of 26 billion.
There is also the commercialization, each family has also come up with a richer way of playing. For example, iQiyi focuses on the "One Fish and Twelve Eating" of the "Huaxia Ancient City Universe"; Mango TV promotes national tide evenings such as "Little Mango Seed Flower Night" and "Little Mango New Year Goods Festival", and lays out offline live entertainment tracks, combined with reasoning variety show brands to create a script to kill the brand M-CITY.
In the past year, iQIYI's total revenue increased by 3%; Mango TV's revenue, which is still in the growth period, increased by 24.28% year-on-year, and the parent company Mango Super Media increased by 9.62%. In the face of growth issues, multi-point attempts at open source for business and play are imperative.
At present, the strategy of developing new growth points on various platforms is also paying more and more attention to the matching degree of their own resources and business costs, such as the general support of short videos shrinking to the field of short dramas, and commercialization also shows a higher degree of integration with content, and the overall expression of intensive thinking.
Through these actions, long video platforms are still accumulating strength for long-term development. From a longer-term market perspective, viewers have a strong need for long videos, and content is the core path for each platform to breakeven. Out of the cold winter, each next step of each platform is critical.