Image source @ Visual China
Text | Photon Planet, author | Wu Xianzhi and He Furong, editors | Wang Pan
Revenue growth is either slowing down or stagnant, and the loss in net profit is the same. Looking closely at the business or the "old three", in iQIYI, there is nothing but online advertising, membership income and content distribution, and in station B, it is still games, advertising, e-commerce and value-added services, and these businesses have not been able to achieve a turnaround for a long time.
The two giants of long and medium video are not so much announcing financial reports as they are issuing a fine to the market. Throughout 2021, iQiyi lost 3 billion yuan and Station B lost 5.5 billion yuan.
Almost four years ago, on March 28 and 29, 2018, iQiyi and Station B also landed on the NASDAQ one after the other. At that time, in order to impress investors and make them believe that they could make money, Gong Yu and Chen Rui intentionally or unintentionally deducted Netflix or Youtube on their heads. Four years, 16 quarters have passed, re-reading their speeches when they were listed, and the afterglow is circling, and it is still impossible to throw away the "-" sign in the net profit column.
When a start-up does not achieve structural profitability in the short term, the risk is large and the benefit is large; but if a company has not achieved structural profitability for four consecutive years, it means that the expected return is close to zero, which is all risk. Of course, Gong Yu and Chen Rui knew it, so "Tu Naifei" told a new story: the full year of 2022 to turn around the loss (it is not clear whether it is deducted or not deducted).
When it is up, it is bullish, and when it is down, it is bullish. In the past year, when the Internet entered the winter, Chinese stocks were affected, and risks were released in a concentrated manner, iQiyi and Station B fell all the way and could not see the end.
"iQiyi"
After more than ten years of development of the long video industry, the profit model has never run through. As the losses of various long video platforms tightened step by step, the mask of "China Netflix" was finally torn off.
Within the platform, membership revenue and advertising revenue go hand in hand. Users buy memberships to avoid ads, while advertisers come to see ads. Long video platforms are difficult to combine between advertising and membership, which shows the difficulties of their revenue models.
According to the earnings report, the number of subscribers to iQiyi Q4 continues to fall back to 96.4 million, down to the level of early 2019. Member price increases will undoubtedly promote the dissatisfaction of some users, and before the content can not fully convince users, member price increases will only lead to users fleeing. After all, there are too many ways to distract users from entertainment.
In addition, the inherent tool attributes of long video platforms may be the root cause of its overall membership scale. "A member for a family" is very common, long video platform due to the strong attributes of entertainment tools, the membership system can not avoid the situation of "acquaintance borrowing". The wholesale method of cooperation with other members will reduce the income of members.
Compared with The B station, the difference between this long video platform and the B station is obvious enough. B station is a community, and the privacy of the content that each user cares about is stronger than that of the long video platform, so the phenomenon of B station member sharing is not common.
Strengthening the private domain and enhancing the private value of the account may be the point where the long video platform can break through the number of members in the future.
In addition, it is still a cliché problem, and the willingness of domestic users to pay for content is not high overall under the long-term influence of factors such as pirated content. Coupled with the lack of quality content, the membership economy is further hampered. The high cost of content further leads to the difficulty of balancing the cost of long video platforms with high-quality content, and the vicious circle begins.
In terms of advertising revenue, as short videos move towards popularization, the overall focus of the advertising industry has changed, and more advertising investment has followed users and traffic to short videos. According to previously released data, ByteDance completed advertising revenue of about 115 billion yuan in the first half of 2021, and advertising has become ByteDance's real cash cow. Long-form video platforms are no longer on par with them.
Based on non-GAAP financial indicators (hereinafter referred to as non-GAAP), the annual non-GAAP operating loss was 3 billion yuan, and the operating loss ratio narrowed from 15% in the same period of the previous year to 10%, of which the non-GAAP operating loss in the fourth quarter was 520 million yuan, and the operating loss ratio narrowed significantly from 13% in the same period of the previous year to 7%.
Stalled Station B
On June 19, 2018, after iQiyi's stock price rushed up to $46, it turned all the way down, and two years later, the market value was surpassed by Station B. From the end of 2019 to the beginning of 2021, Station B relied on high user stickiness and subsequent gorgeous broken circles, and was once praised by the market.
On February 11 last year, it hit a new high of $157.66 per share, and the remaining days were more than cloudy and sunny, and the market value fell more than 70% from the high. The trend of the secondary market is not only due to the general environment, but more importantly, in the past year, the outside world has not seen any qualitative changes in the operating situation.
According to the latest financial report disclosed by Station B, last year's annual revenue was 19.38 billion yuan, an increase of 62% year-on-year, and the adjusted net loss was 5.5 billion yuan, compared with a loss of 2.6 billion yuan in the same period last year, and the loss was still expanding.
Specific to the fourth quarter, revenue was 5.78 billion yuan, an increase of 51% year-on-year. The main business of Station B includes games, advertising, e-commerce and value-added services (mainly for member income), and sub-business investigation can deeply understand its actual situation.
As of December 31, the number of paid members was 0.245 million, an increase of 37% year-on-year, and the growth rate hit a record low. Monthly active activities were 271.7 million, an increase of 35% year-on-year, and the data maintained a minimum growth of more than 50% compared with 2020. In the past eight quarters, the number of paid users of Station B and the monthly active growth have been quite weak.
The game was once believed by many analysts to assume the role of the B station cash cow, the quarterly revenue of 1.3 billion yuan, an increase of only 15% year-on-year, down 6.5% month-on-month, seems embarrassing to reuse. If you carefully analyze it, you will find that the game business of Station B mainly includes two categories, intermodal distribution is light assets, which is divided through extraction channels; the cost and risk of self-research are higher, and once the game is sold, the profit is higher than that of intermodal transportation.
Due to the maturity of the two-dimensional community, the intermodal transport capacity of Station B has a strong explosive force. Last year, the two major phenomenon-level mobile games NetEase "Harry Potter: Magical Awakening" and Tencent's "League of Legends" mobile games were jointly released with them. We also noticed that the data fell to the bottom three months after the release of the agency game "Kangong Riding Crown Sword". All indications show that B station has obvious shortcomings in game operation capabilities.
This greatly restricts the B station's self-developed game. Last year, 16 self-developed games were launched, and even if most of them were related to the second dimension, most of them did not stir up a splash, and some of them showed a significant trend of high and low.
Advertising revenue has not been able to exceed the 2 billion yuan mark in the past eight quarters, and this quarter is no exception. Q4 Revenue from this business was $1.59 billion, up 120% year-over-year and the strongest performance in recent quarters. Similar to iQiyi, there are some discord between advertising revenue and membership income, so in the context of the sluggish advertising market and the emphasis on private domain operation, it is more likely that Station B will maintain near 2 billion.
Some insiders believe that Station B does a better job than Tencent in documentaries, and may provide a more acceptable form of content advertising for it.
Advertising revenue and membership income have each passed each other, and the slow growth rate of paid members and the low base in this quarter have led to the value-added service revenue of Station B not making great strides. From Q1 2020 to Q4 2021, the membership payment rate of Station B increased from 7.8% to 9%, lower than that of iQIYI and TME. Poor growth in paid memberships directly affected value-added services revenue and declined sequentially in the fourth quarter. Value-added services revenue was RMB1.89 billion, up 52% year-on-year and down 1 percentage point sequentially.
Compared with the growth of 50% + in 2020, the monthly active data has fallen to 30% + in 2021.
The slowdown in the growth rate of monthly activity indicates that Station B urgently needs to open a new round of breaking the circle. Especially in the e-commerce business that relies on economies of scale, in the absence of new users, it is likely that e-commerce will not be comparable to NetEase's strict selection of such boutique e-commerce - after all, young people will work one day, and with the improvement of income, personal consumption will change significantly.
The fourth quarter has been the highest quarter for B station e-commerce revenue, with Q4 revenue of 1 billion yuan, an increase of 35% year-on-year, and the growth rate hit a record low.
From the development of the four business sectors, we can see that due to the limited income of the joint venture, the growth rate of the game revenue that once occupied the majority of the high and low, which once occupied the largest part, stagnated. After two years of rapid development, e-commerce and online advertising revenue has slowed down. In the past, value-added service revenue increased well, but it fell significantly in the fourth quarter.
It is worth noting that the recent B station e-commerce blind box has caused a lot of criticism, or will make the e-commerce business worse. Moreover, in terms of SKUs, due to the lack of rigid demand and high-frequency products, most of them are mainly secondary derivatives, and it is difficult to ensure the stability of profitability and customer stickiness.
end
Station B and iQiyi are the leaders of the long and short video track, and now both are in the predicament of weak growth and continuous losses. We have noticed that in the process of short video moving towards servitization, the potential consumption scenarios of medium and long-term videos are relatively limited.
The patience of the capital market is limited, iQIYI is limited by the contradiction between content cost and lack of high-quality content, and the B station, which is dominated by young people, is at the crossroads of the conflict between the expansion circle and the community culture. At present, the entire cultural and entertainment environment is not good, and if there is no self-hematopoietic ability, it will be difficult.
Under the cold winter of film and television, long videos rely on reducing expenditure to survive the difficult period, the problem is that the production cost remains high, the growth of member income is slow, in addition to internal optimization, reduce operating costs, due to limited funds, only with the existing film reserves, it is difficult to turn over.
The situation of Station B is slightly better, after going public in Hong Kong last year, the cash flow is abundant, and there is no need to be too pessimistic in the short term. It's just that the current need to stop telling the story of traffic and stickiness, how to convert traffic into real money and silver may really convince the market.
Regardless of the length of the video, in the future, each platform must ensure a relative balance between content, users, and business monetization, and it is the top priority to polish a circular sustainable profit model.
"There must be a road before the car reaches the mountain, and iQiyi will certainly not fall", some insiders believe that even if you and Teng are unable to take over, there will definitely be other powerful platforms to take over. As for Station B, this is the memory of a generation, and no one would expect it to enter the history museum at the age of 13.