What about the profitability of "saying yes"? Long video collectives have entered the era of "making money| a good word

The profitability of the video industry is a long marathon.

In 2010, iQIYI CEO Gong Yu optimistically predicted in an interview with reporters that it is expected to achieve single-quarter breakeven in 2012 and full profitability in 2013. In the same year, his rival Youku CEO Gu Yongjun told reporters after the listing that the profit schedule was in his hands; Wang Wei, the CEO of Tudou, who had not yet been merged by Youku at the time, said that he was striving to achieve profitability in 2010, "if not, the beginning of 2011 is almost the same."

12 years have passed. After the video industry experienced a series of mergers and integrations, Gu Yongjun left Youku to make an old investment bank, Tudou founder Wang Wei established a light-chasing animation, and Gong Yu became one of the few founders in the video industry to stay until the end. But with the exception of Youku, which had a brief profit in the fourth quarter of 2013, the long-form video industry has experienced 12 years of losses.

This year, long videos, which have almost never been profitable, announced that they would stop rolling and "make money." After announcing the 2021 annual report with total revenue of 30.6 billion yuan and net loss of 6.2 billion, Gong Yu said that the long video industry has entered a turning point, and the new stage is characterized by the pursuit of efficiency, the pursuit of loss reduction, and the ultimate pursuit of profitability, rather than the previous pursuit of market share and rapid growth. He gave a clear profit schedule: achieve break-even at the non-GAAP operational level throughout 2022 and breakeven at the quarterly non-GAAP operational level as soon as possible.

Immediately after, Chen Rui, chairman and CEO of Station B, issued an "anti-internal volume" declaration on a conference call: "The cost input of each company, including market input, labor costs, etc., was previously very strongly internally involved, but this year I think the situation of inner volume will be greatly alleviated, and we will also take this opportunity to control expenditure, reduce costs and increase efficiency, control the money that should not be spent, and the efficiency of the money that should be spent is higher." The Station B CFO expects the company to break even non-GAAP in 2024.

Earlier, Alibaba's fiscal 2022 Q3 financial report showed that Youku's average daily paid user size increased by 14% year-on-year, while losses narrowed year-on-year. The narrowing was due to "prudent investment in content and production capacity to continuously improve operational efficiency".

Tencent Video has not yet disclosed the signal of cost reduction and efficiency increase, but last year it has announced a membership fee increase, and the performance is expected to increase prices every year after that or become the norm in the video industry.

Compared with 12 years ago, why is the long video finally "rolled up" this time?

When the companies first set up the "profit flag" around 2010, it was the beginning of the explosive growth of mobile Internet traffic, in other words, at that time, everyone was in the investment period rather than the return period, and then tried to seize the Internet TV market for a period of time; on the other hand, it was the increasing copyright investment of each company, and the cost pressure should not be underestimated. An example is that in 2013, the video website spent 6 million yuan to buy all the non-solo variety shows of the head satellite TV for a year, but a year later, only one variety show had a low price of 6 million yuan and a high of tens of millions; at the craziest time, some video practitioners revealed to the author that they even had to take the official seal of the enterprise to talk about copyright and sign contracts on the spot, and the fierceness of the competition can be seen.

Therefore, the videos of parents, including Youaiteng, will spend hundreds of millions of dollars on the purchase of variety shows and self-made. Obviously, these high inputs are not produced on a proportional scale. However, some changes have already taken place: unlike the advertising-based monetization model of 12 years ago, membership revenue has been able to account for half of long-form video revenue in recent years.

But the pain of profitability has not yet been solved, and new competitors have emerged: B stations that started from the second-dimensional and subcultural circles have accelerated out of the circle, and more and more users have spent fragmented time on the rapidly rising short video platforms such as Douyin and Kuaishou. Although the long video platform also tries to build its own short video business, the two are obviously not the same operating logic, and there is almost no splash in the market.

In addition to responding to the impact of short videos, the long video industry itself also includes problems such as "content injection" and "traffic theory", and more users have become accustomed to watching dramas at double speed and no longer pay for water injection film and television works.

From the perspective of global streaming media trends, Netflix's profitability has allowed the long video industry to see the dawn of profitability; and from the macro environment, the inflation and interest rate hike cycle superimposed on the war, the capital risk aversion is high, and capital undoubtedly prefers those companies that reduce losses or make profits. Competitor short videos are in the cusp, the demographic dividend is disappearing, advertising revenue continues to decline and 12 years of unprofitable video sites, need to tell a "new story".

Especially from the perspective of user and membership scale, compared with when the epidemic first broke out, at that time, in the short term, each company greatly increased user activity, membership subscriptions and other indicators, but now both Netflix and domestic Youaiteng are facing the challenge of overdraft in user scale and declining paid users.

Under the premise that the structure of the revenue model of the video industry does not change dramatically, it is imperative to achieve the profit target of open source and throttling. Last winter, iQIYI has optimized the organizational structure through layoffs, solved the costs and expenses related to people, and improved efficiency, and the management of Station B also said that the growth of the number of employees this year will be very limited; in terms of content control, whether it is purchasing, production or operation, it is necessary to make more refined choices; in addition, technical means may play a greater role in improving the industrialization of film and television production, reducing costs and increasing efficiency.

The slogan of "making money" is shouted loudly, and for each company, whether it is cost reduction and efficiency increase or membership fee increase, it is only one part of the solution to the cost problem. Abandoning vulgar pandering, traffic-only pandering, and continuing to produce high-quality content is the core competitiveness of long videos. In addition to the existing business, where is the imagination space for video websites in the future? Perhaps the capital markets need more new stories.