Long videos turn to the pursuit of loss reduction iQiyi is once again caught in the "slimming" storm

On March 10, EASTERN TIME, Chinese stocks suffered a collective plunge, and iQiyi (IQ) fell 21.71%. Immediately after the news of the departure of a number of executives was also revealed.

On March 11, some media reported that after iQIYI's organizational structure adjustment at the end of 2021, a number of content business executives have recently left, many of whom are the right-hand men of Chen Wei, senior vice president of iQIYI.

Since then, an executive has sent a circle of friends to refute rumors that "I have not left ... I don't plan to leave my job either." As for whether other executives have left or intend to leave, the reporter of China Times asked iQiyi for verification, but has not received a reply.

Separations and layoffs

According to media reports, in addition to Che Che, the former vice president of iQIYI and head of YOH Studio, Who previously left, Tan Yinzi, the general director of iQIYI ScreamIng Gala and the head of Mei Kr Studio, Yang Yang, head of the Variety Planning Department and Variety Promotion Department, and Chen Qiyi, director of content marketing responsible for drama and animation marketing, have also recently left iQIYI.

After the news of his departure, Tan Yinzi denied the rumors in the circle of friends, saying that "the last time Sina news was rare, it was fake news... Didn't leave... I don't plan to leave my job either." Since then, there have been news that Yang Yang and Chen Qiyi are not senior executives of the company, but department directors.

As early as the end of 2021, iQIYI also carried out layoffs, with a layoff ratio of 20%-40%, involving games, short videos, iQIYI intelligence and other businesses, of which there are also many middle and high-level people who have been laid off.

The other side of iQiyi's layoffs is that some of the content that can bring revenue will be suspended in 2021.

Due to the milk pouring storm and the clear rice circle action, the idol talent show of "coming for money fast" is also facing regulatory pressure. From May 2021, iQIYI's talent show "Youth with You" appeared in the "milk pouring incident", and after the general twists and turns, iQIYI also announced rectification measures to stop recording and live broadcasting the group night originally scheduled for May 8.

On October 4, 2021, iQIYI announced the official cancellation of the advanced on-demand of episodes, while canceling the content promotional patches visible to members, on the same day, Gong Yu said on Weibo, "Continuously improving the consumption experience and satisfaction of members is the goal of iQIYI's long-term efforts, even if the short-term revenue is damaged." ”

Internet industry analyst Zhang Shule analyzed to the "China Times" reporter that layoffs are essentially a strategic shift at the structural level of long video companies in order to cope with the current internal and external difficulties, and the inevitable personnel changes, some abandoned staff in the direction of attack, or transfer or resignation, it has become inevitable.

"Layoffs are not to compress administrative costs for profit, nor does it mean that some directions are abandoned and content costs are reduced, but it is an inevitable transformation pain in the process of explosive models and Netflix." Zhang Shule also said.

The pursuit of loss reduction and profit

Long video has been losing money for many years, since its listing in 2018, iQiyi's cumulative net loss in four years is about 32.6 billion yuan, and now long video companies have also begun to turn to the pursuit of loss reduction.

According to the latest financial report, in 2021, iQIYI's total revenue reached 30.6 billion yuan, an increase of 3% year-on-year, and the net loss narrowed from 7 billion yuan in 2020 to 6.2 billion yuan, a year-on-year narrowing of 11.43%; of which the fourth quarter revenue was 7.4 billion yuan, basically the same as in 2020; the net loss was 1.8 billion yuan, an increase of 20% over the same period last year.

Gong Yu, founder and CEO of iQIYI, said in a conference call afterwards that China's long video industry has entered a new stage, characterized by the pursuit of efficiency, the pursuit of loss reduction, and the ultimate pursuit of profitability, and the focus has changed from seizing market share to improving operational efficiency.

"Since Q4 2021, iQIYI has launched a series of initiatives to optimize its organizational structure and focus on its core business, significantly improving operational efficiency and ROI, and significantly reducing losses while maintaining its leading position in the industry." Gong Yu also said.

Gong Yu gave a profit schedule, iQIYI will achieve the full year 2022 non-GAAP (non-GAAP financial indicators) operational level breakeven, and as soon as possible to achieve quarterly non-GAAP operational level breakeven.

While "throttling", iQiyi is also "open source". On December 15, 2021, the official Weibo of iQIYI VIP members said: "We will update the subscription price of iQIYI Gold VIP members from 0:00 on December 16. At the same time, we will provide one year of maintenance of the original price service for users who have previously purchased and have not yet cancelled the iQIYI Gold VIP member continuous monthly/season/annual subscription service. ”

At that time, iQiyi replied to the "China Times" reporter in an interview, "The subscription price of the video platform has been low, and this phenomenon has affected the healthy development of the industry." In order to establish a more benign industrial ecology, let excellent content producers have a return, and ultimately provide members with more and better content, we decided to adjust the price of members. We will continue to strive to do a good job in content, products, and services to users. ”

However, the price increase finally dissuaded some users, and in terms of the scale of subscription members, iQiyi's average daily subscription members fell below 100 million in the fourth quarter of 2021, with a total of 97 million, a year-on-year decrease of 5.7 million.

It is worth noting that the 2022 opening year drama "The World of Man" was broadcast exclusively on the entire network of iQiyi, and the content popularity value exceeded 10,000. According to the data of iQIYI Data Research Center, among the users who watched "Human World", among the users who became iQIYI VIP members for the first time for "Human World", users over 40 years old also showed a very positive payment preference, and many post-70s users became iQIYI VIP members because of "Human World" recharged for the first time.

In addition, on March 4, the company announced the signing of subscription agreements with investment institutions such as Baidu. The investors agreed to purchase a total of 164,705,900 newly issued Class B ordinary shares and 304,705,900 newly issued Class A common shares in private placements for a total purchase price of US$285 million (approximately RMB1.8 billion) in cash. Among them, as the largest shareholder of iQIYI, Baidu will subscribe for Class B ordinary shares, and other investors will subscribe for Class A common shares.

Responsible Editor: Huang Xingli Editor-in-Chief: Han Feng