Figure: Figure worm
Source: 21tech
Author: He Hongyuan
Editor: Cao Jinliang
When the wind stopped, the giants were not spared.
Tencent's financial report shows that as of the fourth quarter of 2021, the number of paid members of Tencent Video was 124 million, a decrease of 5 million compared with the third quarter, and the growth rate turned from positive to negative.
In addition, Tencent Media's advertising revenue decreased by 25% year-on-year to RMB3.2 billion, mainly due to the decrease in advertising revenue of Tencent Video and Tencent News.
In the same period, Tencent's revenue was 144.188 billion yuan, an increase of 8% year-on-year; net profit under non-IFRS was 24.88 billion yuan, down 25% year-on-year, and net profit has declined for two consecutive quarters.
This is just a corner of Tencent's big entertainment "stall".
In the fourth quarter of 2021, Tencent Music's revenue was 7.61 billion yuan, down 8.7% year-on-year; net profit was 536 million yuan, compared with a net profit of 1.20 billion yuan in the same period of 2020, a decline of more than half.
In the current period, Tencent Music Online Music Mobile MAU decreased by 1% year-on-year to 615 million, and Social Entertainment Mobile MAU fell by 21.5% year-on-year to 175 million.
"Lady Hu Zhu", starring Yang Mi, failed to alleviate the decline of Tencent Video members
Image source: Episode official micro
"Reduce losses"
Objectively, the weakening number of Tencent video members has a clear trajectory.
After entering 2021, the growth rate of Tencent Video members has declined for two consecutive quarters again, and the growth in the second quarter has returned to zero, and the number of members has stagnated.
It wasn't until the third quarter that Tencent's video membership returned to growth. At that time, there were episodes such as "Sweeping The Black Storm" and "You Are My Glory" on the line.
In the fourth quarter, Tencent Video also had big projects. Including Yang Mi, Chen Weiting starred in "Lady Hu Zhu" and Zhang Ruoyun starred in "Snow in the Knife Line" and other big IP, big production series. But the results are quite limited.
Reduced membership is also the norm in the industry.
At the end of last year, iQiyi had only 97 million members, down 5.6% year-on-year and 7.4% month-on-month, falling below the 100 million mark.
There are big environmental factors behind it.
"The uncertainty of content launch is the biggest negative factor, which involves the epidemic, production, and content review reasons. In the future, with the easing of the epidemic, policy stabilization, and a deeper understanding of policy review, this negative factor is gradually alleviating; another negative factor is mobile. The total length of the long video market is declining, which has become an objective reality and has been going on for some time. Gong Yu, founder and CEO of iQIYI, said on the earnings call.
With the changes in the general environment, the focus of the giants has changed.
"China's long video industry has entered a new stage, characterized by the pursuit of efficiency, the pursuit of loss reduction, and ultimately the pursuit of profitability, rather than the previous pursuit of market share and rapid growth. The turning point has arrived. Gong Yu said.
By the time, iQIYI has put forward a performance outlook for achieving full-year non-GAAP operating profitability in 2022. In 2021, iQIYI's revenue was 30.55 billion yuan, an increase of 3% year-on-year; a net loss of 6.109 billion yuan, compared with a loss of 7.007 billion yuan in the same period last year; and a non-GAAP net loss attributable to the mother of 4.49 billion yuan, a year-on-year narrowing of 17.6%.
iQiyi is taking various throttling measures. For example, make the organizational structure flatter. Previously, iQiyi carried out a round of large-scale layoffs.
In terms of content, iQIYI will make refined choices in content production, procurement and operation. "The head content will not be reduced, but it is trying to make the head content more profitable through publicity." Stricter control of content that is not well broadcast, reduce procurement, improve the level of content production, and reduce the output of 'bad content'. Gong Yu explained.
In the short, medium and long term, iQIYI's choice is still to improve the industrialization of film and television production, improve efficiency, reduce costs, and improve the predictability of the future broadcast effect of the project through technical means.
Tencent also said in its earnings report that it would take measures to optimize costs and reduce Tencent Video's financial losses, but stressed the need to "maintain a leadership position."
Tencent's approach is roughly the same as iQiyi's.
According to 36Kr, tencent video's PCG (platform and content business group) is undergoing different proportions of personnel layoffs. Several PCG employees said that the layoff rate in their department has been nearly 10%, and the number of layoffs continues to increase.
"In some non-core businesses, the number of employees will continue to become reasonable, and this phenomenon will become more and more obvious." On the earnings call, Tencent's president Martin Lau responded to the layoffs.
According to the 21st Century Business Herald reporter from a number of film and television companies, platform executives learned that Tencent Video film and television drama projects are becoming more and more difficult to meet, and it is not easy to promote the project.
"The head project still exists, but what a head is obviously needs to be redefined." Some executives of film and television listed companies told the 21st Century Business Herald reporter.
"Traffic dilemma"
Tencent Music, which is already profitable, is a different story.
In the fourth quarter of 2021, Tencent Music's social entertainment services and other revenues fell by 15.2% to 4.73 billion yuan from 5.58 billion yuan in the same period of 2020.
The main reason for the decrease is increased competition from other pan-entertainment platforms and the impact of the changing macro environment. In the fourth quarter of 2021, ARPPU increased by 1.7% year-on-year, while paid subscribers to social entertainment services fell by 16.7%.
For Tencent Music, how to resist the intrusion of short videos, especially the vibrato that is entering the music market, is the key.
Data released by Trustdata shows that in January, Douyin's monthly active activity reached 393 million, down 1.16% month-on-month. In the same period, Tencent Music's QQ Music monthly active monthly activity was 159 million, an increase of 3.82% month-on-month; Kugou Music's monthly active monthly activity was 151 million, down 1.16% month-on-month; Kuwo Music's monthly active monthly activity was 108 million, down 0.16% month-on-month.
In the same period, Tencent Music's online music service revenue was 2.88 billion yuan, a low-speed increase of 4.3%. Among them, the music subscription revenue was 1.95 billion yuan, an increase of 23.5% year-on-year, mainly because the number of paid users increased by 36.1%. However, ARPPU fell from $9.4 in the fourth quarter of 2020 to $8.50 in the current quarter, and the decrease was mainly due to additional promotional activities.
In terms of copyright, with the fall of the anti-monopoly sledgehammer, the sequelae of Tencent Music's abandonment of exclusive copyright are emerging.
According to NetEase Cloud Music, in 2021, it has reached copyright cooperation with Modern Sky, Emperor Entertainment, China Singing Group, Fenghua Qiushi, and Lehua Entertainment, and reached direct agreements with the three major record companies. By the end of 2021, netease cloud music content library contains about 80 million music tracks, including music from well-known labels and independent musicians.
Of course, Tencent Music still has the most head advantage, but with the start of new musicians, this advantage is relatively diluted.
A number of upstream and downstream people in the music industry confirmed to the 21st Century Business Herald reporter that NetEase has talked many times about Jay Chou's music authorization, but there is no following.
Tencent Music seems to have placed the increment on long audio.
In December 2019, Kuwo Music released the "10 Billion Sound Machine" plan to support long audio content creation with 10 billion resources + funds. In March 2020, Tencent Music and Yuwen reached a strategic cooperation to jointly explore the market for sound works, and in April of the same year, the long audio independent product Cool I Listen was released; In January 2021, Tencent Music announced that it would acquire 100% of the equity of Lazy Listening book from shareholders such as Reading and Lazy Listening for 2.7 billion yuan, and continuously increased the layout of long audio.
Ai media data show that in the first half of 2020, the number of writers / works were 8.1 million / 13 million, far more than other digital reading platforms, Tencent's IP resource advantages are expected to continue in the field of long audio.
In addition, QQ Music launched in-depth cooperation with the podcast product Small Universe in December 2020 and officially launched the "Podcast" independent module. Tencent Music has completed full coverage of long audio categories such as audiobooks, podcasts, and paid audio.
However, after many years of implementation of the long-term audio strategy, Tencent Music Monthly Active is still in the falling range.
Editor: Lu Taoran