Impact hundreds of millions of members! After a year, Tencent Video once again announced a price increase

Author 丨He Hongyuan

Editor 丨 Zhang Weixian

Figure Source 丨 Figure worm

Tencent Video is clearly in a state of tension.

On the afternoon of April 9, Tencent Video announced that it will adjust the prices of Tencent Video VIP and Super Film and Television VIP at 00:00 on April 20, among the 12 member types of the two major types of members, the price of 5 member members such as Tencent Video VIP Monthly Card and Super Film and Television VIP will remain unchanged, and the remaining 7 types will increase by 5 to 20 yuan.

Among them, the monthly subscription price of Tencent Video VIP continuous subscription was adjusted from 20 yuan to 25 yuan, the VIP continuous package season rose from 58 yuan to 68 yuan, and the VIP continuous package increased from 218 yuan to 238 yuan. Tencent Video's VIP season card rose from 68 yuan to 78 yuan, and the vip annual pass price was adjusted from 253 yuan to 258 yuan. The monthly subscription price of Super Film and Television VIP was adjusted from 30 yuan to 35 yuan, and the continuous subscription season of Super Film and Television VIP rose from 88 yuan to 98 yuan.

Tencent Video's last membership price adjustment was on April 10 last year, with a maximum increase of 50%.

After the news came out, it quickly caused a heated discussion among netizens, many of whom expressed their incomprehension of the price increase.

"Cost Reduction and Efficiency Improvement"

But this is only a corner of the change.

A day earlier, Tencent Video held an "Early Spring Business Sharing Meeting". At the meeting, Tencent Video said that it will further "reduce costs and increase efficiency" in content development, make reasonable expenditures, optimize content costs, and explore content production under controllable costs.

It proposes that the cost of content production factors such as self-made, customized, and copyrighted by the platform will be further standardized and rationalized next, and through effective and landing measures, it will ensure that the cost can be controlled, suppress the unreasonable inflated price on the production chain, squeeze out the bubble, and leave enough room for development.

Tencent Video will also innovate the cooperation model, and on the existing cooperation model, it will introduce the initiative of "market price + member a posteriometric incentive" to further incentivize high-quality content and activate upstream and downstream content production.

Earlier, iQIYI founder and CEO Gong Yu also said on the earnings call that the turning point has arrived. "China's long-form video industry has entered a new stage, 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 said.

iQIYI has put forward a performance outlook for achieving full-year non-GAAP operating profitability in 2022.

"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 said.

In fact, the industry has long felt the platform changes.

Liu Xiaofeng, chairman of the board of directors and CEO of Straw Bear, said at the performance exchange meeting that the platform budget cut is in the waist products, as well as the cuts in the products below the waist, and there is no reduction in investment in the head products.

However, executives of other film and television listed companies told the 21st Century Business Herald that head projects still exist, but the number has decreased significantly. "What is a head obviously needs to be redefined." He said.

According to the 21st Century Business Herald reporter, at present, the key elements of cost such as directors, screenwriters and actors are falling significantly. In particular, the salaries of first-line actors have fallen.

"It's not easy to reduce losses"

Behind the changes in Tencent Video is that loss reduction has become a hard task.

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.

During the same period, 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 current 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.

In this situation, Tencent said in its earnings report that it should take measures to optimize costs and reduce Tencent Video's financial losses, but stressed the need to "maintain a leadership position".

The core of Tencent Video's long-term loss is that the imagination space of the industry is limited.

Not only Tencent Video, but also iQiyi's membership is also declining. At the end of last year, it had only 97 million members, down 5.6% year-on-year and 7.4% month-on-month, falling below the 100 million mark.

On December 15 last year, iQIYI announced that gold VIP ordinary monthly subscription members were raised from 25 yuan to 30 yuan; continuous monthly subscription members were raised from 19 yuan to 22 yuan; ordinary season card members were raised from 68 yuan to 78 yuan; continuous season subscription members were raised from 58 yuan to 63 yuan; and ordinary and consecutive annual card membership prices remained unchanged, at 248 yuan and 218 yuan, respectively. Star Diamond membership prices remain unchanged. The overall price adjustment range is between 9% and 20%.

Membership income is iQIYI's largest source of income. Boosted by the previous round of price increases, the business generated revenue of 16.7 billion yuan last year, up 1% year-on-year.

iQiyi's advertising revenue is also declining. In the fourth quarter of last year, iQIYI's advertising revenue was 1.665 billion yuan, down 10.5% year-on-year.

Membership and advertising are the main sources of revenue for long videos.

For the whole year of 2021, iQIYI's total 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%.

"Based on national conditions, there is a limit to paid membership. I don't see long videos in the future. A former executive of the head minister video platform told the 21st Century Business Herald reporter.

In this situation, increasing membership revenue and reducing content costs have become one of the few options for long videos.

However, there is no good news in the near future, and consumption growth continues to be weak. On March 30, the central bank routinely released a questionnaire survey of urban depositors, entrepreneurs and bankers in the first quarter of this year, showing that in the first quarter of this year, the proportion of depositors who chose to "save more" in the future reached 54%, an increase of 2.9 points from the previous quarter.

After the epidemic in 2020, whether it is "more investment proportion" or "more consumption proportion", there has been a central decline, and only the "more savings proportion" has rebounded significantly.

In addition, the decline in the number of members has a limited impact on newly broadcast film and television dramas, and the reason behind this is that the epidemic has repeatedly affected the progress of the whole chain of the project. But that situation has not fundamentally changed.

This makes the road to member price increases more difficult.

Editor of this issue Wang Tingting Intern Lin Xiying