Produced | Pie Finance
Wen | Wang Feishu edited | the prince of the sect
The long video industry, which has been constantly turbulent, has ushered in the follow-up price increase of Tencent Video.
A few days ago, Tencent Video officially issued a notice that it will adjust the price of Tencent Video VIP and Super Film VIP members at 00:00 on April 20, of which 5 kinds of member prices such as Tencent Video VIP Monthly Card and Super Film and Television VIP package prices remain unchanged, and the remaining 7 kinds of increases range from 5 to 20 yuan, and the highest one rises by 25%.
From the perspective of the long video industry, Tencent Video is not alone, from the end of last year to the beginning of this year, iQiyi, Mango TV, Migu Video, etc. have been intensively attacked by users because of price increases. But enterprises always have to survive, investors always have to make profits, and the price that should rise still has to rise. However, the anger of member users has never been able to be calmed, and the taste of being treated as a lamb to be slaughtered is really not very good.
However, knowing that users are not happy, why do the long-term video giants with deep pockets still repeatedly start the idea of user wallets? If they don't make a penny, how do they escape the vortex of loss?
01 Price increases are routine
A full year before the price increase, Tencent Video also made a price increase.
On April 10, 2021, Tencent Video announced to 100 million paying members that it would continue to subscribe to 20 yuan per month, 58 yuan for consecutive seasons and 218 yuan for consecutive years, up 33%, 29% and 22% respectively, and 30 yuan for non-continuous packages, 68 yuan for the season and 253 yuan for the annual package, up 50%, 17.2% and 27.8% respectively.
Inspired by the major video sites as if the appointment, have followed up, of which, iQiyi VIP the highest increase of 20%, compared to Mango TV's VIP price increase is still less, the continuous monthly price increase of only 1 yuan. It is understood that among the domestic comprehensive video platforms, iQiyi, Tencent Video, Youku, Mango TV, and Bilibili have attracted more than 80% of audiovisual users, and according to the "2021 China Online Audiovisual Development Research Report", the five major platforms accounted for 88.3% of the market share.
That is to say, the price increases of these platforms basically represent the unified price increase of the whole industry, and Tencent Video members have become the most expensive members.
Even so, Tencent Video, iQiyi and Youku, which have become oligarchs, still lose money and are becoming more and more tired in terms of user growth and membership income. Tencent Holdings' latest financial report for the fourth quarter and full year of 2021 shows that by the end 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 fact, as early as Q4 2020, Tencent Video's membership growth has stagnated. After entering 2021, the month-on-month increase in the membership of the platform has declined for two consecutive quarters, and the growth in Q2 has returned to zero, and the number of members has stagnated. Until Q3, under the super intensive pull of major dramas such as "Sweeping Black Storm" and "You Are My Glory", Tencent Video's membership growth turned from negative to positive. By the fourth quarter, Tencent Video continued to make big moves, releasing big IP and big-scale production dramas such as "Lady Hu Zhu" starring Yang Mi and "Knife Line in the Snow" starring Zhang Ruoyun, and the paid membership decreased by 3.9% to 124 million from the previous quarter.
The decrease in the number of members naturally corresponds to the weakening of commercial value. According to the financial report, Tencent's media advertising revenue fell by 8% to 3.2 billion yuan in 2021. According to the official explanation, the main reason is the decrease in Tencent Video's advertising revenue. It is precisely for this reason that in 2022, Tencent Video impatiently raised prices again in April.
Also troubled is Tencent Video's old rival iQiyi, whose latest financial report shows that iQiyi's total revenue in 2021 reached 30.6 billion yuan, an increase of 3% year-on-year, and the annual Non-GAAP (non-US GAAP) operating loss of 3 billion yuan. In terms of membership data, iQIYI's average daily subscription membership in the fourth quarter of 2021 was 97 million, a decrease of 5.7 million year-on-year; in the third quarter of 2021, it was 104.7 million, a decrease of 7.7 million from the previous quarter; this is also the first time since Q2 2019 that iQIYI's membership has fallen below 100 million.
The remaining giant Youku Video is not listed, and the relevant data is missing. But a basic fact is that long videos have gone through 17 years since Tudou launched in 2005, and losses have been one of the biggest problems in the entire industry. According to data, the three companies of Aiyouteng have burned as much as hundreds of billions of dollars in ten years, but there is still no profit, and even the B station outside the three giants is also in a huge loss, the only exception is Hunan Satellite TV's son Mango Super Media.
No wonder, Fan Luyuan, president of Ali Entertainment Business Group, once spoke publicly at the conference: "According to the current living environment, it is delusional to make a profit just around the corner." ”
But having said that, the long-form video giants who don't want to be salted fish are still physically honest in their exploration of the possibility of profitability. However, they also know that in addition to unconventional means such as advanced on-demand, profitability can only be achieved through membership price increases and advertising fees.
Obviously, in the long video pattern has been determined, and the short video platform is full of momentum, as well as the entire socio-economic pressure environment, long video players want to achieve profitability through advertising, which is nothing more than a fool's dream. Therefore, in the eyes of the giants, the wool of the member users has become a natural choice. What's more, in their opinion, the membership fee is still too low. Gong Yu, founder and CEO of iQIYI, said that iQIYI provides users with high-quality content, but the membership pricing is too low. "It has affected the healthy development of the industry."
Based on the price increase of Tencent members, according to the membership price of 25 yuan / month, in the face of 124 million paid members, Tencent Video can generate 37.2 billion yuan in revenue by member payment alone, which is definitely the best posture to lie and earn.
02Where do losses come from?
For long video platforms, the outside world will have a common question: where did the money go?
One of the most important reasons is that the Aiyouteng people themselves have rolled up the money. As a common learning object of the three giants in China, Netflix will spend as much as $17 billion on purchasing copyrights and self-produced dramas in 2021. Naturally, domestic followers have also followed suit, intending to gain an advantage in copyright resources through banknote capabilities and completely squeeze out competitors.
In this regard, the earliest testers were the veteran player Sohu Video. In 2009, Sohu Video purchased the copyright of "Great Qin Empire" at a "high price" of 25,000 yuan, after that, iQiyi took over the banner of copyright, and in 2014, the Korean drama "You from the Stars" that received huge attention was broadcast exclusively on iQiyi, allowing it to harvest huge broadcast traffic and huge advertising revenue, and iQIYI began to taste the sweetness; in 2016, after obtaining the exclusive broadcast rights of "Descendants of the Sun", the number of paid members increased by 50%. Membership fees alone increased revenue by about 190 million yuan; by 2017, Tomb Raider Notes 3 exclusively licensed iQiyi at a custom price of 24 million yuan per episode, and the purchase cost of long video rights increased by more than 400 times.
Good content is always limited, but competitors think they can do it, and the direct consequence of this is that long video platforms are willing to become "self-rolls". "The value of exclusive copyright lies in the fact that in the short term, it will play a role in gathering traffic and pulling new users, and become a weapon to change the competitive landscape of long-term videos." Some insiders said that this is the reason why long video platforms are overly chasing content exclusivity.
A widely circulated case is that when competing for "Ruyi Chuan", the two parent video platforms originally agreed to pay 600 million yuan each to win the dual platform broadcast rights, but one of the teams was convinced that "Ruyi Chuan" would become the second "Zhen Huan Chuan", shouting out 1.3 billion yuan to grab the exclusive broadcast rights, and finally failed to copy the glory of "Zhen Huan Chuan", and the membership + advertising revenue was not enough to cover its sky-high cost.
Even so, Tencent Video and iQiyi, who have tasted the sweetness, are still happy to do so, because no one can guarantee that the next blockbuster will not appear in the other camp.
Therefore, over the years, the head players in order to occupy the high point of hundreds of billions of dollars to buy copyright, self-made dramas, public data show that in the entire Internet about 8826 copyright dramas Tencent Video covered 53%, domestic over 100 million of 399 movies Internet copyright tencent video covered 82%; 2021 ~ 2023, the main long video platform new episode coverage, Tencent accounted for 46%, Youku accounted for 29%, iQiyi accounted for 21%, Mango TV accounted for 11%.
Just in February this year, Tencent acquired the exclusive information network dissemination rights for a total of no less than 6,332 film and television programs with a total of no less than 6,332 shares in Jebsen for a period of six years.
However, what makes people cry is that the long-term tug-of-war, the final benefit is the traffic star, because the long video platforms have found that the popular IP + traffic star is the easiest way to make money. Under the mechanism of competing for a competitive price increase, traffic stars have made a lot of money, while long-form video players have turned themselves into objects of ridicule.
In February 2019, Gong Yu said on a conference call after the release of iQiyi's fourth-quarter earnings report, "The cost of purchasing copyright has dropped from a maximum of more than 15 million episodes of a TV series to less than 8 million, and the cost of self-made dramas is mainly reduced in terms of actors' salaries, and now the maximum price of a top actor is 50 million yuan, compared with more than 150 million yuan before." ”
Fortunately, with the release of the national salary restriction order, long video platforms have gained a breathing space.
However, this only eased the losses of long-form video platforms, but it did not make them profitable, because the pursuit of exclusive rights by players continued. Especially after the rise of short videos, cutting strips, commentary and other secondary video content has made a large number of long video users turn to short videos, and the user time is constantly compressed, so there is a short video "pig food theory" by Tencent video executives last year, and the anger value is directly full.
At the same time, on the content side, short video platforms have also begun to march towards self-made content. In 2021, Douyin officially entered the micro-short drama track; Kuaishou plans to invest real money and tens of billions of traffic to create 1,000 exclusive boutique short dramas; Station B will continue to increase variety content this year after the end of "Rap New Generation" last year.
Wave after wave of shocks, long video players do not fight back much. In the business model of long video, its revenue composition is mainly two parts: membership payment and advertising revenue. However, in the initial publicity, "members to advertise" has been a common word of video platforms, but also generally accepted by consumers, and now it is difficult to increase advertising revenue. This can be seen from the proportion of iQiyi's advertising in the past years, from 50.28% in 2016 to 23.13% in 2021.
Therefore, in order to narrow losses and even achieve profits, membership price increases seem to be the most brutal and direct, but the simplest and most effective way - at least long video players think so. However, the problem also arises, the users who have been woolen, the tolerance is always limited, how to balance the relationship between price increases and user loss, has become a new problem for platforms.
03Where is the way out?
In fact, the use of member price increases to generate income is not unique to Aiyouteng, and its target Netflix is also going through the same process.
In terms of de-advertising, the forerunner Netflix has done a better job, and it still insists on refusing to add any ads to the video. However, after 20 years of growth, the single membership paid profit model has also begun to show weakness. According to the data, the annual growth rate of Netflix's paid membership has also narrowed from 26.26% to 11.64%; the annual new paid membership has also declined, from 36.6 million in 2020 to 18.18 million last year.
Prior to this, Netflix announced an increase in the price of membership subscriptions in the Uk and Ireland in mid-March, which is the second time that Netflix has raised prices in this region in 18 months. In November 2021, Netflix also raised its membership price in South Korea for the first time, and again increased subscription prices in the U.S. and Canadian markets in January 2022.
That is to say, Netflix has also fallen into a growth bottleneck similar to that of Aiyouteng, and it seems that paid users and unit prices can only choose one or the other. Not long ago, Netflix predicted that the number of new paying users in the first quarter of this year would be 2.5 million – significantly lower than the industry's estimate of 5.8 million, and its stock price immediately plummeted by 27%.
The same dilemma has long been manifested in iQIYI, after the announcement of the price increase at the end of 2020, the membership fee price increase did not achieve the expected effect, from the financial report data can be seen, iQIYI's membership service revenue in each quarter of 2021 was 4.3 billion, 4 billion, 4.3 billion and 4.1 billion yuan, an increase of -6%, 0%, 0% and 7% respectively, and did not achieve growth.
When the company's revenue is mainly driven by the unit price of customers rather than the size of customers, many times it is not an optimistic signal: in the non-rigid demand market, the unit price increase will compress the scale of users, and the company will have the impulse to further push up the unit price of customers in order to ensure revenue, thus falling into a vicious circle.
What's more frightening is that the current video membership price of Aiyouteng has basically exceeded that of Netflix. From the perspective of the latest membership price, after the price increase, the membership price of Aiyouteng is 22 to 30 yuan / month, calculated according to the domestic per capita monthly salary of 2927 yuan (the National Bureau of Statistics announced the per capita income of the national residents in 2021 of 35128 yuan), accounting for more than 10 thousandths; the membership fee of Netflix is 9.99 ~ 19.99 US dollars / month, according to the per capita monthly salary of the United States of 3500 US dollars, accounting for less than 6/10000.
This means that the price of i-Uteng's membership may have exceeded the tipping point, and players can no longer increase their income by raising prices, but instead discourage consumers. What's more, at present, higher membership prices do not bring users a better experience, such as film "separate payment", "advanced on demand", "video advertising" and other charging methods are still emerging, which makes users unacceptable.
So, what's the problem?
When Disney+ changed its previous rejection of advertising because of the low income of pure members in 2022, Netflix was also forced to ask when to increase advertising on the platform, indicating that the business model of the long video platform may have reached the stage of re-correction and exploration. And the Aiyouteng, who are deeply troubled by losses, naturally assume the heavy responsibility of model exploration.
In fact, the problems faced by Aiyouteng are more serious than Netflix. The latter is aimed at billions of potential users and 220 million paying users around the world, while Aiyouteng, Bilibili, and Mango TV share more than 300 million paying users, and there is no doubt that in terms of profitability, Aiyouteng is in hell mode.
Therefore, in 2022, iQiyi and Tencent Video have proposed the goal of breaking even or starting to make a profit. In 2021, in order to reduce losses, iQIYI has adopted open source and cost-cutting measures, in addition to saving people-related costs, but also to make the organizational structure flatter." According to media reports, at the end of last year, Gong Yu laid off 20%-40% of employees in one go. With this, iQIYI recorded a very appetizing financial report for investors, and the net loss attributable to iQIYI's parent company in 2021 shrank to 6.17 billion yuan, and its profitability increased by 12.4% year-on-year.
Tencent Video has taken similar measures, and Tencent's 2021 annual report shows that the company is taking steps to optimize costs and reduce Tencent Video's financial losses. Not long ago, Tencent was rumored to have made large-scale layoffs, and Tencent Video must have been affected.
However, while shrinking costs, Aiyouteng also began to move their minds. On March 17, 2021, the TV series "If You're Okay Is Sunny" starring Zhang Han and Xu Lu was broadcast on Oriental Satellite TV, but it was not broadcast in cooperation with any parent video platform.
Soon after, its producer Yang Li publicly attacked Aiyouteng on Weibo, saying that in order to reduce costs, it began to jointly suppress the price of many producers' dramas from 2020. "In terms of pricing, on the three of them, they decide how much is how much. The producers resisted, and if they could not reach the same agreement, they dragged it to the last moment before the satellite TV began broadcasting, otherwise it would be naked. ”
If as Yang Li said, the long video platforms are undoubtedly fishing in the water, and the squeezing of creators will eventually bring about the destruction of the entire industry ecology, excellent content output will be greatly hindered, and the ultimate harm will still be the platform itself.
Now, as a "middleman", long video platforms cut down on expenses, squeeze content creators, raise prices downwards, and steal membership wool, but they cannot continue to output high-quality and excellent content, nor can they give users more unique rights. This dooms users with low loyalty to swing back and forth between various platforms, which content is more attractive to go to which, the direct consequence is that the platform's profitability can not be completely improved, vicious competition can not be stopped.
That is to say, the current loss will continue, and the exclusive copyright will still be enshrined as a guideline, which will be a super long-distance run that tests explosiveness and endurance until a certain platform obtains an absolute advantage.