Folded user groups, embarrassing long videos

Image source @ Visual China

Text | Financial Storyteller

As the highland of the global long video platform "Pilgrimage", Netflix was once synonymous with high growth and high profitability.

But its latest quarterly earnings report has surprised people - the loss of paid users, stagnant revenue growth, and a year-on-year decline in net profit.

On the evening of April 20, Netflix's stock price ended with a 35% decline, the largest one-day decline in nine years.

After the decline in the number of members, the only fulcrum that can provoke revenue growth is to increase prices - in January this year, Netflix gradually increased subscription fees in North America.

During the earnings call, Netflix co-CEO Reed Hastings reed made a compromise that "the future will satisfy consumers who want to be tolerant of advertising at lower prices."

Even the rich Netflix began to cut money in the fingers, and even planned to launch "membership advertising". In contrast, the days of China's long-form video are even more difficult – stagnant advertising markets, members who refuse to raise prices, losses that have not yet come out, and so on.

Finding a way in distress, reducing costs and increasing efficiency, the video of Chinese and foreign mayors in the same direction and the same road is stepping into the same river, where is the opportunity to go ashore?

01 Advertising VS members, how to "dilemma" to "two complete"?

In the monetization mode, Netflix and Aiyouteng are actually looking at each other.

For many years, Netflix has always said no to advertising – worrying that advertising will affect the user's perception experience.

"I have to ask you questions about advertising. Otherwise, I wouldn't have left this room alive. In early March, a Morgan Stanley research director jokingly pressed the CFO of Netflix.

Before going public in 2018, iQIYI's membership paid contributions had long been below advertising revenue. From 2015 to 2017, the revenue of membership services accounted for 18.7%, 33.5% and 37.6% respectively; in the same period, advertising revenue was 3.4 times, 1.5 times and 1.24 times of membership payments, respectively.

It wasn't until Q3 2018 that iQiyi's membership revenue exceeded advertising for the first time. By Q3 2019, membership revenue accounted for more than half for the first time.

In this regard, Gong Yu has compared the difference between the two, in the early days, advertising revenue, especially brand advertising, ranked first in the revenue of video websites, but its disadvantages are low ceiling, slow growth, and limited space; in contrast, the membership business ceiling is higher and the growth time is longer.

In 2021, the online advertising market entered a stagnant rise, and in the same period, iQiyi's advertising revenue also fell by 10.5% year-on-year. Even Tencent Video's head variety show "Semi-Familiar Lovers" at the beginning of the year, from the beginning to the end of the broadcast, an appreciation quotient did not pull.

Under the advertisement, the dependence of iYoteng on user payment has been further enhanced.

Therefore, it is not difficult to judge that in long videos, first, it is the consensus that open source and reduce costs to expand multiple monetization models. Netflix compromised, Aiyouteng changed lanes, and walked into the same river of "advertising monetization + member payment"; second, the revenue market still depends on the support of membership payment, in the final analysis, user experience is the first.

Even for users, the long-term loss of long videos is not a good thing - more money may not produce good content, but less money must not be able to produce good content continuously.

After all, the content of the series, like physical goods, has both cost and value, and it is unrealistic and unfair to talk about quality and service aside cost.

Take Game of Thrones, for example, according to GQ, its total cost per season is as high as $60 million to $80 million.

A long-term video person revealed to the "Financial Story Club" that some of the platform's large-scale projects were produced, "Before going online, 70% or 80% or even 90% of the cost has been spent, and the money must be recovered, otherwise how can content production continue?" That's the pressure on the platform."

After the epidemic, "the life of the production agencies is not very good, and they also hope that the platform can have more revenues to feed back into the upstream production." ”

The data shows that in 2020, more than 5,000 film and television-related companies collapsed, and nearly 4,000 film and television companies went bankrupt in 2021.

In addition to open source, throttling is also inevitable, and Aiyouteng is working hard - the first knife is cut on the sky-high salary. In 2022, Tencent Video made a big move and set a maximum salary for self-produced drama actors - 25 million.

It can be said that in terms of content cost compression, Aiyouteng has little space - from the financial report, in Q4 2021, iQiyi's content cost has only been compressed by 5%.

Another throttling is marketing customer acquisition - in Q4 2021, iQiyi's marketing costs were compressed by 17%, which was more than three times the cost of content.

In fact, on April 16, Youku launched the "Invite Five Friends, Unlock the Plot in Advance" function for VIP users, and the basic logic is also "cost reduction and efficiency increase" - by motivating users to fission, to achieve low-cost customer acquisition.

Although this attempt has attracted controversy, reducing costs and increasing efficiency is indeed an inevitable choice of last resort. Of course, whether this attempt is bought by the user or not, it is also left to the market to test, and the user to vote.

02 Users fold backwards to force service tiering

Membership payment has built a large market of long video revenue, but it is not easy to serve users well - hundreds of millions of users, with different demands, it is difficult to find a "comprehensive solution" to meet all users.

In this regard, Netflix's approach can be called the pearl jade in the front - for different member accounts, divided into basic, standard, advanced three levels, of which, the price of senior members is 19.99 US dollars / month, which is about twice the pricing of basic members.

In March this year, Disney announced the launch of the "Disney+" low-cost membership service, in which there will be advertising insertions.

Different from the rationality of Netflix's frequent price increases, Aiyouteng is cautious in price increases, somewhat afraid of hands and feet, and in the early days, it mainly relied on the free mode to "feed" users.

After the latest round of price increases, at present, the monthly membership fee of IYoteng is just located in the range of 22 to 30 yuan, which is far lower than the Netflix membership fee - 9.99 ~ 19.99 US dollars / month, the lowest price of Youku membership fee, you can even get for free - if you are An Ali 88 VIP member.

On the one hand, it is difficult for mainstream membership fees to increase prices, and on the other hand, the needs of users are diversified. In view of the differentiated consumption demands and consumption capabilities of users, it has become inevitable to provide differentiated services.

At present, domestic long video users can actually be divided into several categories:

Price-sensitive users who are willing to sacrifice the experience and do not reject ads in order to enjoy free content;

Time-sensitive users, willing to pay for content, become members, skip ads;

Social cattle users may be willing to invite other users to chase the drama together;

Iron fans (who have an obsession with a certain star or a certain series), are willing to pay to unlock the plot in advance, etc.

For example, since the beginning of this year, the explosive dramas "The Beginning" and "The Tale of the Taming Fish" have risen in large numbers of chasing more and more troops. Some iron fans even began to miss the old days of "advanced on-demand", "Really can't go over- "Please, please, can you add more!" Super point is OK, I am willing to spend money! ”

But in fact, adding more to long video platforms is often an unbearable weight.

The broadcast cycle of the series is usually the result of collective negotiation and agreement of the platform, the content party, the advertiser, etc., once the large-scale area is updated in advance, all contracts may have to be re-signed, and the rhythm of the production of various promotional materials and the advertising implantation cycle will also be completely disrupted.

"If you are very hasty and do not coordinate the parties, you may face defaults and claims," the long video source revealed.

Previously, in response to the demand for a small number of iron fans, advanced on-demand was an outlet for releasing emotions.

It's just "the honey of the other, the arsenic of the ru" - the advanced on-demand broadcast that started from the "Chen Qing Ling" in the summer of 2019, and was collectively stopped in October 2021 under the fierce public opinion. The demand for some hardcore drama fans to watch the drama in advance is blocked.

Another long video platform person, has made a rough estimate of this, "Among the thousand users of long video platforms, usually only five to ten people are willing to open super points, and some popular dramas may have 20% and 30% of users have this appeal." And one-size-fits-all service will lead some users to seek perfection."

After the paid advanced VOD was stopped, how to meet the above iron fans' demands? Youku's plan is to incentivize members to unlock the plot in advance by pulling new free - this essence is also to satisfy some of the users of the differentiation of the user.

Unlike the collective price increase of membership fees, Youku has not reduced the stock rights and interests of members. The established broadcast schedule of the episode has not changed, and the original permissions of VIP members have not been affected, but a new option to unlock the plot in advance has been added, and this activity is limited to episodes 23 and 24.

Why set a threshold for adding more episodes instead of directly adding more for all users?

To some extent, the platform is also a last resort - as mentioned above, if you make a big move to add more to all VIP users, you will suffer multiple pressures from the investment, production, marketing and other levels, and set a threshold for the user group of the plus, and the plus more episodes are limited to two episodes, and the pressure will be reduced a lot.

The differentiation solution is also Tencent Video. For example, for non-member users who want to watch the show, the launch of "three yuan purchase" to unlock the entire work, of course, for the sake of fairness, the limited duration of this right is three months.

In fact, differentiated operations for members and users are also spread across all walks of life. For example, airlines also provide different services such as Silver, Gold, Platinum, diamond and so on according to the membership level, while Disney and Universal Studios have launched a variety of express pass tickets and so on.

Nowadays, whether it is Netflix or Aiyuteng, whether it is to drive growth, or to turn losses into wins. Long videos in the same direction and the same road are faced with the dilemma of how to balance user experience and performance growth, and providing differentiated services may be the only option. (This article was first published on the Titanium Media APP)