Recently, Tencent Video announced the second round of membership price increases. It should be noted that other long video platforms have also had membership price increases more than once. Can a long video platform that has been losing money for many years stop the loss by raising the membership fee?
Price increases again
Recently, Tencent has adjusted the price of Tencent Video VIP and Super Film VIP members again, and the price increase is between 5 yuan and 20 yuan. Among them, Tencent Video VIP continuous monthly subscription, Tencent Video VIP annual pass, super film and television VIP consecutive monthly subscription increased by 5 yuan; Tencent Video VIP continuous package season, Tencent video VIP season card, super film and television VIP continuous package season rose by 10 yuan; Tencent Video VIP continuous annual package increased by 20 yuan.
It should be noted that in April last year, the price of Tencent Video members has undergone a round of price increases, ranging from 1 yuan to 85 yuan, with a maximum increase of 50%.
Not only Tencent Video, but also iQiyi, Mango TV, Migu Video and other member prices have also undergone a round of price increases in the past five months. In December last year, the price of iQIYI Gold VIP membership monthly card ordinary users rose from 25 yuan to 30 yuan, the price of consecutive monthly subscriptions rose from 19 yuan to 22 yuan; the price of Mango TV members rose from 1 yuan to 20 yuan; in February this year, Migu Video adjusted the price of diamond members and pass coupons, with a maximum increase of nearly 25%.
"Price increases are a pros and cons compatible strategy. It is also a helpless move for video platforms to maintain the balance of revenue by raising prices. After all, the annual loss of billions of yuan always has to try to fill this hole, so the video platform has increased its revenue by increasing prices in the past two years. Internet analyst Ding Daoshi told the China Business Daily reporter.
Price increases may become the norm
In fact, before the price increase of Tencent Video members, the number of paid members of Tencent Video had already encountered a bottleneck of growth, and even a slight decrease.
In the four quarters of last year, the number of paid members of Tencent Video was 125 million, 125 million, 129 million and 124 million, respectively. The reason for the sudden increase in the number of paid users in the third quarter, Tencent said, mainly benefited from the promotion of high-quality content, including "Sweeping Black Storm" and "You Are My Glory", which ranked first and second in the third season of China's online platform broadcasts last year.
Not only Tencent Video, iQIYI has also been plagued by the reduction of membership size, according to iQIYI's financial report, iQIYI's subscription membership scale in the four quarters of last year was 105.3 million, 106.2 million, 103.6 million and 97 million, respectively. Perhaps because of this, iQiyi raised its membership price twice in 2020 and last year.
iQIYI said: "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. ”
The reporter asked Tencent about the effect of member price increases on alleviating the plight of the platform, whether the price increases of members will continue, and the specific measures of the platform to improve the quality of content, but did not get a clear reply.
"Membership prices have not yet reached the ceiling, and price increases will become the norm in the future." Ding Daoshi said.
Mr. Wei, a paying user of a video platform, told The China Business Daily reporter: "Domestic video platforms often 'pay the fee', setting different thresholds for programs, episodes and movies, and watching movies requires movie coupons and episodes to broadcast coupons. And there are fewer episode types, no better content is produced, and only barriers are set up for resources. ”
Ms. Hu, a user member of a video platform, also said: "The platform should use fine products to impress consumers, win consumers, and attract consumers, rather than sitting on the ground and starting from the price. ”
Sustained losses
Even if the price of membership has risen for many rounds, the long video platform is still difficult to change the continuous loss for many years.
According to iQIYI's financial report, the net loss attributable to iQIYI for the whole year last year was 6.2 billion yuan, while the net loss from 2017 to 2020 was 3.74 billion yuan, 9.06 billion yuan, 10.28 billion yuan and 7 billion yuan, respectively.
According to the performance report of Station B, the losses of Station B in the past five years from 2017 to 2021 were 183.8 million yuan, 565 million yuan, 1.3036 billion yuan, 3.1 billion yuan and 6.8 billion yuan, respectively.
Youku is not out of the quagmire of losses. According to Alibaba's earnings report, the digital media and entertainment segment lost 6.118 billion yuan in fiscal 2021 with a loss of 11.446 billion yuan in fiscal 2020. The corresponding adjusted EBITA margin improved to -20% from -39% in FY2020, mainly due to lower losses from Youku and contributions from the online gaming business.
"The days of long video platforms are not good. In addition to the impact of short videos, the new crown pneumonia epidemic, advertisers, production costs, costs, etc. have increased the pressure on the platform. Not only that, as the audience's requirements for content quality have become higher, the approval of projects by various video platforms has become more cautious and strict, and while the number of approved projects has decreased sharply, it has also become more cautious about S+ level projects with large productions and large investments in the past. A film and television industry practitioner told the China Business Daily reporter.
"Content production requires long-term high investment, and it needs to continuously cultivate users to achieve scale effects before profit and loss are flat or even profitable." Netflix also experienced many years of losses in exchange for today's profits; similarly, several major domestic video platforms also need to go through this process. Ding Daoshi told reporters, "The main problem of the three major domestic video platforms now is that they do not have the ability to continuously produce high-quality content, and it is very important to be able to form a normalized workflow for the production of high-quality content." ”
In addition to the need to be more high-quality in content production, video platforms have also proposed "cost reduction and efficiency increase" more frequently in order to reduce losses and make profits as soon as possible.
Tencent said: "In view of the recent market environment, we are taking steps to optimize costs and reduce Tencent Video's financial losses while maintaining its leadership position." Gong Yu, founder and CEO of iQIYI, said: "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. "(Reporter Zhao Yiru)