Explosive models can't pry the ecology, can iQiyi "go crazy"?

Written by | Wen Yehao

Edit | Wu Xianzhi

In the past year, with the "cost reduction and efficiency increase" has achieved certain results, iQiyi, which has been dormant for a long time, has begun to look forward to spring.

In this context, from the price increase of members at the end of last year to the explosive "Crazy" at the beginning of the year, as well as the completion of new financing, iQiyi seems to have saved up "three arrows", arrows in unison, to stimulate growth and say goodbye to "hibernation".

Among them, "Crazy" has been soaring all the way since its launch, becoming a major phenomenal hit drama in 2023. However, just at the end of "Crazy", iQiyi was in a public opinion depression due to "restricted screen casting", ushering in a moment of "mixed sorrow and joy".

And this may be just a microcosm of iQiyi's "pouring spring cold", from its business situation, iQiyi is still far from the so-called "virtuous circle", and whether the "three arrows" can exert its power is also a question mark. For iQiyi, which is eager for spring, the "recovery" is a long way off.

Explosive models do not move ecology

The explosive model at the beginning of the year is undoubtedly a shot of chicken blood for the long-lost iQiyi.

Compared with some "pseudo-explosive models" supported by the personal traffic of actors in the past, the script of "Crazy" is solid, one ring is buttoned, and the actors' acting skills are superb, not only the audience's reputation is bursting, but even the always strict Douban users have also scored a rare high score for it. And this is undoubtedly a great blessing for iQiyi.

High-quality solo content has long been the key to long-form video players winning the competition, which once sparked the money-burning war in the early years of the platforms. However, as the industry enters the stock competition, the reckless era of regardless of cost investment has passed, and profit and loss have become a new benchmark for self-examination by players.

In the new competitive context, players have had to cut back on content spending and slow down the pace. The content competition logic of long-form video platforms has gradually changed from the past "group fighting" to the current "heads-up".

And to review the Spring Festival war of long-form video players, although Tencent Video's "Three-Body Problem" was once in the lead, it may be the limitation of the sci-fi theme, and the top of the list was overtaken by the realistic "Crazy" before it sat firmly. As of now, in terms of topicality, iQiyi's "Crazy" has undoubtedly defeated Tencent Video's "Three-Body Problem", Youku's "Country Love 15", Mango TV's "Go to a Windy Place" and other opponents, and won the victory of the New Year's battle.

And this is especially critical for iQiyi, which is in a difficult period. For long-form video platforms, the value of popular content lies not only in the number of views and member subscriptions at the data level, but also in the increase in its influence on the platform. Taking Netflix as an example, from "House of Cards" in the early years, to "Black Mirror", "Love Death" to "Squid Game", each wave of explosive content can help it break through the stock limit to a certain extent and rise to a new high.

However, Netflix's logic is not necessarily useful for iQiyi - compared to Netflix, iQiyi's self-made content pool is shallow, even if it can leverage member subscriptions in the short term through popular dramas, member retention is also a problem. A simple example, a user who loves the suspense genre is attracted to "Crazy" and pays, but when he chases "Crazy", only a few series of the same type such as "Punishment" can be consumed.

In other words, the user's recognition of the content does not mean that the user recognizes the platform, and the increment leveraged by "Crazy" is likely to be only the user's "single payment" for the explosive content, which is difficult to sustain for a long time. And iQiyi, which has reduced costs to survive, cannot stably output high-quality explosive content. In addition, for now, the end point of content is still short video - not only user time, advertising revenue is also migrating to short video.

In this context, iYouteng is deeply involved in contradictions - if it does not ensure competitiveness with self-made content, it is likely to become the next "Sohu video", and continuing to burn money for high-quality content is facing the test of profit and loss. Therefore, in addition to tightening his belts to live, iQiyi is also eager to "replenish blood".

It's just that there are not many hands available for iQiyi to play. Judging from the past few quarters' financial reports, advertising revenue, as a major source of revenue, is declining; Membership growth also provides limited increments. Based on this, iQiyi had to turn its attention to the 100 million member market and "replenish blood" by raising the price of members.

Raising prices is a double-edged sword

For iQiyi, member price increases are nothing new. In December last year, iQiyi continued the habit of the first two years, announcing another price increase for members at the end of the year. Although the base price has not changed, the continuous paid price has ushered in different increases.

In this regard, iQiyi once explained its motivation when raising the price of members in 2021: "The membership subscription price of video platforms has been low, and this phenomenon has affected the healthy development of the industry. In the latest earnings call, "increasing the average revenue contributed by members" was also included in its core business strategy of membership service revenue.

Objectively speaking, iQiyi is not lying, looking at the world, the price of iYouteng membership is actually not high. After multiple rounds of price increases, the Netflix standard subscription price is $15.99 / month, while Disney+ and AppleTV+ are 10.99 and 6.99 US dollars / month respectively. In this regard, some insiders said that compared with overseas video platforms, stripping away income and regional gaps, the price of domestic video platforms is still low.

However, as mentioned above, iQiyi's current content ecology is not only difficult to support retention, but also difficult to support price increases. Looking at social media, the focus of users' complaints is not the price increase itself, but "moral unmatching". In other words, finding the basic growth of members is a double-edged sword, which will not only damage the user's mind, but may even increase the risk of unsubscribing.

Reflected in the data level, since the first price increase, the number of iQiyi subscription members has not reached the high point in the first quarter of 2020; At the revenue level, the increase in membership subscription revenue brought about by the price increase only played a role in the following quarter and could not be sustained for a long time.

It can be seen that iQiyi's increase in charging standards has not led to stable revenue growth. Although iQiyi has experienced three rounds of price increases, its current membership subscription price is still a certain distance from the expected indicators.

However, considering the aforementioned user mental problems, whether it is iQiyi, Youku, Tencent, or overseas video platforms, there is no "one-step in place" at the price increase level, but mainly "small broken steps", testing at the edge of the user's bottom line - in addition to the structural price increase of membership prices for three consecutive years, iQiyi has also tried to tap the increment from the membership system through "functional price increases" such as paid advanced on-demand and member-exclusive recommendation advertisements.

On the other hand, for video platforms, the timing of price increases is particularly critical. Looking back at iQiyi's three price increases in the past three years, there is more or less a sense of paving the way for the "explosive model at the beginning of the year" - the end of 2020 corresponds to the next year's "Son-in-law", the price increase at the end of 2021 corresponds to the next year's "The World", and the latest price increase is secretly in line with the "Crazy Race" that has repeatedly brushed the screen.

For iQiyi, which has become a habit of "opening the year's hits", the pre-price of the relevant drama launch can not only maximize the positive feedback brought by the price increase, but also reduce the negative public opinion caused by the price increase to a certain extent, after all, during the popular drama, users often have a higher tolerance for the platform. As everyone knows, iQiyi's small calculation has not yet begun, and it has been criticized by public opinion for restricting screen casting.

Restricting the clarity of screen projection is not actually a "combination punch" for members to raise prices, it is more to ensure the interests of the licensee at the TV end, rather than the platform's "backwards" on high-level members. This is true of Youku and Station B, and iQiyi is more like a back-pot man. However, in the face of the torrent of public opinion, iQiyi is not only difficult to speak, even if it is forcibly explained, it is pale and powerless———— this round of mental warfare, iQiyi is not beautiful.

Financing is difficult to solve

In the past year, iQIYI has raised "cost reduction and efficiency increase" to a more important level.

However, in addition to reducing the output of S dramas and S+ bureaus in the content field, the cost reduction is more reflected in layoffs. In other words, even if iQiyi achieves profitability through slimming, the path is too heavy and cannot be copied, and can only act in the short term. From a long-term perspective, iQIYI can only truly get out of the sea of suffering by building a virtuous cycle of high-quality content.

However, the aforementioned increase in membership subscriptions and member price increases are all types of fine water and long-term streams, and they cannot smooth out the "trouble" of content production costs in time. In this context, iQIYI once again set its sights on the capital market.

In its second-quarter earnings report last year, iQiyi announced that it would issue a convertible bond of up to $500 million. Recently, iQiyi announced that it has completed the issuance of US$500 million convertible bonds to PAG subsidiaries. For iQiyi, which is in desperate need of blood transfusions, the $500 million financing has improved its cash flow.

However, financing can quench the near thirst, but it cannot solve the long-term worry, and iQiyi still needs to be responsible for its own profits in the end. Although iQiyi's debt pressure has eased in the short term, if it cannot solve the fundamental problem of content output input on long-form video platforms, the situation is still not optimistic.

In other words, iQiyi must seize the rare "breathing time" to improve its business situation and reshape its own story logic, otherwise financing will not only not quench its thirst, but will also deepen its financial difficulties.

In general, iQiyi's "Three Orders Arrow" can be said to have released a positive signal to the outside world, and the explosion of "Crazy" has also brought it back to the industry context to a certain extent. But in the next stage, how iQiyi should achieve its own "recovery" still needs time to answer.