Recently, iQIYI released its unaudited financial results for the fourth quarter and full year of 2022. In 2022, iQiyi's total revenue reached RMB29 billion and operating profit based on non-GAAP financial measures was RMB2.2 billion. It is worth mentioning that this is also the first time that iQIYI has achieved full-year operating profitability since its establishment in 2010.
Coincidentally, Tencent has previously announced that Tencent Video has made a profit for the first time, with annual revenue of more than 10 billion yuan in 2022, and has been profitable since October.
Alibaba's financial report for the third quarter of fiscal 2023 (October to December 2022) also showed that Youku's average daily paying users increased by 2% year-on-year, achieving a year-on-year reduction in losses for seven consecutive quarters.
The hat of "loss" has been following the head platforms such as iYouteng for a long time, and the profits of iQiyi and Tencent have undoubtedly injected a shot in the arm into the industry.
However, for video platforms, the future development still faces challenges: long video platforms have huge content costs, and in recent years, they have faced the fierce impact of short video platforms, and it is difficult to cover costs with advertising revenue alone, let alone carry long-term profit expectations. Under such circumstances, the platform has to turn its attention to C-end users and increase revenue from membership revenue. In order to find a new growth point in member income, rising membership fees, restrictions on user screen casting, restrictions on multi-platform login, etc. have become frequent without surprise, making the "distinguished members" experience poor, and even more questioned by users for "eating ugly".
Taking iQIYI as an example, after successive interviews with the Consumer Protection Commission, user prosecutions, and public opinion questions, the platform had to announce the restoration of 720P and 1080P HD screen projection functions for old members, and canceled the restriction on the type of login by device, and said in its statement, "Thank you iQIYI VIP members for their love for us over the years, we will cherish this trust and friendship even more, strive to launch more and better content, continue to improve the service experience, and live up to everyone's expectations." ”
What's more, for the platform to thrive, it needs continuous quality content, so where is the next Drag Rush?
Content content, or content
Whether it is profitable iQiyi or Tencent Video, high-quality content is obviously the core reason for its profit.
iQiyi's "The World" in early 2022 is considered to have written about the great changes in Chinese society and the ups and downs of people's lives in the past 50 years; "Police Honor" does not write about those cases in the traditional sense, but focuses on the life of the city and the joys and sorrows of the police; "The Wind Blows in Half Summer", which tells about reform and opening up, depicts the tide makers in the 90s... Combing iQiyi's works in 2022, it can be seen that most of these works sink from a narrative perspective, depicting life with delicate performances and real pyrotechnics, and using the fate of "little people" to gain insight into the changes of the times and the warmth of the world.
iQiyi said that the key to achieving its annual target in 2022 beyond expectations is the continuous launch of widely acclaimed original content, especially original dramas. Taking the fourth quarter as an example, Yunhe data shows that iQiyi ranks first in the industry in the two indicators of effective playback of all dramas and independent dramas, and hit a new quarterly high in two years.
The same is true for Tencent Video. Soft Technology's "The Beginning" has opened the road of innovation in the soft science fiction theme of domestic dramas. According to Vlinkage data, among the top three in the online drama playback index in 2022, Tencent Video's "Menghualu" and "Star Han Splendid" occupy the top two. Among the top ten, Youku contributed "Acquaintance with Junchu" and "Agarwood Like Crumbs". In addition, Youku's "Coward" and "Out of Court" Douban scores also reached 7.8 and 7.6, youth + suspense and the parallel narrative of the two protagonists are also considered to be an innovation in suspense dramas.
Under the explosive effect, the number of iQIYI members and membership income increased significantly. iQIYI's financial report shows that as of December 31, 2022, the number of iQIYI members rose to 120 million, and the net increase in the fourth quarter reached 10 million. At the same time, membership service revenue in 2022 was 17.7 billion yuan, a year-on-year increase of 6%. In the fourth quarter of 2022, membership business revenue reached the highest quarterly revenue value in history, and membership service revenue was 4.7 billion yuan, a year-on-year increase of 15%.
Continuing to build Crazy? Difficult!
In the words of iQiyi founder Gong Yu, iQiyi's excellent performance is not surprising, or even just the beginning. However, the core question is still whether major platforms can continue to produce blockbusters like "The World" and "Crazy"?
Gong Yu used "Crazy" broadcast at the beginning of this year as an example, saying that this drama further verified iQiyi's "content flywheel effect", that is, "stable supply of high-quality content - driving membership growth and cost efficiency optimization - driving profit improvement - producing more high-quality content". He also confidently said that the success of "Crazy" can be replicated.
In his opinion, iQIYI's ability to mass-produce high-quality original content has been significantly improved. Taking Q4 2022 as an example, iQiyi launched 6 popular dramas in one quarter, driving a year-on-year increase of more than 40% in member playback time and more than 30% month-on-month, which is "unprecedented".
But the voice from the outside world does not seem to be as optimistic as iQiyi.
It is true that "Crazy" is a popular drama in recent years, but in terms of its content and production, it is only above the qualified line, and its depth and scale are not even comparable to "Black Hole" and "Black Ice" of the same theme 20 years ago, and many voices believe that the reason why "Crazy" has attracted high attention is because "thanks to peers". After the finale of the play, it was questioned due to suspected modification of the ending, wrong lines, and unclear logic, and the Douban score also dropped from 9.1 to 8.5 points today.
Following the broadcast of "Crazy", "The Daming Silk Case under the Microscope", also produced by Liubai Film and Television, was originally placed on high hopes. However, the short drama model is still facing difficulties in the current domestic entertainment market, and many times, it is in the name of quality dramas, and it is not popular. "The Daming Silk Case under the Microscope" is no exception, even if it has not exceeded 10,000 popularity on iQiyi Station many days after the finale, and it has not been able to reproduce the grandeur of "Hidden Corner" and "Silent Truth" that year.
For a long time, the core factor of member loss is that user loyalty is difficult to guarantee, and it is the dramas and variety show products on the video platform that attract users, not the platform itself. When blockbusters are missing, members are likely to lose or be attracted to competitors.
It is precisely because of this that there are many "one-month members" on the Internet, that is, what platform has good dramas, then recharge for a month first, and wait and see after the broadcast. This also confirms from the side that the stickiness between the platform and the audience is not strong.
A positive phenomenon is that the popular dramas from last year to this year are not the traditional traffic stars and big IPs of the past. After years of trial and error, the platforms finally proved that the traffic + IP approach did not work, and turned to solidly create scripts, create vivid and credible characters, and invite actors with more acting skills and more suitable characters. You Xiaogang, president of the China TV Drama Production Industry Association, believes that the industry must respect the law, keep abreast of the development of the times, and correct its thinking in order to concentrate on creation. Do not believe in stars, traffic, and do not buy fake ratings to establish a healthy production link.
Prices have increased again and again, but there are more restrictions
The profitability of video platforms is also inseparable from the controversial increase in membership fees over the years.
The first to increase prices was iQiyi. Since 2020, iQIYI members have increased their prices many times, the most recent of which was in December 2022: Gold VIP members are 25 yuan, 68 yuan and 238 yuan for consecutive months, 68 yuan and 238 yuan for consecutive annual subscriptions.
Tencent Video also made two price adjustments in 2021 and 2022, with the price of VIP continuous monthly subscription increased from 20 yuan to 25 yuan, the VIP continuous subscription season increased from 58 yuan to 68 yuan, and the VIP continuous annual subscription increased from 218 yuan to 238 yuan.
In June 2022, Youku increased its price for the first time in five years, with monthly passes adjusted to 30 yuan, season passes 78 yuan, and annual passes 258 yuan.
The price increase has made users angry, and more importantly, while raising the price, there is a problem of raising the price without improving the quality, and the news of the video platform's "fancy charges", restrictions on user use, and many advertisements have also repeatedly rushed to the hot search.
Not long ago, a user in Guangdong took iQiyi to court for restricting screen casting. The user said that on January 11, 2023, he found that iQiyi limited the projection clarity of gold VIP members to 480P, and if he needed higher definition, he had to upgrade to a higher level of membership.
In addition to restricting screen casting, iQiyi was also criticized for "3 devices logged in to iQIYI accounts at the same time and being blocked".
After the fermentation of public opinion, iQIYI issued a statement on February 20, saying that iQIYI Gold VIP members who are still in the subscription status on February 20, 2023 will resume the screen projection service in 720P and 1080P definition.
In fact, restrictions on account login have become a common phenomenon in the industry. For example, Tencent Video VIP account can only be used on up to 5 devices, and the same VIP account can be viewed on up to 2 devices at the same time. Youku announced in December last year that a member user account can log in to up to 3 devices at the same time, and can be used on up to 2 devices at the same time.
Red Star News reporters also noticed that although major video platforms have claimed that they can buy members without watching advertisements over the years, advertising content still exists.
In some episodes of iQiyi, although members can skip the first few tens of seconds of advertising, there are still more than 20 seconds of advertisements before the main film is played. During the broadcast, if you press pause, an advertisement will appear on the screen immediately. The original video is zoomed out and moved to the corner. If you click on the screen, you'll be taken to the main page of your ad. The correct action is to click on the small print "Turn off ads" in the top right or the narrowed down episode video to watch it again.
In addition, the dramas broadcast on major platforms also have interstitials, patch ads and oral advertisements that are difficult to fast-forward, which annoys the audience. "Obviously I have recharged VIP, but I still can't avoid watching the advertisement!" Many netizens complained.
Take back the rights and interests of non-members, and recharge to continue watching
Another phenomenon worth paying attention to is that today's video platforms have become more and more unfriendly to non-members.
Also taking "Crazy" as an example, although it has ended, non-members can only watch the first two episodes, and from the third episode onwards, they must recharge members to watch it.
"The Silk Case of Daming under the Microscope", which is also produced by Blank Film and Television, is still the only first two episodes for free for non-members.
The sci-fi TV series "The Three-Body Problem" exclusively broadcast by Tencent Video has also ended, but non-members can only watch 25 episodes.
Drama critic Ah Song said that at a time when the number of members has almost reached the ceiling, major platforms can only pull new ones by reclaiming part of the viewing rights of "non-members". In the past, VIP members were "sneak peek", but now it is gradually evolving into "only I can see", and higher-level VIPs may enjoy the rights of clearer screen projection and the most devices used at the same time.
When the number of member users faces a bottleneck, price increases, account restrictions, and screen casting restrictions have become the repeated use of the current member stock, which also reflects the profitability dilemma of the entire industry from the side. When members reach the peak, long-form video platforms have no choice but to increase the value of individual members in disguised form through restrictive measures.
iQiyi gave in to the screen casting limit, which is another open source failure after its advanced screening. In this farce of testing consumers to get more membership income, the pressure of iYouteng is self-evident.
Red Star News reporter Qiu Junfeng
(Download Red Star News, there is a prize!) ）