Following the hot search of the opening drama "Crazy" on the screen, iQiyi, which should have enjoyed applause and flowers, was involved in the public opinion war because of "eating ugly".
In early February, the news that an iQIYI member was blocked for using three devices to log on to iQIYI account, and wanted to unblock and had to recharge more expensive members, which caused heated discussions, and then iQIYI interpreted this as a "technical problem", but it still could not stop consumers from questioning the iQIYI membership system.
"It's not the first time iQiyi has done this, is it all a technical problem?"
It turned out that in addition to blocking accounts, iQiyi not only raised membership prices many times, but also repeatedly appeared "nesting doll-style" charges such as "limiting the clarity of screen casting", "advanced on-demand" and "finale screening ceremony", and even went to court with users.
On January 29 this year, a Guangdong user who claimed to be an "old fan" of 7 years took him to court because iQiyi restricted the clarity of screen projection, and filed a case on the same day;
In 2020, the Beijing Internet Court ruled that iQiyi's "advanced paid on-demand" service violated the agreement between it and users to watch hot dramas first, constituting a breach of contract;
In 2018, iQIYI was sued by a student for failing to provide the "member jumping advertising" service, and the court ruled that iQIYI had defective performance in its obligation to inform.
In this way, even if the reputation of "Crazy" is good, it cannot withstand iQiyi's "continuous demonization".
But in fact, not only iQiyi, Youku has also caused controversy because of restrictions on screen casting, restrictions on multi-terminal login, and 1 yuan membership refund and renewal. So, why is the relationship between long-form video platforms and "food and clothing" so tense? In addition to "Xue member wool", does iYouteng have the next trump card?
iQiyi, who can't eat enough
Bohu Finance observes that the "root of the disease" of iQiyi's love for user wool may be in its method of making money.
As far as iQiyi is concerned, membership payment and advertising are the two most important carriages driving its revenue growth, with membership payment as the core pillar.
Taking the third quarter of 2022 as an example, iQIYI's current membership service revenue reached 4.2 billion yuan, accounting for more than 50% of the revenue, while the scale of online advertising, content distribution and other revenue in the same period was only 1.2 billion yuan, 730 million yuan and 1.3 billion yuan.
So far, membership services have become iQIYI's main source of revenue for 17 consecutive quarters, and have brought about 4 billion yuan of revenue to iQIYI for 7 consecutive quarters.
At the same time, iQiyi has "skyrocketed" in the quality and quantity of content.
Yunhe data shows that iQiyi accounted for 13 of the top 20 active broadcast of positive films in the third quarter of 2022, of which 6 were broadcast alone. In the second half of 2022, many works such as "Canglan Tips", "Wind Blowing Half Summer", "Tang Dynasty Mystery Record" and "Daughter Returning" have also aroused heated discussions on the Internet several times, and the year-end hit "Crazy" is not only the TV series with the highest popularity value on iQiyi Station, but also received a high score of 9.1 on Douban.
Although high-quality content can drive membership growth and advertising revenue, blockbuster works can be hard to come by, and high content production costs have always been a mountain on iQiyi's head. Data shows that after nearly one year of iQIYI's "cost reduction and efficiency increase" strategy, iQIYI's content production costs in the first three quarters of 2022 are still as high as 12.6 billion yuan.
Therefore, in order to transfer costs, iQiyi decided to take the lead in raising prices, and it was 3 times in 3 years. And the timing of the price increase, then put it on the eve of the launch of the "explosive model at the beginning of the year", you can also divert attention and be less scolded. As a result, iQiyi rose once at the end of 2020 before the launch of "Son-in-law", and once at the end of 2021 before the launch of "The World", and the latest price increase on December 15, 2022 was secretly in line with the repeated "Crazy Speed".
Source: Network
Of course, other long video platforms are also following, and now open the iYouteng APP casually, you can see that the continuous monthly price is hovering at the level of 25 yuan, and in 2020, this level is still 15 yuan, up 66% in 3 years.
Source: NBD data
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. Another industry insider said that compared with overseas video platforms, excluding income and regional gaps, the price of domestic video platforms is still low.
Admittedly, looking at the world, the price of iYouteng membership is not high. It is understood that after multiple rounds of price increases, the subscription price of Netflix Standard Edition is 15.99 US dollars / month, equivalent to 108.5 yuan / month, and Disney+ and AppleTV+ have also reached 10.99 US dollars / month and 6.99 US dollars / month respectively.
Of course, price increases are not the end. Subsequently, there is a more complex membership hierarchy and the shrinkage of the original member rights, when the platform VIP continues to upgrade to VVVIP, members are forced to become "super users", the entire long video industry membership system has also fallen into serious inflation, all kinds of gold VIP, star diamond VIP emerge endlessly, user rights and interests are also highly dispersed.
The finale that "Bronze" can't watch, "Diamond" can; VIP can't cast the screen, VVIP can. "Matryoshka charges" are also repeatedly prohibited: recharge the first one, and there is the next.
At the same time, in order to play a longer user value, Youku also innovatively launched the "Youku Monthly Savings" and "One Dollar Membership" activities, canceling the renewal to withdraw the discount and deduct 25 yuan / month to encourage users to continue to pay.
But the user is like fine sand in the hand, the tighter the grip, the faster it loses. With the rapid rise of membership fees, as well as the opaque rules and unilateral policy adjustments of the platform, the platform users began to lose. For example, after a maximum price increase of 50% at the end of 2020, iQiyi's membership in 2021 decreased by 5% year-on-year.
The more troublesome problem for iQiyi is that the membership income here has not stabilized, but the advertising revenue is still falling sharply.
In the third quarter of 2022, while iQiyi's membership revenue fell slightly by 2% year-on-year and month-on-month, advertising revenue fell 25% year-on-year to RMB1.25 billion, and advertising revenue fell 26% year-on-year to RMB2.6 billion when the number of Tencent Video members decreased by 9 million to 120 million year-on-year.
The revenue paradox
By its very nature, the decline in advertising revenue is partly due to the incompatibility of membership revenue with advertising revenue.
That's because subscriptions are inherently paid for additional benefits or resources, including the right to opt out of ads. Consumers spending money not to watch ads is a problem of left and right hands for platforms. An increase in membership and revenue means an increase in the number of people who do not see ads, and advertising revenue will also decrease.
However, it is also difficult for long-form video platforms to be separated from the advertising business, and the membership business alone cannot support the company's operation. This goes back to the nascent days of China's online video industry from 2005 to 2009, when free UGC content and unauthorized videos made users develop the habit of "white" content. Correspondingly, advertising becomes the price of free.
When the high-net-worth users that advertisers want to reach are blocked by members' blocking advertising services, it means that the value of advertising in iYouteng is decreasing, and the real traffic bonanza has shifted from traditional long video platforms to short video rookies such as Douyin and Kuaishou.
Questmobile data shows that in the distribution of typical media advertising market share in China from 2019 to 2023, the share of online video advertising began to be gradually squeezed by e-commerce and short video, shrinking from 5.8% in 2019 to 4.3% in 2022.
In the case of shrinking advertising business, membership payment has naturally become "the hope of the whole village". However, in addition to the superstructure problem of iYouteng's own membership system, the core content foundation of the content payment model, iQiyi is not solid.
The first is that the previous copyright accumulation is not enough, there is no classic works and IP accumulation like Disney in the United States, and the copyrights bought with money are scattered on various platforms and do not have exclusive advantages. As copyright fees become higher and higher, in order to create a content moat, long-form video platforms have turned to platform self-made.
But content self-control is also a difficult road. The production and publicity of high-quality content is expensive and unattainable. Moreover, limited by the overall content production capacity, iQIYI's main film and television dramas and seasonal variety shows fluctuate in word of mouth, and the quality rate is not high, it is difficult to maintain the stable output of high-quality content, let alone enrich the content library to form scale effects and reduce marginal costs.
Therefore, many consumers buy season cards and annual passes because there is no good content to watch most of the time are idle, superimposed on the fragmented entertainment habits of domestic users who have been brushing short videos for many years, and the user's payment habits are not yet mature, consumers are more inclined to pay for good content once, repeatedly jumping between multiple platforms.
iQiyi previously reduced content investment in order to reduce costs and increase efficiency, and carried out large-scale layoffs, which also buried hidden dangers for its future content creation. The loss of outstanding talent may weaken iQiyi's content competitiveness in the long run, resulting in a decrease in the number of members and being overtaken by competitors, and Youku is a lesson in this regard.
In the fourth quarter of 2013, Youku achieved quarterly profitability by reducing content investment, but fell from first to third in the industry until it sold Ali two years later.
Content payment is not a panacea for long-form video platforms. Netflix, the master of the subscription system, has also fallen into a situation of weak growth and user loss. As of June 2022, Netflix had about 220.7 million global subscribers, down nearly 1.2 million from the beginning of the year, according to the data.
Source: Network
The "password sharing" model that helped Netflix acquire new customers is also about to usher in stricter regulation in the first quarter of this year, and Netflix will also charge additional fees if users share accounts with others outside the family, when Netflix may also face the challenge of large-scale user exodus.
When the aura of subscription-based system is gone, what is the future of long-form video?
Diversification becomes a long-term theme
In fact, iYouteng has not tried other monetization methods, IP operation and copyright distribution are common monetization channels in the industry.
For example, in 2021, on the film and television drama IP of the self-made drama "Fengqi Luoyang", iQiyi has already implemented the "one fish eats more" business model in stages, focusing on the "Luoyang" IP to carry out subdivided development in twelve fields, including comics, dramas, variety shows, online movies, animation, games, documentaries, stage dramas, VR full-sense movies, cloud performances, derivative consumer goods, and real estate, to build "one fish and twelve eats".
Source: Network
In addition to the main brand, under the diversified business concept of Gong Yu's "Apple Tree", iQiyi also has a media service matrix such as novels, comics, qibabu, dingda, and anytime.
In addition, in terms of copyright, iQIYI also announced a cooperation with Douyin Group in July 2022, iQIYI licensed to Douyin to hold information network dissemination rights and sub-licensed long-form video content in its content assets, including high-quality dramas such as "Misty Theater", and allowing users of Douyin's Douyin, Watermelon Video, Toutiao and other platforms to recreate these works for short videos.
This measure not only solves the copyright troubles of many users on the Douyin platform for secondary creation, but also makes a good publicity and diversion for iQiyi films to increase exposure and monthly life, which can create greater copyright revenue.
In the era of stock, content going overseas is also a feasible way. As early as June 2019, iQiyi and Tencent launched the international version of IQIYI APP and Tencent WeTV respectively, and met in Southeast Asia.
In the same year that it was launched, Tencent's hit drama "Chen Qingling" swept Thailand and received more than 100 million views; In 2020, iQIYI's blockbuster "Hidden Corner" was widely distributed in Malaysia, Thailand, Singapore, Cambodia, Myanmar and other places, helping iQIYI's membership to grow to 101.7 million.
But no matter how many tricks there are, it is not yet a climate.
In terms of revenue data, iQiyi's other revenue, including publishing, games, offline VR, and various derivative membership services, accounted for only about 13%.
To reduce its dependence on membership payments and advertising revenue through new businesses, iQiyi still has a long way to go.
Written at the end:
The development model of long-form video platforms such as iYouteng needs to be explored, and success or failure needs time to test, but blindly passing on the cost to consumers and losing the hearts of the people can not be recovered in a moment.
Consumers should not be leeks to be cut, and any business model must eventually return to user value. If you don't put user experience first, users will naturally not take the platform as their first choice.