Can iQiyi's long-term video turn around losses in the first quarter rely on "open source and reduce expenditure"?
In May 2021, Gong Yu, the founder of iQIYI, made a "prediction" that he believed that iQIYI might be profitable within 5 years.
A year later, that goal was achieved, at least "temporarily".
According to the financial data for the first quarter disclosed by iQIYI recently, the company achieved revenue of 7.277 billion yuan in the first quarter, down about 8.67% from 7.968 billion yuan in the same period last year; A net loss of 1.3 billion yuan in the same period last year.
For the long-term video industry, which has been submerged in the shadow of losses for a long time, iQiyi's profitability is undoubtedly a boost.
Losses are still the norm in the industry
Compared with recent data from other platforms, losses are still the norm.
Before iQiyi made a profit in the first quarter, the "loss narrowing" could even be considered good news for the industry.
According to Alibaba Group's financial report for the fourth quarter of fiscal year 2022 (January 1 to March 31, 2022), Youku's average daily paying users increased by 14% year-on-year. Achieve "loss narrowing year-on-year".
Tencent did not mention too much data from Tencent Video in its financial report for the first quarter of this year, and did not specify the loss data of Tencent Video in its 2021 financial report. It only mentioned that “measures are being taken to optimize costs and reduce Tencent Video’s financial losses.”
Although it has achieved "turning losses into wins", iQiyi's total revenue has continued to decline since the first quarter of last year.
This is also believed by the outside world that the profit is largely due to the control of costs.
In fact, cost reduction and efficiency enhancement have become the consensus strategy of the entire video industry.
At the beginning of this year, Han Zhijie, vice president of Tencent Video, posted in a circle of friends that "the most tragic project decision-making meeting in history" was held. More than 70 projects passed the meeting, but only 2 finally passed; Xie Ying, general manager of Youku Drama Center, was also there. The circle of friends also publicly stated that in the last project establishment meeting last year, 53 drama projects passed the green light meeting, and only one IP was locked in the end.
Tencent and Youku have a total of more than 120 projects, and only 3 have passed the review, which means that in terms of content cost, each platform has started a very strict review and screening.
Member price increase can be done once and for all?
In addition to throttling expenditure, the profitable account also has open source.
As the platform's largest source of income, iQIYI's membership service revenue in the first quarter was 4.471 billion yuan, a year-on-year increase of 3.7% and a month-on-month increase of 8.5%, accounting for 61.4% of total revenue, a record high.
The increase in membership income is easily reminiscent of the price increase of iQiyi members last year.
iQIYI has raised membership prices twice in the past two years.
The latest time is at the end of 2021. After the price increase, iQIYI Gold VIP regular monthly membership will be raised from 25 yuan to 30 yuan, an increase of 20%; continuous monthly subscription, ordinary seasonal card and continuous seasonal subscription are also included in the price adjustment.
In the past six months, various long video platforms have kicked off the "price increase", including Mango TV, Migu, Tencent, etc.
Tencent Video has made two increases in one year. In April last year, Tencent Video had already conducted a round of price adjustments with a maximum increase of 50%; in April this year, Tencent Video once again adjusted continuous monthly and annual packages. , and the prices of quarterly and annual cards, with a price increase of up to 25%.
But the price hike brought another unpredictable result, quality issues.
"Video quality is a difficult problem, and it's hard to say whether the quality will go up or down after the price increase," an industry insider told the Red Star Capital Bureau.
Young playwright director Xiang Kai described the frequent increase in membership prices as a "suicidal model". "This is not a once-and-for-all decision. While frequent price increases must be considered, membership will also be lost."
In Xiang Kai's view, iQIYI's first-quarter profit was not really achieved by content, but was caused by multiple factors such as member price increases, layoffs, reductions in dramas, and cuts of variety shows.
"The profit model of tightening the waistband cannot be imitated, and the profit of iQiyi does not mean that the spring of long videos is coming."
"The key is to reduce the burden while maintaining the volume and value-added content output. The platform should think about how to attract high-quality teams from content production." Xiang Kai told the Red Star Capital Bureau.
Chengdu Business Daily-Red Star News reporter Wang Tian