This article is reprinted with permission from Tencent Technology, first published in Tencent Shenwang (ID: qqshenwang)
Author | Li Ruchao
In the eyes of many people, among the previous generation of video industry leaders, Gong Yu may be the one with the least character. Bit.
This man from science and engineering, who has been repeatedly labeled a "good old guy" by his former employees, does not have many fascinating stories. Until 2010, Gong Yu was still like a group of industry elites with the same template, unable to leave too many obvious marks in the minds of viewers.
2010 was the peak of fierce competition in the video industry.
In that year, Wang Wei was busy preparing for Tudou 's IPO in the United States. However, a divorce case came out halfway, which made the IPO full of ups and downs; Gu Yongqiang was complacent, and Youku, who had successfully sounded the bell, pushed him When it comes to the highlight moment, almost no one doubts that he will have the last laugh.
And Gong Yu, it was in that year that he became the helmsman of Baidu's newly established video website "Qiyi".
Eight years later, Gong Yu finally stood at the place where Gu Yongqiang and Wang Wei had achieved their wishes. This is the dream place for Gong Yu, who has repeatedly impacted the capital market. Standing beside the ecstatic Robin Li , today's owner, Dr. Gong Yu, smiled restrainedly; it suddenly made people realize that this was probably the scene of Baidu's own listing.
Of course, we have no reason to doubt Gong Yu's excitement - eight-year-old iQiyi completed his coming of age ceremony. Gong Yu, who does not have many stories, finally used reason and logic to achieve self-certification.
However, today's Gong Yu will still feel uneasy - after all, just like eight years ago, the industry's long-term profit period and fierce competition are still the quagmire that troubles every player.
This is the new path Gong Yu faces.
The Wind-Up Man
To this day, there are still some old employees who remember the office legend of their boss Gong Yu: he must go downstairs to the company at 8 o'clock every morning, and receive his emails at 1 o'clock in the middle of the night. There are too many deviations.
A person who has worked with Gong Yu at Focus.com told Tencent's "Deep Web" that Gong Yu is like a bug-free program that can run for a long time. This also resulted in the company he helmed having a mechanical temperament.
And Gong Yu is the one who winds up the machine. Since
entered the video industry in 2010, Gong Yu, who highly advocates rationality, has been seeking a mechanism to allow the company to operate at a reasonable and high speed. The big bet on the mobile terminal was the first time Gong Yu gave the company during this period.
At that time, Gong Yu directly gave up the Symbian system, which was still the mainstream at the time, and focused on Android and iOS systems. Since it was the end of 2010 and the popularity of Android and iOS lagged far behind Symbian, making such a choice was almost crazy in the eyes of many people at the time.
In an exclusive interview with "People" magazine, Gong Yu said frankly, "You said that I had not programmed software for more than ten years at that time. You asked me to say 1234 and say a particularly strong truth. I really can't say it. But it doesn’t work just by looking at it, and this trend doesn’t work. After reading some reports and playing with that mobile phone product, the operating system doesn’t feel good. It basically relies on intuition.”
implemented this judgment, and iQiyi invested a lot of manpower and material resources in a short period of time. Funds were spent on the development of Android and iOS apps, and the iPad version was launched only 5 months after the website was launched. The first-mover advantage of
on the mobile terminal gave the newly born iQiyi its first shot.
Next, the high emphasis on technology finally made people familiar with Gong Yu begin to realize his own logical system.
Within iQiyi, Gong Yu has repeatedly emphasized that half of the company’s employees must be technical personnel. If this ratio is reduced, recruitment of other non-technical positions will also be suspended. He hopes technology can drive the company forward and free people to do more creative things.
Ma Dong once said that people with a background in automation look at the integrity of system operations and will constantly look for bottlenecks in the system. He feels that this is the bottleneck at present, so he concentrates his efforts to solve this problem. What he pursues is the overall efficiency of system operations.Gong Yu, who is a
engineer, is undoubtedly using this method to keep the huge machinery of iQiyi operating efficiently.
Direction and mechanism
But establishing this set of execution mechanisms is far from enough.
In Gong Yu’s own words, the CEO of a company is the upper limit of the company. As the most advanced component of this machine, Gong Yu must make more forward-looking decisions so that this machine will not repeatedly perform meaningless operations at a low-dimensional level.
, the leader who pays less attention to public opinion and more to data, needs to constantly discover new driving directions in the complex competitive environment at that time.
Gong Yu chose to buy popular copyrighted content at a large price. Before 2012, iQiyi's copyright procurement strategy was quite conservative. An industry insider recalled to Tencent's "Deep Web" that iQiyi's previous principle was that you have it and I have it. It almost only buys cheap general copyrights, and there is no unique one. broadcast content.
But since 2012, there has been a sudden change. By 2013, iQiyi even directly spent 200 million to obtain the exclusive copyright of five variety shows including Hunan Satellite TV Happy Camp and Tiantian Xiang. A year ago, this copyright only cost 6 million. It is available on all video websites. The battle between
and against was the first shot in the "exclusive" war in the industry. It was also from this battle that iQiyi officially launched the "exclusive" purchasing strategy that will be known in the future.
In the same year, iQiyi acquired PPS, setting off a new capital war in the video industry. In a sense, Gong Yu also reflects his bold side in taking bets at key points in the development of the industry.
When the general direction has been established, Gong Yu has set up a "new mechanism" internally, trying to make the highly expensive video procurement worthwhile while reducing risks as much as possible.
Gong Yu once explained that through technical product personnel, iQiyi tried to establish a good mechanism, that is, to format and regularize some human judgments, and rely on this mathematical model to build a software model. The continuous evolution of this mechanism has allowed iQiyi to predict the success rate of traffic for a major drama from 50% at the beginning to more than 85% by around 2015.
More importantly, this achievement directly benefited from the subsequent development of the membership business.
In fact, iQiyi had already launched a membership payment service as early as 2011. However, due to the weak overall payment environment at that time, there was no significant improvement in the membership business in the next two or three years. However, as the exclusive copyright procurement business of hot hits and the market environment continue to mature, this business has finally exploded.
At this time, the membership business began to enter a period of rapid growth, which finally gave iQiyi the confidence to find new ways to solve the continued losses in the video industry.
According to the prospectus released by iQiyi, the total number of members in 2015, 2016, and 2017 (as of December 31 of that year) was 10.7 million, 30.2 million, and 50.8 million respectively. The proportion of membership revenue in total revenue also increased from 18.7% in 2015 to 37.6% in 2017. Correspondingly, the proportion of advertising revenue on which video websites relied most in the past has increased from 18.7% in 2015 to 37.6% in 2017. 63.93%, dropped sharply to 46.95% in 2017.
’s healthier revenue structure is an important guarantee for iQiyi’s listing.
The listing is not the end
However, even if it is successfully listed, losses will still be a lingering shadow.
According to the previously released prospectus, iQiyi’s total revenue in 2017 was 17.378 billion yuan (2.671 billion U.S. dollars), a year-on-year increase of 54.6%. However, between 2015 and 2017, the net losses were 2.575 billion yuan and 3.074 billion yuan respectively. , 3.736 billion yuan. Although the increase in losses is not large compared with the faster-growing revenue, it is true that it is still expanding.
Gong Yu admitted that iQiyi will not be profitable in the short term. "Video websites require continuous investment in content and do not pursue short-term returns and profits, which is more in line with the interests of shareholders."
But whether this statement can finally be recognized by Wall Street is still full of suspense.
In fact, on the first day of listing, iQiyi’s closing price was only US$15.55, a 13.61% decrease from the issue price of US$18. During the session, iQiyi once fell to $15.44, a drop of 14.22%.
The arduous task before Gong Yu is to further prove iQiyi’s profitability. In an interview with Wired, Gong Yu said that iQiyi will look for new opportunities in advertising, mainly information flow advertising. Currently, iQiyi is not only developing new information flow products, but also spending a lot of effort on a social product called "iQiyi Bubble". This is a product based on information flow that allows fans to follow celebrities.
Gong Yu said that iQiyi Paopao has 45 million DAU in the off-season and more than 60 million in the peak season. Gong Yu hopes to bring more information flow advertising revenue through this social product.
In terms of membership business, iQiyi’s 60.1 million paying members have exceeded Netflix’s 54.75 million users in the domestic market in the United States.
However, the concern is that the ARPU value of iQiyi’s paid members in the past three years has been RMB 93.18, 124.57, and 128.66 yuan respectively-------the ARPU value has hardly increased in the following two years.
At the same time, on an annual basis, the growth rate of paid members in 2017 has dropped from 182.22% in 2016 to 68.21%. Although the trend of increasing membership will not change in the short term, once it enters a period of stable development, if the increase in ARPU value is still not obvious, it will directly affect iQiyi's future revenue.
But in turn, this also means that digging deeper into users’ payment habits to further increase ARPU will be iQiyi’s next important growth point.
In any case, as a company that has successfully reached Nasdaq to complete its coming-of-age ceremony, iQiyi led by Gong Yu has achieved initial success. When the video market enters the era of oligarchy, the industry structure has undergone tremendous changes. Gong Yu, a latecomer, has achieved his wish and occupied an important position in the market and capital - iQiyi deserves to be celebrated.
However, facing today's powerful rivals Tencent Video and Youku, Gong Yu does not have much room to spare.
Before ringing the bell, Gong Yu said with emotion that he had always hoped that iQiyi would become a century-old company. The vision is great, but can it be realized?
