(Observer.com Text/Lu Siye Editor/Zhuang Yi) Qutoutiao, which once "sinks the three giants", has come to a time when it needs to save itself.
A few days ago, Qtoutiao issued a notice announcing that it will adjust its business and stop the service and maintenance of the self-media creation platform on June 30. Observer.com found that Qutoutiao has already downloaded the content portal online.
As a content aggregation platform, stopping the self-media creation platform service has a hint of "lying flat", and Qutoutiao abandons creators at this time seems incomprehensible, but it is also a last resort. Four years after
was listed, Qutoutiao fell behind completely, fell into a quagmire of losses, and its stock price also fell into a "1 yuan stock". In the vicious cycle of reducing costs and stopping losses and users' escape, Qutoutiao's sinking story can no longer be told.
has a cumulative loss of 6.6 billion yuan, and is forced to save money and lose money
At the first Qutoutiao ecological conference held in November 2018, Qutoutiao founder Tan Siliang once said that content entrepreneurship has entered overtime and is determined to do a good job in content construction and will "fully empower content entrepreneurs." And now, just four years later, Qutoutiao has completely closed the door to self-media creators. The notice of
has no previous attention to creators, but it just coldly emphasizes that self-media creators "retrieve cash in their accounts as soon as possible. Delete self-media accounts to avoid unnecessary disputes, and the author's account will be automatically cancelled after the deadline."
's move is completely contrary to the current situation where mainstream content platforms are competing for creators. As an information platform characterized by content aggregation and recommendation distribution, why should Qutoutiao abandon creators who are related to core content competitiveness at this time? The answer may be "having to abandon it."
iMedia Consulting senior analyst Zhang Yi analyzed in an interview with Observer.com that Qutoutiao has reached the time to "save money and reduce food".
Zhang Yi said that Qutoutiao has no way to attract and maintain creators through strong subsidies. "The demand for user traffic and user retention by content information platforms is fundamental. Judging from the number and activity of users, Qutoutiao has been marginalized and lacks attractiveness to creators and advertisers."
financial pressure can be seen from the financial report that since its listing in 2018, Qutoutiao has been circulating in the quagmire of losses.
From 2018 to 2020, Qutoutiao's net losses were 1.946 billion yuan, 2.689 billion yuan and 1.105 billion yuan respectively. The losses in the first three quarters of 2021 reached 942 million yuan, and the cumulative losses have been approximately 6.682 billion yuan.
In the fourth quarter of 2020, Qutoutiao briefly achieved an operating profit of 42.5 million yuan in the first quarter. At that time, Tan Siliang set a grand goal of achieving 700 million yuan in the internal letter to double its operating profits of , DAU and revenue in 2021.
Now, although the fourth quarter results of 2021 have not been announced, this goal is difficult to achieve. In the first three quarters of 2021, Qutoutiao's revenue was 1.291 billion yuan, 1.202 billion yuan and 966 million yuan, respectively, with losses of 149 million yuan, 209 million yuan and 584 million yuan respectively. Not only did the revenue gradually decline, but the losses also expanded quarter by quarter.
QuToutiao's quarterly net profit for 2018-2021
Other indicators also fell sharply. In the third quarter of 2021, Qutoutiao MAU (monthly active users) fell 1.7% year-on-year to 118 million, and DAU (daily active users) fell 33.2% year-on-year to 26.5 million.
At the third quarter 2021 financial report meeting, Tan Siliang classified the reason for his poor performance as "the Internet advertising industry is under pressure due to the macro environment."
More importantly, there is not enough funds to support Qutoutiao to spend the off-season of Internet advertising. As of September 30, 2021, Qutoutiao held a total of approximately 862 million yuan in cash, cash equivalents, , restricted cash and short-term investments.
At the same time, the 171 million USD 3-year convertible bond invested by Alibaba when Qutoutiao was listed is about to expire. If Alibaba does not convert debt to equity, Qutoutiao will bear a huge debt of USD 171 million, and the current financial reserves are not enough to repay the convertible bond.
In the first quarter of 2021 financial report, Qutoutiao also disclosed for the first time that it had high continued operating risks on the debt maturity date.
Zhang Yi believes that as users and high-quality content are decreasing, potential and traditional partners show relatively pessimistic emotions towards Qutoutiao. Without the support of business orders and capital, Qutoutiao's cost pressure is huge. "The layout of the self-media creator entrance is now a choice for Qutoutiao to decide to save money."
According to the official response, Qutoutiao chose to directly purchase third-party content platforms such as Baidu to support the normal operation of the platform, saving the cost of creators maintaining the self-media platform business and the cost of operating in part of content.
In terms of scale and profit, Qutoutiao chose the latter either actively or passively. But this move is not a good move, but a risk of falling into a "vicious cycle". After closing the self-media creation platform due to cost pressure, the platform's content ecosystem will inevitably be affected, which will further affect the efficiency of user retention and commercial monetization.
"Subsidy to read news" model is unreliable and falls into a vicious cycle
Why did the "first stock of mobile content aggregation" that was so glorious in the past come to this day? Qutoutiao should reflect on its own business model.
Once upon a time, Qutoutiao was one of the "three sinking giants" alongside Pinduoduo and Kuaishou. With the help of the innovative "online earning model", Qutoutiao, which was launched in 2016, quickly captured a large number of users in the sinking market, and also set off a trend of imitation.
"Online Earning Mode" actually uses cash to inspire users to read news. The platform claims to "make money by watching news". Users can get corresponding cash rewards by logging in, checking in, browsing news, sharing and attracting new products.
, a simple and crude user incentive model, was still "unique" at that time. When content aggregation platforms such as Sina , NetEase, etc. are still creating content and cultivating creators to attract users, Qutoutiao skips the middle link and invests its energy and financial resources on users.
happened to catch up with the rapid popularity of mobile Internet and smartphones in the sinking market in 2017. Qutoutiao users grew explosively, and relying on subsidies to users to open up a new battlefield in content entrepreneurship. It once became the reading app with the most installed capacity in the sinking market.
In the era of Internet traffic bonus , Qutoutiao seized a good opportunity for commercial monetization, and the fresh sinking stories also attracted the attention of capital.
In September 2018, after receiving hundreds of millions of dollars in investment from giants and investment institutions such as Tencent , Xiaomi , Qutoutiao went public quickly, setting the fastest listing record for Chinese companies in Nasdaq at that time. On the day of listing, trading was suspended due to the rapid increase and fall intraday due to the circuit breaker being triggered five times. At the close of the first day, Qutoutiao's stock price had soared by 128% to US$15.97, with a market value of up to US$4.588 billion.
QuToutiao founder Tan Siliang
and its listing is at its peak. After its listing, Qutoutiao has not made any major breakthroughs. Many industry opinions question the problems with Qutoutiao's business model.
Qutoutiao’s business model is simply to use the Internet strategy of “burning money subsidies” in the content industry first. Unlike other Internet platforms that have lost money but have a scale growth, Qutoutiao’s long-term sales and market expenses have not brought about the growth it should have. In recent years, Qutoutiao’s user data has continued to decline in each quarter.
The reason is that the users attracted by Qutoutiao subsidies are not to watch the news, but are filled with a large number of wool parties who are not interested in content. This feature can also be seen in the financial report: Once market expenses drop, user data will decline sharply.
Starting from the third quarter of 2019, Tan Siliang announced that he would restrict costs and expenses, and launched a plan to reduce losses for more than a year. After the platform subsidies were tightened, the number and activity of users immediately declined.
In the fourth quarter of 2019, the usage time of Qutoutiao users on the platform began to decline, from 63.1 minutes to 59.4 minutes in the same period in 2018. By the third quarter of 2021, the average user usage time dropped to 51.9 minutes.
As of the third quarter of 2021, Qutoutiao's daily active data fell month-on-month for six consecutive quarters, and had fallen to the fourth quarter of 2018 level two years ago; the monthly active data fell back to the third quarter of 2019 level.
"Success is subsidized, failure is subsidized." Facts have proved that there are problems with Qutoutiao's business model. Since we do not pay attention to content and choose to capture users first, Qutoutiao lacks a good platform ecosystem and unique content, and the moat is not high.
As Internet traffic becomes more and more expensive, customer acquisition costs increase, the attractiveness of the online earning model to users is declining, and the content lacks attractive platforms. Once subsidies are reduced, users will leave without mercy.
The current Qutoutiao can be said to have entered a dilemma: control costs, active users will decline, and revenue will be affected; increasing subsidies will aggravate losses, and cash flow is insufficient.
As of April 28, Qutoutiao's stock price has fallen to US$1.17, and its market value has dropped to US$35.45 million, a decrease of more than 99% from the peak of US$4.588 billion.
How will Qutoutiao go in the future? Three years after its establishment, Qutoutiao began to realize the importance of content and vigorously introduced original creators, institutional media and other content creators. In 2018, Qutoutiao launched the "Fast Lane Plan" to increase creators' share and ensure creators' guaranteed income. However, Qutoutiao has not disclosed how much money has been invested in content in recent years.
In May 2018, Qutoutiao "takes a different approach" and launched the free reading novel platform "Midou". At that time, there were reports that Qutoutiao hoped to make up for its content shortcomings through MiDou and also become a growth curve for new business. Two quarters after
Midou went online, Tan Siliang said in the quarter's financial report that MiDou gained 5 million users in just half a year. "I believe MiDou is fully capable of challenging the traditional paid subscription model."
It is worth mentioning that MiDu’s business model and Qutoutiao are from the same school. When online literature platforms are exploring and promoting paid reading, MiDu entered the online literature market with "free + advertising". Like Qutoutiao, MiDu grew rapidly in the early stage, and the research agency Questmobile data. In 2019, MiDu became the first in the domestic free novel APP.
However, the same problem also occurs with MiDu. Although MiDu has attracted a large number of users to grow in a short period of time, in the online literature industry that focuses more on original and exclusive content, MiDu's moat is also very fragile.
After 2019, the number of players in the free reading field began to increase, and the competition was fierce. Backed by ByteDance and Baidu's Tomato Novel and Qimao Novel, MiDu also lost.
Questmobile data shows that at the end of 2020, among the top 100 MAU scales in the online reading app industry, Tomato Novel ranked first with 61.62 million, and Qimao Free Novel ranked second with 54.34 million, surpassing mainstream platforms such as Huawei Reading, Zhangyue , and QQ Reading . MiDu, which previously led the lead, has not yet entered the top 10.
Since the official announcement of the daily active data of 10 million in September 2020, MiDu has never updated its user data. Qutoutiao's third quarter financial report only stated that MiDu Novel HTML has continued to grow after the daily active users exceeds 10 million.
At the end of March this year, MiDu issued an announcement in the author's backend that starting from April 1, MiDu's signed works will be transferred to China Literature Group , and will be operated and maintained by China Literature in the future. The powerful general who Qutoutiao once had high expectations also quietly fell.
Free Reading Market Competition is Fierce
In recent years, short video platforms such as Douyin and Kuaishou have risen, stealing away the Internet usage time of a large number of users. The living space of graphic and text content platforms has been continuously squeezed, and the drawbacks of Qutoutiao's single advertising monetization revenue model have become more prominent.
In fact, Qutoutiao has also tried to develop diverse products. In addition to the online literature platform MiDu, Qutoutiao has also incubated short video platforms such as "Qiuqiu Video", "Quduopai", and live broadcast platform "Qu Live", but they all ended up in failure to test the waters.
Original content information track, Matthew effect is obvious, and the Toutiao-type Toutiao, which is benchmarked against the sinking market, and the Toutiao-type Toutiao and Baidu-type Toutiao version occupy the market. Zhang Yi told Observer.com that in comparison, other content platforms such as Toutiao can still have greater incentives for creators, which has become the mainstream choice for users and creators.
"From Qutoutiao's current status, it can be said to be internal and external troubles." Zhang Yi said that external troubles come from the rise of platforms such as Toutiao and professional media, while internal troubles are financial pressure. Qutoutiao is still in the stage of burning a lot of money, and whether the capital market is willing to provide support is a key.
After four years of losses and stock price plummeting, Qutoutiao's sinking story can no longer be told. It lost MiDou and closed the entrance to self-media creators. How should Qutoutiao continue now? Perhaps, after reducing costs, considering transformation is Qutoutiao’s only way out.
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