On the afternoon of November 6, iQiyi announced that it will adjust the subscription fee for the gold VIP membership service on November 13, and the price of members at all levels will be unified. Among them, the prices of continuous monthly, monthly, continuous, quarterly, continuous, and annual cards are adjusted to 19 yuan, 25 yuan, 58 yuan, 68 yuan, 218 yuan, and 248 yuan respectively.
However, iQiyi also stated that gold/student VIP members who have been monthly/season/year consecutively before the adjustment will enjoy iQiyi's benefits of "no cancellation of automatic renewal at the same price within two years".
In the battle for the throne of the long video head that burns money continuously, the entire Tencent department stands behind Tencent Video, and Youku Video also has a large amount of hot money blessing from the Ali department, and the dream of "China Netflix" iQiyi, Only Baidu, which is hard to protect itself, supports it. The price adjustment move may allow iQiyi to fall into the palm of its competitors, or it may be the key to its revival.
member price increase by 15 yuan, income increase by 1.5 billion?
In the earnings conference call in mid-August this year, Gong Yu, CEO of iQiyi, emphasized the importance of membership subscription fees. "The price we set nine years ago was too low to cover the current content cost."
Before this slightly frustrating conference call, iQiyi had just handed in a modest report card. According to the second-quarter financial report released by iQiyi on August 14, its total revenue for the quarter reached 7.4 billion yuan, an increase of 4% year-on-year, setting the lowest revenue growth rate in years; in terms of profitability, iQiyi still maintained losses , A net loss of 1.4 billion yuan, a year-on-year decrease of 39%. According to its mid-year report published at the same time, the situation is not ideal. Although its revenue has increased from 12.164 billion yuan in the same period in 2019 to 13.2 billion yuan in 2020, its loss gap continues to expand, from 41.26 billion yuan. The billion yuan increased to 4.314 billion yuan, an increase of 4.56%.
In this case, price adjustment seems to be an inevitable move by iQiyi. Subdivided into the second quarter financial report, from the perspective of iQiyi’s revenue structure, the revenue from membership fees is 4 billion yuan, accounting for 55% of the total revenue, and the current iQiyi’s paying user scale has reached 105 million. According to a research report by Tianfeng Securities, if iQiyi increases the member price by 10-15 yuan per year, it can bring in 1.06 billion-15.9 billion yuan in revenue increment. However, iQiyi's price increase this time is only 4 yuan (continuous monthly service), and I am afraid that there will be a discount in income.
However, iQiyi's ambition does not stop there.
In the capital market, many investors still regard iQiyi as a simple video platform. According to this view, membership payment and distribution are just a process for iQiyi to offset content procurement and production costs. Through advertising to other businesses-such as game business-to achieve. If you look at iQiyi from this perspective, it is undoubtedly a failed work. The decline in advertising revenue year by year and the low drainage capacity of the long video platform can all prove this.
Of course, iQiyi will never be willing to be treated this way. Gong Yu's dream of is to make iQiyi the Netflix of China.
blindly imitating, is iQiyi’s "China Netflix" dream really wise?
In 2018, iQiyi was listed on the Nasdaq, and Gong Yu was embraced by representatives of several investment banks for a road show. Gong Yu, who made his debut on stage, convinced many investors with just one sentence: "iqiyi is the Netflix of China."
"because foreign investors are not familiar with the positioning of your company, if so Introduce iQiyi as a'China's certain Internet company', and they will know what kind of company they are dealing with." In the preface of Mark Randolph's "Return to Netflix", Gong Yu explained how he was at the time. move.
In Gong Yu's view, this wording is just a more understandable expression. But in the next two years, iQiyi really became more and more like Netflix.
Netflix's profit model originated from the CD rental business that it relied on at the beginning of its business. Through the user subscription system established by Netflix founder Mark Randolph, Netflix successfully got out of the financial crisis. From simple CD rental to advanced streaming media, the income from membership fees supports NetflixOther expenses, all the way to promote it to the throne of Silicon Valley heroes. It is this model that
iQIYI wants to imitate- only relies on user fees under the membership subscription system to maintain the operation of the entire enterprise.
In order to improve its membership subscription system, iQiyi's move is not only to adjust prices. In 2018, iQiyi produced a large number of popular content including "Idol Trainees", "New Rap of China", and "Strategy of Yanxi Palace", which added fresh blood to the membership subscription system. In terms of increasing payment, iQiyi has also launched the "advanced on-demand mode" and "Star Diamond membership. All kinds of measures show that iQiyi is going further and further on the road of Netflix.
Is it really wise to imitate?
Netflix is also trapped in a "stall" cycle, iQiyi's road to profit is still long
iqiyi is much poorer in imitating Netflix. It has a large number of global users. Under the circumstances, Netflix does not dare to abuse its pricing power, but iQiyi, which has not yet laid down on the Chinese market, has begun to gather consumers’ wool.
is already a gold member under the "advanced on-demand" model launched by iQiyi this year. Of users have to pay another 3 yuan for on-demand or a one-time payment of 50 yuan to unlock the entire content of certain episodes. Because of this model, iQiyi has been criticized by many users, and even caused A lawsuit. The newly launched Star Diamond membership of
on top of the gold membership is also called IQ tax by some users. After all, the service is not only free to watch "advanced on-demand" dramas and paid movies, but also the same as gold members. The difference is not big. In a sense, the high-priced Star Diamond members have also devalued the gold members that should be valuable.
On the other hand, Netflix, imitated by iQiyi, is also in a stall. Strange circle.
Judging from the user subscription system that Netflix relies on for a living, to maintain this system, the continuous production of original and high-quality content on the platform is the key . In 2013, Netflix bought the " "House of Cards" finally brought it 11 million subscribers-which is why iQiyi has been investing in original works in recent years.
However, Netflix's lack of content makes it too dependent on the shortcomings of the membership subscription system Gradually highlight. In recent years, many original content created by Netflix at has not become the first choice for subscribers. According to the market statistics agency Nielsen, 8 of the 10 programs with the highest ratings of Netflix in 2018 From a third party.
Under this situation, Netflix’s growth has gradually stagnated. In the four quarters of 2019, Netflix’s global paying subscriber growth rate dropped from 25% at the beginning of the year to 20% at the end of the year, and profit growth The decline in speed also followed. The 2019 annual report shows that Netflix's net profit was US$1.867 billion, an increase of 54.17% year-on-year, compared with 224.7% in the previous year. From this, we can see that the huge amount of money spent on original content The investment (in 2019, Netflix invested more than $15.3 billion in original content) did not bring corresponding profit growth to Netflix, and iQiyi, who only learned three-legged cat kung fu, could not complete the growth miracle like "House of Cards". If you want to rely on users to subscribe to this bowl of rice to make a profit, Iqiyi has a long way to go.
was short-selling and fell into the "investigation door", how can Iqiyi, who is rumored to be sold out, deal with it? IQiyi also faces inquiries from the capital market.
On April 7 this year, Wolf Pack Research and Muddy Water, a well-known short-selling agency, jointly issued a short-selling report targeting iQiyi. This report believes that iQiyi has exaggerated revenue by 8-13 billion yuan in its 2019 financial report. In addition, it has exaggerated to varying degrees in terms of user size, revenue and capital expenditure.
"iqiyi has been deceiving since it went public, and it has continued to deceive since then," Wolf Pack Research wrote in this report.
Regarding the short-selling report, iQIYI’s attitude is quite firm, saying that the Wolf Pack Research report is “seriously untrue in terms of data and conclusions”, but this does not completely dispel the doubts of the capital market. On August 13, iQiyi was investigated by the US Securities and Exchange Commission (SEC), and the final result has not yet been reached.
In addition, iQiyi has recently exposed rumors that it is looking for buyers. In June of this year, Reuters reported that Tencent intends to take a stake in iQiyi and replace Baidu as its largest shareholder-which means that Tencent will at least acquire a 57% stake in iQiyi. If the acquisition negotiations are finally reached, then iQiyi will be placed under Tencent, and the dream of "China Netflix" that has been advertised before will probably no longer exist.
Even if iQiyi finally gave up the idea of selling oneself, the support that Baidu behind it can give is very limited. Last quarter, Baidu's own core online advertising business fell by 8% year-on-year, and the monthly active users of Baidu APP also dropped significantly. In the face of the competition from ByteDance's Douyin and Watermelon Video, Baidu's future video business development will focus more on live broadcast and short video fields, which will not help iQiyi, which focuses on long videos.
made a profit and became the only way for iQiyi to break the game. The facts have proved that the Netflix model is not the best way to realize iQiyi. Perhaps Gong Yu should briefly withdraw from his longing for Netflix and take a good look at this dilapidated iQiyi and the predicament surrounding it.
