Abandoning growth and seeking profit, iQiyi was forced to "two choose one"

Picking / He Xijin

Edit / Chen Jiying

Gong Yu, the founder of iQiyi and CEO, is a master of "creative words" with a clever tongue. For example, the decline in revenue is about to be "calm growth".

Is the cost -reducing efficiency and efficiency of lying flat or a pitch to rescue the long videos?

Relying on active weight loss and reducing costs, Q1 in 2022 turned a miraculous turn to profit -the net profit attributable to iQiyi reached 169.1 million yuan, achieving the first profit since 12 years since its establishment.

However, whether the net profit of "thin" can continue has also become a question that practitioners and investors care.

On August 30, iQiyi announced the Q2 financial report, and the situation was not too optimistic -the financial report showed that the total revenue of iQiyi in the second quarter was 6.66 billion yuan, a year -on -year decrease of 13%. 9%.

The net loss attributable to iQiyi was 214 billion yuan. It did not follow the Non-Gaap Standard (NON-GAAP). The net profit attributable to iQiyi was 78.3 million yuan, and the net loss was 1.1 billion yuan in the same period last year.

It can be seen that growth and profitability, Q1 iQiyi can choose one in one. In Q2, iQiyi's profit was actually not so hard, and only Non-Gaap's net profit that Buffett himself did not recognize was left.

Entering the iQiyi that enters the calm period, the road to reduce costs and efficiency is not easy.

After the cost reduction, the explosion is hard to find

The cold winter of film and television has become the most important goal of long videos.

In December 2021, the market reported that iQiyi's large -scale layoffs of the large -scale layoffs. Almost all departments such as iQiyi Research Institute, iQiyi Game Center and other departments were laid off. More than 30%, the maximum ratio is 50%.

Reflected in the Q1 financial report of 2022, iQiyi's revenue costs fell sharply in the first quarter, a decrease of 1.14 billion yuan to RMB 5.96 billion compared with the same period last year, a decrease of 16% year -on -year, reaching a new low in three years. Among them, the content cost of Q1 4.4 billion yuan decreased by 19% year -on -year.

The core strategy of cost reduction continues in Q2, and its strength has continued. According to the Q2 financial report, the revenue cost in the second quarter decreased to RMB 5.2 billion, a year -on -year decrease of 24%, and a decrease of 760 million yuan from the first quarter. 500 million yuan.

Iqiyi attributed the reduction of content cost to the optimization of content strategies and the reduction of operating efficiency, and the so -called content strategy optimization refers to the new way of iQiyi from the first quarter of this year: cut off the waist content, the impact header, the impact header The content of the ministry, the increase in the income of members and advertising by explosive models, and enhance the loyalty of users.

It can be seen that iQiyi wants to spend every penny on the blade and deeply cultivate refined content. In the interview after the Q1 financial report in Q1 in 2022, Gong Yu said: "If the content is divided into head, waist, and tail, our most important strategy is to increase the content of the head and reduce the content of the street, and the waist content does not deliberately do it. "

Unfortunately, Q2, iQiyi is somewhat unpretentious in the output of content.

First of all, in terms of the content of his long -term episodes, iQiyi lacks a little luck, and the explosive model you want to push is dumb.

On April 10, the TV series "Dear Child" produced by CCTV and iQiyi, after the launch of the CCTV8, the Douban score was as high as 8.1, and the ratings reached the top from April 16th to April 22nd. The average ratings of each episode are 1.386, ranking No. 1 in the TV series single channel ratings.

However, due to the different platform audiences, the show was broadcast high and low in iQiyi.com, and his results were not ideal. According to Yunhe data in April, the full -network series of serial films effectively played · Bai screen list, "Dear Child" ranked fifth with 527 million positive players, and the market share was 1.99%. "Glory", Youku's solo "Knowing with the Jun Chu is just like the old man's return" Tencent's "Test the World" alone.

(Yunhe Data April The entire network series of serial films effectively played · Batshop list)

The "Wind Relucting Longxi", which was broadcast on April 27, rushed the street again. The play was directed by Lu Yang, director of "Embroidered Spring Sword", starring Chen Kun and Bai Yu, and was adapted from Ma Boyong's original name, luxury lineup, good production, S+rating, and rating. Iqiyi has natural high hopes for this drama, hoping to create the glory of "Twelve Hours of Chang'an" (broadcast by Youku), but after the broadcast, the audience said that the play is dark, the rhythm is chaotic, and the taste is tasteless. Discard the drama. Yunhe Data in May on the entire network continuous positive film is effective played. The 10th is ranked 10th. The effective playback volume of the positive film is 232 million, and the market share is only 0.97%.

(Yunhe Data May on the entire network series of serial films effective playback · Buling list)

Inventory of the entire Q2, the only explosive model of iQiyi episodes is "Police Honor". It was broadcast on May 28. The popularity and word of mouth have soared, becoming the fastest content of the content of the content of the iQiyi Station. IQiyi's bleak Q2.

Helplessly this drama and Tencent video's big explosion drama "Menghua Record" met in a narrow road. Effective playback volume of Yizheng film, 3.76%of the market share, lost to the 5.89%market share of "Menghua Record", ranking second.

In general, Q2, Iqiyi, who "content as king", failed to step on the episode, and the overall performance was not bright enough. (Yunhe Data June Forects Series Effective Film Effective Play · Batshop List)

Secondly, iQiyi's variety show encountered a "aggressive" cost reduction strategy, which greatly reduced the content.

According to the variety content organizational structure published by iQiyue Enjoyment Conference in 2019, at that time, iQiyi had 3 centers (Chen Wei and Che Che responsible for program production centers, Jiangbin's responsible program development center, and the production of sports variety shows. Wonder Studio) and 21 studios.

However, according to media reports, in June of this year, only 9 of iQiyi's variety studio were left, and the number of iQiyi variety shows was also reduced.

According to incomplete statistics of "Financial Story", from April 1st to June 30th, iQiyi launched a total of including "Like You and Me", "Go to work, Mom 2", "Meng Discovery 2" "Camping together" and "China Rap -Peak Duel" and other 6 variety shows.

In June alone, Tencent Video launched the "Log in", "Start Inference", "It's a very familiar taste", "50 kilometers of Taohuawu 2", "What to do!" "Talk Show Special", "Talk Show Conference 5", "New Travel", "Hahahahaha 3", "Battle to the Peak" eight variety shows, throwing iQiyi behind him.

After the cost reduction and reduction, is the quality improved? If the variety show in the cold autumn in the first half of the year, then iQiyi can be said to have entered the severe winter in advance.

According to the Bone Duo Poor Index Ranking, in the top ten online variety list in April 2022, iQiyi only included "Like You and Me" and "Camping Together", ranking 5th and 8th; Tencent Video With the top of "New Travel", Mango TV won five seats in the list and won with quantity.

In the following two months, first in May, Mango TV was killed by "Sister 3" in the wind, ranking first on the list of the bone popularity index for two consecutive months; in June, Tencent videos relied on "50 kilometers of Taohuawu 2". Social topics have a strong circle, causing discussions on the entire network.

Compared with them, iQiyi's variety show lacks memory points. Since the broadcast of "Meng Discovery 2", since the broadcast on May 27, there is still no score on Douban.

(Bone Duo Poor Index May and June Network Comprehensive Ranking)

Finally, the same content of the film is insufficient.

Iqiyi's movie content mainly comes from two aspects: theater movie and online movies.

In terms of cinema movies, affected by the epidemic, the theater was closed, and the number of theater discharge decreased. According to the data of the Guilian Securities "Review and Trend Analysis of the Film Industry in 2022", the multi-place outbreak in the country spread in March, and the theaters' sealing and control became stricter, which led to a decrease of -63.5%year-on-year in the box office market. Essence

The high -quality content of the cinema movie also affects the purchasing Fang iQiyi. In terms of online movies, the content supply is also declining. According to Yunhe data, 202 online movies have a total of 202 online movies in the first half of 2022. The number of new numbers further reduced, a year -on -year decrease of 32%.

There are two main reasons for this: on the one hand, affected by the epidemic, many crews are interrupted, and the project cycle is delayed; on the other hand, iQiyi has adopted the strategy of improvement and reduction. Qiyi has upgraded the cooperation model of online movies, and the new model cancels the platform level, replacing "effective viewing of the first 6 minutes" with "effective time for membership accounts", and forcing the producer to work hard on the quality of the content, thereby extending the shooting cycle.

Weak revenue, members are decreasing, advertising is not strong

The content lack of explosion, the supply is insufficient, bringing another problem: weak revenue.

Iqiyi with long video content as the core. The profit method is mainly divided into four types: member service income, online advertising service income, content distribution and other methods including games and live broadcasts. Proportion.

According to iQiyi's financial report, the total revenue of Q2 reaches RMB 6.7 billion, of which membership service revenue accounts for most, reaching 4.3 billion yuan, online advertising service revenue is second, reaching 1.2 billion yuan, and content distribution revenue is 479.3 million yuan. Other income was RMB 698.4 million ($ 104.3 million).

In addition to the year -on -year increase of membership service revenue, the other three sectors revenue was declining, and the decline of Q2 was 35%, 30%, and 37%, respectively.

Insufficient content supply, lack of explosive funds, can achieve the growth of membership service income. Is the number of members of iQiyi decreased?

This is not the case. Since iQiyi entered the "100 million" member era in 2019, the number of users is close to saturation and does not increase but decrease.

According to the financial report, in addition to the trial membership, iQiyi Q2, the average daily number of members is 97.7 million, while the same period in 2021 is 98.5 million, and the Q1 in 2022 is 1008 million, the number of members continues to decline.

In this case, the reason why iQiyi member service revenue can achieve growth is mainly due to iQiyi for two years.

On December 16, 2021, iQiyi adjusted the price of gold membership. The annual card price remained unchanged, and the monthly card and quarterly card increased by 9%-20%. Driven by this, the average monthly income of each member of Q2 was 14.53 yuan, an increase of 8%compared to 13.42 yuan in the same period in 2021;

However, because the content is not strong, the per capita revenue growth is not stable. This number this quarter is less than 14.69 yuan in Q1 in Q1 in 2022. The number of members decreases, but it can achieve income growth through price increase, but Iqiyi's other interest -weight town -brand advertisement, but there is no such blessing.

In the Q2 quarter, brand advertising revenue was 1.2 billion yuan, and the number of 1.3 billion yuan in the previous quarter was still declining.

There are two main reasons:

First, the macroeconomic environment was severe, and the epidemic broke out again. The advertisers also tightened their pockets and learned to have a careful calculation.

According to QUESTMOBILE data, the size of the Chinese Internet advertising market in the first half of 2022 decreased by 2.3%year -on -year, and the number of Internet advertising brands has fallen by 38.3%year -on -year.

According to the January-June of 2022, QuestMobile, the average sorting of the media status index, WeChat occupies the first throne, the two short video platforms of Douyin and Kuaishou are ranked second and third, Tencent Video and iQiyi two long videos The platform ranked seventh and eighth, and the launch of the heat and value lost to the short video platform.

Second, the quality of iQiyi's variety show declined and the attractiveness of advertisers declined.

It is an indisputable fact that the variety market in the first half of this year is.

According to the statistics of Yunhe data, the cumulative effective playback volume of the full network variety show in Q1 in 2022 was 5.9 billion, and the number of Q1 in 2021 was 8.8 billion, and the playback volume fell 33%year -on -year.

The audience was about the fatigue of variety shows, and the content of iQiyi was not outstanding. Advertisers who wrapped their waist tightly, naturally they were even more reluctant to invest.

Being good is still there, there are all the future

Open source is hopeless, only throbbing.

"The gross profit margin has maintained a month -on -month increase in three consecutive quarters, reflecting the continuous improvement of content business efficiency. In the second quarter, continuing to implement a prudent expenditure plan, maintaining stable operating expenses" strategy Jun explained so.

Despite heavy pressure, Iqiyi also had some good cards when he continued to change.

First, in terms of cash flow, on August 30, iQiyi announced that it would reach an agreement with PAG. PAG will subscribe for a total of 500 million US dollars, iQiyi, which will issue convertible bills, and iQiyi's hands are a lot rich.

At the end of the second quarter, the total amount of book cash and long -term investment of iQiyi was about 15.5 billion yuan. The total debt of accounts payable, short -term borrowing, and convertible bonds exceeded 24 billion yuan, and the funds were tight.

In addition, Gong Yu said that iQiyi will upgrade strategy from the third quarter to the new channel of "calm growth". It is to invest more resources into the company's main business and high -degree ROI projects. "

Second, the cost reduction and efficiency, iQiyi tried to find a balance point.

Since the major layoffs in December last year, iQiyi has been aggressive in the reduction. Although the Q2 content reduction directly affects the content, quality and member scale, but for iQiyi at the moment It is necessary to try and error with the bottom line of efficiency.

At the conference call after the financial report was released, Gong Yu explained that "We need to increase some investment at some points that our predicted efficiency will be relatively high, which will lead to profit growth higher than income growth."

Since the growth and profitability are not available, one step back, the second choice to keep the profit, it is also a good option.

Third, with the vibrato, the enemy is friends, drainage and relieves, increase income

It is difficult to find the explosive model. How to use the existing content to obtain new growth points is also the direction of iQiyi's exploration.

If you ca n’t fight, you can join. On July 19, iQiyi and Douyin turned the enemy as a friend. The two sides reached a cooperation to explore the second creation and promotion of long video content.

Iqiyi will authorize the long video content with the right to communicate and transfer to Douyin, including the "Mist Theater", including the "Mist Theater".

In this way, iQiyi not only reduced the cost of rights protection, obtained copyright income, but also successfully drained with the help of Douyin's two works to release the long tail effect of high -quality content.

However, this cooperation is estimated that it will not bring considerable revenue to iQiyi, and more value may be in drainage. It may be expected to save the number of users and membership of iQiyi's continuous decline.

Fourth, the summer stall recalls, and the "Basic Law of Genius" and "Cang Lan Jue" have become explosive.

Compared with the second quarter variety shows and episodes are not powerful. Although the variety show is still not strong in the summer file, the episodes of the episode have been pulled back.

In July and August, iQiyi still lacks highlights in variety shows.

Bone Duo Poor Index Ranking, in July, in the top 50 of the network comprehensive ranking, iQiyi only occupied five seats, and the best "Meng Explorer 2" ranked third with the popularity of 54.48.

By August, iQiyi's seats did not increase and decrease. Only "China New Rap Peak Duel", "Men who made housework 4", "Meng Discovery 2", "Eighty Miles", four variety shows squeezed into TOP50 List.

However, the summer stalls have excellent performance in iQiyi.

On the list of the Bone Duo Poor Index in July, the "Genius Basic Law" is ranked third. In August, "Cang Lan Jue" exploded, and became the fourth enthusiasts of the platform after "World World", "Resessing" and "Yanxi Raiders". As of the finale of August 30, Douban scored 7.8 points. On Weibo, there were only 16 million discussions on Weibo on Weibo and 17.19 billion reads. The high heat is the phenomenon -level ancient puppet explosion after "Menghua Record", which has been purchased by Netflix recently. Therefore, Gong Yu also pointed out at the conference call that the average number of members of Q3 will rise, because: "First, summer is a very good season; second, the" Genius Basic Law "and" Cang Lanjue "and other dramas are here. It was broadcast one after another, so whether it is the increase in membership income and the number of members, it is optimistic. "

However, the content Q2 fluttering the street, Q3 rebounded, it just shows that iQiyi did not establish a stable content supply mechanism, and the symptoms of long video explosive models were difficult to solve.

It can be seen that in order to make a profit, iQiyi will maintain the current contraction strategy in the future, trying to squeeze out the bubble of the platform content, and focus on head content.

However, in the content industry that "you can't open the flowers and inserts the willow and will not be inserted", the explosive model can be called a blind box, and the content is originally a probability game. However, in this cold winter, iQiyi couldn't care too much.

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