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Iqiyi is in a growth dilemma: the total number of members has declined, and the market value is less than half of station B

via:博客园     time:2021/2/20 13:15:12     readed:226

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Wen / Zhong Wei

Source: Online insight (ID: lxinsight)

Iqiyi is one of the most concerned but embarrassed players.

But its growth dilemma is obvious.

On February 18, iqiyi released its unaudited financial reports for the fourth quarter and the whole year up to December 31, 2020. The total revenue in the fourth quarter was 7.5 billion yuan, a year-on-year decrease of 1%, and the total revenue in 2020 was 29.709 billion yuan, a year-on-year increase of 2%.

In recent years, iqiyi's revenue growth has been declining. From 2016 to 2020, iqiyi's revenue growth rates were 111%, 55%, 44%, 16% and 2% respectively.

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Another dangerous sign is that iqiyi's total subscription membership is 101.7 million, a year-on-year decrease of 1%, which means that iqiyi's current membership size may reach the ceiling.

After the release of this financial report, iqiyi fell by more than 7% after hours. The profit difficulties pointed to by successive years of losses and the member growth difficulties pointed to by the age of flow stock have made iqiyi questioned.

This also led to the slow growth of iqiyi's market value. On May 27 last year, the media described the market value of station b surpassing iqiyi for the first time as a historic scene in the domestic video website industry. Now, the market value of iqiyi is 19.041 billion US dollars, and that of station B is 49.847 billion US dollars, less than half of the former.

The gap between iqiyi and Nafi is more obvious. Currently, Nafi's market value is US $242.804 billion. Iqiyi's profit and revenue growth are far away from Nafi, and its market value is only one tenth of Nafi's.

In order to make profits and give the capital market enough confidence, iqiyi has made frequent moves in recent years. From the expansion of literature and comics to create ecology, to the launch of multiple apps for short and medium video markets, and then to iqiyi app's price increase measures and advance demand, all reveal iqiyi's anxiety and urgency.

Can iqiyi get out of the growth dilemma this year?

Has the membership reached its peak?

Iqiyi is under the pressure of weak membership growth.

In recent years, the disappearance of Internet traffic dividend also appears in the long video industry. At the same time, the rise of short video platform, but also snatched a lot of traffic.

From "secret corner" to "love of mountains and seas", blockbusters are constantly strengthening iqiyi's content barriers, and iqiyi's membership has increased to 119.9 million in Q1 2020. This is mainly due to the arrival of the epidemic, so that users have a lot of free time.

This may be a difficult peak to break through. In the whole year of 2020, the membership scale of iqiyi will decrease.

According to the financial report data, its membership size has decreased from 118.9 million to 101.7 million by the end of 2020, with a slight decline of 4.95% compared with the same period last year.

Iqiyi and Tencent video competition has been stuck. The latter has already exceeded the trillion member scale. By the end of Q3 in 2020, the number of its members has increased by 20% to 120 million. This scale is comparable to iqiyi, and even keeps growing.

The pursuit of competitors, have to let iqiyi alert. But for them, the slowdown in growth is a fact that has to be accepted. Among the long video players, iqiyi took the lead in announcing that its membership scale exceeded 100 million in 2019, but it was also the year that the membership scale began to decline.

In the first quarter of 2019, the membership size of iqiyi reached 118 million, but in the last three quarters, the membership size was 104.9 million, 104.8 million and 107 million respectively, showing a downward trend.

The growth of membership scale slows down, even negative growth, which makes the outside world guess that the membership scale of iqiyi may have reached the ceiling.

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Gong Yu, founder and CEO of iqiyi, once said that the era of horse racing and enclosure is over, and then every user of the video platform has to harvest in the gap.

Correspondingly, iqiyi began to try paid membership service since 2011, and no longer only rely on free content to drive user growth.

Since the second half of 2018, iqiyi has been preparing for the price adjustment again, and the price increase measures were not implemented until two years later, with an increase of about 26%. To know that the original membership price has lasted for 8 years, enough to see iqiyi's cautious attitude.

After qingniannian, iqiyi tried the advanced on-demand mode in different types of works, such as love apartment 5 and I am Yu huanshui.

In addition to the pure membership mode, iqiyi is also trying to add single chip payment to members to explore more charging possibilities.

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Under the pressure of public opinion, iqiyi is mining the value of existing members, and the current results are also slightly apparent.

In 2020, iqiyi's member paid ARPU value (average paid user income) will further increase.

In terms of service income / number of subscription members, the ARPU value increased from 121.5 yuan in 2018 and 134.9 yuan in 2019 to 162.2 yuan in 2020.

The increase of membership fee also increases the ARPU value of members and increases the income of the platform, but it may also make some users give up their subscription, resulting in the loss of members of the platform.

This negative effect did not disappear soon. With the decline of membership scale in the fourth quarter of 2020, the income of members who accounted for more than 50% of iqiyi's total revenue also showed negative growth, with a year-on-year decrease of 0.67% to 3.835 billion yuan.

After the long video turns to the stock market, iqiyi's membership growth problem becomes more serious.

Slow growth in market value

Iqiyi's market value is also facing growth difficulties.

Looking back six years ago, Gong Yu said at a media conference that the value of Youku potato listed in the United States was seriously undervalued because the health rules of the industry were not established and the value of the industry was not fully understood by investors.

A few years later, iqiyi came into the market and faced the same dilemma as Youku and Tudou.

In April 2018, iqiyi was listed on NASDAQ in the United States, with the offering price set at $18 / ads. according to the latest closing price of $25.61, the share price has risen by 42.2% so far.

爱奇艺股价情况,图源老虎证券

Iqiyi stock price, tuyuan tiger securities

Correspondingly, mango super media, which was listed in January 2015, has an issue price of 9.06 yuan per share. According to the latest closing price of 71.17 yuan, its share price has risen by 672%.

Mango super media and iqiyi are both in the long video track. Although the former's membership income and membership scale are far less than the latter, the latter still gains the recognition of the capital market.

At present, iqiyi and mango super media, B station and even the U.S. company Netflix, the stock price trend comparison gap is obvious.

At the same time, the gap also appears in the market value. Station B, which is also listed in the US stock market, has seen its share price rise 114% since its listing, and its current market value is 2.5 times that of iqiyi.

Iqiyi's valuation is quite different from those of these players, and the deeper reason lies in the mode and existing performance of iqiyi.

On February 18, iqiyi's financial report for the fourth quarter of 2020 was released. Compared with the same period in 2019, iqiyi's main revenue sectors declined to varying degrees in the fourth quarter. The impact of the macroeconomic downturn continued, with advertising revenue down 1.27% to 1.859 billion yuan year-on-year; affected by the decrease in cash transactions, content distribution revenue was 804 million yuan, down 8.43% year-on-year.

Meanwhile, iqiyi has been losing money for four consecutive years. According to the financial report, iqiyi lost 3.7 billion yuan, 9.1 billion yuan and 10.3 billion yuan in 2017, 2018 and 2019 respectively. In 2020, although the loss has narrowed, it will still reach 7.038 billion yuan.

Among the current video players, Tencent video and Youku can not cover the cost of content, station B has lost money for 11 consecutive quarters, and mango hypermedia has made profits.

图源爱奇艺官方微博

Tuyuan iqiyi official microblog

Iqiyi wants to expand the scale of revenue, either reduce the cost of fees, or promote the continuous growth of paid members.

Iqiyi has been controlling operating costs and content costs. Since 2020, the policy has standardized the remuneration of actors. Iqiyi has also issued proposals with Youku, Tencent and six major film and television production companies.

Iqiyi currently relies on self-made content to reduce costs, and its proportion of self-made dramas surpassed that of copyright dramas for the first time in 2018.

Mango super media's high share price is also considered to be due to the profit made by self-made content, becoming the only profitable player in the long video website at this stage.

Iqiyi is forming the industrialization mechanism of self-made drama. Its self-made drama is not weak in strength and high in quality.

“迷雾剧场”的地铁广告,图源爱奇艺官方微博

The industrialization mechanism is conducive to iqiyi's large-scale production and operation content, and can also form a certain burst of money methodology.

Only the continuous burst of money can make the paying users continue to grow.

However, in the current long video field, members are willing to pay for high-quality content, but the stickiness does not last. Iqiyi has not formed a unique brand recognition in the hearts of users. Users often switch between platforms for high-quality content.

Chip and challenge of iqiyi

Iqiyi's apple garden ecology refers to the layout around the entire online copyright content, forming a whole content chain covering video content, audio content, knowledge payment, e-commerce, games and even finance, and breaking through a self recycling ecological link.

This is a story that capital is happy to see. Iqiyi's dream is still on the way to realization.

In 2021, iqiyi will put more than 50 in-house studios into full production, which focus on the diversified content categories to meet the viewing needs of different user groups.

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Iqiyi completed a financing in December 2020, the largest since its IPO. Financing will further improve iqiyi's content supply and technical level.

However, the long video war is fierce, and iqiyi's supplementary ammunition will also be consumed rapidly.

New players are eyeing. Station B's actions in 2020 are frequent: it has invested HK $513 million in Huanxi media, jointly broadcasted the solo drama "the sky of winddog youth"; in the aspect of self-made variety show, it has launched "rap new generation" and "pattern intern"; in the aspect of film and television copyright, it has introduced series films such as "Lord of the rings" and "Hobbit".

B station, as a community, has a large number of high viscosity users, which also means that it has a moat that long video players can't copy.

Tiktok Kwai has also stolen some of the long video cake because of the hot short video platform in recent years.

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In order to flow, iqiyi has also entered into short and medium video.

Not only in the field of short and medium video, iqiyi has already involved in many businesses, such as film and television, variety show, game, cartoon, literature, e-commerce and live broadcast. This expansion is also reflected in the financial report. Iqiyi's other income is growing rapidly.

However, until now, the vast majority of iqiyi's revenue still comes from membership services and advertising revenue.

In the case of domestic growth slowdown, iqiyi also began to March overseas.

In the vast overseas market, iqiyi will face the giants such as Netflix and HBO, and face the competitive pressure with great challenges.

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In 2015, the online drama "notes on Tomb raiding" with a cost of 5 million yuan per episode was launched, which crushed iqiyi's server and officially opened the era of online drama.

These are the chips and values of iqiyi, but if you want to become a Chinese version of Nafi, your current achievements are far from enough. At present, it is doing all kinds of exploration, trying to get out of the predicament, but the time left for it to break through is not much.

(the top picture of this article is from iqiyi official website.)

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