After the "cost reduction and efficiency" exploration period, iQiyi entered the new route of "calm growth"?

Text | Zero One

During the 2021 report, iQiyi founder and CEO Gong Yu once said that iQiyi's goal in 2022 was: "While maintaining the industry's leading position, the Non-GAAP operating level of 2022 is balanced, and the quarterly NON-GAAP operation level profit and loss balance. "

Since then, iQiyi quickly moved closer to this goal. In the first quarter of 2022, iQiyi first realized operating profit based on non-American GAAP financial indicators (NON-GAAP); on August 30, iQiyi released unaudited financial reports in the second quarter, and the season realized this season. The total revenue was 6.7 billion yuan, and the operating profit was 344 million yuan, an increase of 5%month -on -month, and operating profitability was achieved in two consecutive quarters. At the second quarter of the financial report, Gong Yu said that iQiyi will upgrade strategies from the third quarter to enter the new channel of "calm growth".

Announced open source throttling and clearly put forward profitability, and iQiyi's strategic adjustment has been regarded by the industry as a significant signal that the industry has entered the "cost reduction and efficiency" stage. Looking back at the development of the video platform, almost everyone has used investment in the massive content and user scale for many years, trying to realize the "scale effect" and then seek multiple business revenue. So when the "reduction of cost reduction and efficiency" starts, the industry will also cause doubt: When the platform starts to reduce costs, is it equivalent to "weight loss"? Does it mean that high -quality content is about to shrink and cause the platform value to shrink?

Therefore, iQiyi's performance and content performance this year also gave his answer to the "development direction" question that the long video industry was thinking. From iQiyi's financial report to the platform strategy to some changes in macro environmental factors in the second half of the year, Reading Entertainment Jun also tried to analyze the real trend of the video industry after "reduction and efficiency".

Drive from "Storm Eyes"

Due to the repeated impact of the epidemic, the overall market is not dazzling in the first half of 2022. The production progress, user payment capabilities, and advertisers' budgets in the industry where the video platform is located is affected.

The performance of the film market in the first half of the year was a microcosm. In April and May 2022, the domestic film box office was only 566 million and 717 million, respectively, a decrease of 77.3%and 85.3%compared with last year. The lack of head content supplements; the advertising market has also been affected very obvious, and several major video platform advertising business revenue has declined during the year. According to QuestMOBILE "2022 China Mobile Internet Half -year Report", the size of the Internet advertising market in Q2 in 2022 has declined 7.6%.

In the situation of the overall market, iII "cost reduction and efficiency" has been "shocked" in the six months. Fortunately, from the perspective of two consecutive quarters of financial reports, iQiyi has at least spent the most dangerous stage.

First look at the specific data: the data of the "not good -looking" in the second quarter is that the total revenue is 6.7 billion yuan, a year -on -year decrease of about 13%; the advertising service revenue is 1.194 billion yuan, a year -on -year decrease of about 35%; The total number of members was 98.3 million, a slight decrease from 99.2 million in the same period in 2021.

The relatively "dazzling" data are: membership income of 4.3 billion yuan, an increase of 7%year -on -year, and a monthly average single member income (ARM) is 14.53 yuan, an increase of 8%year -on -year; the seasonal revenue cost is 5.2 billion yuan , A year -on -year decrease of 24%, the overall operating cost was 1.3 billion yuan, a year -on -year decrease of 31%; operating profit was 344 million yuan, an increase of 5%month -on -month, and operating profit for two consecutive quarters. At the same time, the gross profit margin maintained a month -on -month growth.

The reasons behind different data are not difficult to analyze. Because the overall market as a whole in the first half of 2022, the overall consumer market shrinkage has led to a significant decline in the total amount of advertising. Mango Super Media also appeared more than 30%of advertising revenue in Q2;

In terms of membership business, although the size of iQiyi Q2 has decreased slightly, at the same time, it has achieved the growth of membership income and strong ARM continuous performance. It has achieved 8%or more year -on -year growth in six consecutive quarters. Continuously increased; revenue costs and overall operating costs decreased by 24%and 31%, respectively. At the same time, the operating profit and gross profit margin increased continuously. Stability and continuity of profitability.

Considering that in the second quarter is the low season of the platform, and in the third quarter, iQiyi aired a series of explosive dramas such as the Basic Law of Genius, Cang Lan Jue, Twenty Twenty Confusion 2, Breaking through the 10,000 popular value, the current social platform discussion has a great trend of the popularity. This year, the performance of iQiyi's performance will continue to be optimized.

Therefore, Gong Yu also made the following judgments in the second quarter: "The process is very challenging, but the result is exciting. The performance in the second quarter shows that the big ship of iQiyi has completed the optimization and upgrade and successfully left the storm. "

From the exploration period of "reduction of cost reduction" to the new route of "calm growth"

From the perspective of the development of the Internet industry, it is not uncommon to use the model of "the traffic scale first, stable profitability backward" in the past ten years. This has not only brought losses, but also the reason why the video platform can quickly expand content and achieve high -speed growth growth. one. However, as the industry competition pattern is becoming more stable, and the macroeconomic environment is gradually changing, if the head video platform continues to fight for market share, it has to be "both must be all": constantly seeking to occupy positions in various small tracks, and It is not preferred to consider the return, which leads to the continuous growth of upstream costs but cannot be converted into corresponding revenue. Profit seems to be out of reach. For a period of time, market competition has become a quagmire that is undesirable.

The logic of "cost reduction and efficiency" is nothing more than "open source throttling". It no longer adds scale battle without cost, but more detailedly considering the return of each cost that may be harvested, and then promote the achievement of profitability. This is simple to say, but it is huge different from the development thinking of the past video platform. It requires a "self -change" at the concept level.

From the perspective of entertainment, the basic goal of this change is that it is necessary to reduce costs and diversify the source of income to gradually achieve profitability without hurting the establishment of the video platform of "high -quality content".

From the results, iQiyi basically practiced this goal in the first half of 2022. While operating costs have declined and achieved two consecutive quarters of profit, the industry competitiveness of iQiyi's content is still strong. QuestMobile data shows that the iQiyi APP monthly active user scale (MAU) ranks first The effective playback market share of iQiyi episodes, animation (including children's animation) ranks first in the industry.

In addition to the leading user activity and the popularity of content playback, iQiyi still maintains the frequency of output of high -quality content. In the first half of the year, the diverse theme head drama coverage was achieved: "The World", "Heart", "Dear Dear, Dear, "Child" and "Police Honor" have been widely praised in realist style, surpassing many labels such as age, region and gender, and achieved the national explosion; "Elite" and other segmented vertical categories are constantly innovating, and word of mouth has become the norm. In addition, original variety shows such as "China Rap" and "Meng Discovery 2" also achieved the hot lead during broadcasting.

Of course, the industry also has a concern of concerns: the production cycle of film and television content is long. Of course, the explosive model of iQiyi comes from the reserve project. So after cost control, can iQiyi maintain the continuous supply of high -quality content in the future? It is necessary to understand this problem. In addition to the new season "Fog Theater" return of iQiyi at this stage, the return of high -quality content reserves such as the return of the IP quarterly broadcast original variety show, you also need to analyze iQiyi "cost reduction and efficiency". What is the logic of subdivision.

From the perspective of content cost investment, at the beginning of this year, Wang Xiaohui, the chief content officer of iQiyi, clearly proposed the "four abandonment", that is, "abandon the content of simplicity to meet the direction, give up the content of the suspended direction, give up the content of obvious losses, and give up without no money. Innovative content. "Obviously, iQiyi tried to reduce the quality of word of mouth and the expected low expected capital return, and for the investment in high -quality head content, iQiyi did not try to compress and give up. Phenomenon is here.

From the perspective of the industrial model, iQiyi has attached particular attention to the layout of the accounts in recent years, the reform of the online movie sharing model, and the launch of the single -film payment model "Cloud Film". In this type of accounting model, market risks and income will be distributed by the platform and content parties, reducing the purchase cost and uncertain risk of content procurement at the bottom of the waist. Self -development iteration.

Increased income angle, the growth momentum of overseas business and sinking market (speed version) has a good momentum. In the second quarter, iQiyi launched the explosive drama "Grandma in Love Me" and "The Seven Days 3" in love with me in the second quarter It attracted a large number of users and advertisers, especially in Thailand and Malaysia. In the second quarter of the iQiyi Speed ​​Edition, the daily active user scale (DAU) exceeded 5 million, and membership revenue and advertising revenue increased rapidly year -on -year.

Another important change is that iQiyi and Douyin have reached cooperation. After the two parties have reached a second authority, the long video platform can use short videos to use short videos to have unique advantages in entertainment content, and then revitalize the popularity of the new film and the long -tail effect of the film database. Can obtain additional copyright operating income and further enrich their own revenue sources.

Therefore, iQiyi's "cost reduction and efficiency" can also achieve high -quality content without shrinking. This strategic adjustment cannot be summarized with simple "weight loss". If you have to fight this analogy, it is better to say that you no longer pursue "whole body bodybuilding", but to return to "core strength exercise".

The exploration of the first half of the year also gave iQiyi a more complete awareness of its own development strategy. Gong Yu said that iQiyi will enter the new channel of "calm growth", and he explains this concept: no longer at the cost of a large amount of cash flow, put resources more into the company's main business and high certainty. In the high ROI project; seeking dual growth of income and profit, the profit growth rate is higher than the growth rate of income. At the same time, the operating expenses will remain stable. Under the compact organizational structure, the operating efficiency will be higher; Customers create greater value. From the perspective of entertainment, the "calm growth" strategy has actually summarized the adjustment of iQiyi's direction for more than a year, and further analysis and interpretation of future development.

Conclusion

In addition to the strategic change of the video platform itself, the macro environment has also had a huge impact on the industry.

According to the China Economic Times, the economy will recover in the second half of the year. "In the second half of the year, the pace of consumption recovery is expected to gradually accelerate. In the third quarter, the total retail sales of consumer goods will return quickly, and the return of economic growth will be driven. Investment will maintain a steady and rapid growth, and the possibility of export growth will accelerate after the epidemic is improved. Chief Economist Lian Ping told this reporter that economic growth in the third quarter of this year is expected to become a high point during the year, which is expected to be 6.2%; consumption in the fourth quarter will continue to recover, and the growth rate of investment and exports may slow down. It is expected that the economic increase is expected to increase. A speed of about 6.0%. "

Another positive signal comes from the capital market. In recent years, the problem that has troubled the stock market in the United States is expected to be actively solved. According to official media reports, on August 26, 2022, the China Securities Regulatory Commission and the Ministry of Finance of the People's Republic of China signed an audit supervision cooperation agreement with the US Public Company Accounting Supervision Committee (PCAOB) on August 26, 2022, which will be launched in the near future. Related cooperation.

A reporter from the CSRC mentioned in the question: "The signing of the Sino -US audit supervision cooperation agreement marks that the two parties have taken a key step through strengthening cooperation to solve the issue of Sino -stock audit supervision, which is in line with the market expectations and expectations. The cooperation agreement conducts daily inspections and investigation activities in cooperation with relevant accounting firms, and makes objective assessments on the effect of cooperation. If subsequent cooperation can meet their respective supervision needs, it is expected to solve the issue of Chinese stocks audit supervision to avoid passively retreat from the United States. We look forward to actively promoting cooperation with the US regulatory authorities with a professional and pragmatic attitude to achieve active results together. "

Back to the long video industry, the first half of the year was indeed a very challenging experience for iQiyi. It was a great adjustment of its platform strategy at the most difficult moment. Nowadays, the environmental factors have improved. With the clearness and deepening of the platform's "calm growth" strategy, the industry should be able to see a higher efficiency and brighter performance in the future.

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