china’s online video market outlook

In 2019, the video site is both happy and distressing. In 2020, after the initial run-through membership payment model, further exploration of commercial realisation is imminent.

In 2019, it is gratifying that the first half of the year iqiyi took the lead in announcing the membership of hundreds of millions, and then Tencent Video also announced that the membership of hundreds of millions, the domestic video site of the billion-level membership era immediately came. Worryingly, the huge losses on video sites are continuing behind reaching hundreds of millions of membership. Take IQiyi as an example, the head video platform in 2018 full-year net loss of 9.1 billion yuan, 2019 loss did not improve, Q3 net loss of 3.7 billion yuan, an increase of 19.4% year-on-year, the full-year expected loss of nearly 10 billion.

If you don’t have a concept of this loss, look at the data compiled by Burning Finance. Of the 54 new economic companies listed so far from 2018 to date, 10 have been selected as “China’s Top 10 Loss-making New Economy Companies in 2019”, with iqiyi to rank second with a loss of 7.801 billion yuan, after the ferociously expensive NIO Automobile.

The copyright battle for video is a bottomless hole, and the uncertainty of the macro environment has heightened the uncertainty of the industry over the past year. As a result of policy regulation, episode series withdrawal and bare-airing have become the norm, and video sites that pay for episodes, rely on episodes to drive advertising and member revenue, are the main participants in this risk. Revenue from advertising is also falling due to the economic environment and the rise of short video platforms. In December, iqiyi’s chief content officer, Wang Xiaoxuan, said in a speech that the decline in content cost growth has not led to higher revenue for video platforms, and that the video platforms during the adjustment period are also facing new problems such as declining advertising. Tencent COO Ren Yuxuan also revealed at Tencent’s annual video launch that the annual growth rate of video sites fell to 5.7%, and the growth rate of advertising fell to 19%.

Behind the on-demand storm of “yuqingnian” at the end of the year, this anxiety and an eagerness for profitability are reflected. Since 2015, when iqiyi began the era of paid membership with “Tomb Raider Notes”, over the past few years, Youku, iqiyi,Tencent Video has been balancing advertising revenue with original content from the head, and by Q3 in 2018, iqiyi’s membership revenue has exceeded advertising revenue. Today, membership growth has slowed, and the head video platform, represented by Tencent Video, has begun to test water single-point fees to boost profitability on projects such as “chenqingling”, “There was a Ling Jianshan” and “yuqingnian”.

In 2020, for the head video platform, a possible trend is that, in addition to further controlling the cost of content, through increasing membership fees and other means, the loss of the head platform is expected to narrow, at the same time, after the stage of grabbing members in the race circle, the competition between platforms will also enter a new stage of fine operation. In the second-line long video platform, Bilibili in the broken circle at the same time the path of differential development can continue, will be particularly worthy of attention.

First, head platform brewing membership fee increases, incremental space in the low-tier cities and abroad market

In 2020, a major source of pressure on video sites is that the demographic dividend period for the online video industry is nearing its end. Tencent Video’s membership from Q4 in 2018 to 2019 Q1 stagnated at 89 million, although iqiyi led by membership of 100 million, but compared with last year, the growth rate also slowed sharply. In 2019, the total number of members of domestic video sites (not heavy) has exceeded 200 million, according to CNNIC domestic network video users of about 759 million data, the user’s pay ratio is already very high.

Another possible threat is that, as policy loosens, overseas streaming sites are also gaining a huge domestic user base. This year, Beijing proposed to promote foreign access to Internet content operations such as open Internet games, videos and books, and explore pilot open areas in Beijing to allow foreign investment to provide online game downloads and online audio-visual programservices while meeting content regulation and data security. Netflix has entered the competition for Chinese-language content in 2019, announcing three original Chinese-language content at a launch event in Taiwan, and despite the poor reputation of its first online production, ” Bardo ,” It’s still a big deal.

For listed companies such as Aichi, the growth of paid members is key to investor confidence. In 2019 Q3, iqiyi’s founder and CEO Yu Yu revealed in a earnings conference call that the next step will be to focus on low-tier cities and overseas markets. Signs have actually emerged that 2 million of the nearly 5 million new members of iqiyi Q3 are from lower-tier cities. “Frankly, first-tier cities have become saturated, but the sub-tier and overseas markets still have huge growth potential,” Wang Wei, vice president of Tencent Video, said at a year-end forum. “Youku and Huawei announced in-depth cooperation in June this year, Huawei Video will set up Youku zone in its APP, the account number of the two platforms will be two-way access, rights and interests sharing, it is worth noting that the cooperation between the two sides to the low-end phones as the main position.”

In terms of overseas market, the Southeast Asian market has become the main position for overseas users of domestic video sites. In June 2019, Tencent Video launched its overseas streaming service, WeTV, and in July, the release of “chenqingling” made the characters frequently to the top of Thailand’s Twitter trend. In addition, Tencent has also received a round of A-round financing for the Indian version of The iqiyi MX Player. iqiyi also launched the iQIYI app, which serves global users, in June and announced a strategic partnership with Astro, Malaysia’s first media brand, in November, a key node in its out-of-sea business. With Malaysia as the fulcrum, iqiyi’s long-term goal may be to capture the entire Southeast Asian market.

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