The long video industry is experiencing collective performance pressure in the third quarter, which should have been the peak season.
Recently, iQiyi released its unaudited third quarter financial report as of September 30, 2024. In the third quarter, iQiyi's total revenue reached 7.2 billion yuan, a year-on-year decrease of 10%; The net profit attributable to iQiyi was approximately 230 million yuan, compared to 480 million yuan in the same period last year, a significant decrease. At the same time, iQiyi's two core revenues, membership revenue and online advertising revenue, both showed significant declines in the quarter, dragging down overall performance.
Member advertising revenue both decline, lacking effective explosive products
The financial report shows that the membership service revenue in the third quarter reached 4.4 billion yuan, a year-on-year decrease of 13%, mainly due to a reduction in content. The revenue of online advertising services was 1.3 billion yuan, a year-on-year decrease of 20%, mainly due to the decline in brand advertising business, but partially offset by the growth of performance advertising business.
In fact, the third quarter should have been the peak season for the long video industry due to the inclusion of the summer season, but from the performance data, the industry has encountered a collective failure this year. Mango Super Media, which was once the earliest profitable among several long video platforms, also performed poorly in the third quarter. Mango Super Media's operating revenue in the third quarter was 3.318 billion yuan, a year-on-year decrease of 7.14%, and its net profit attributable to the parent company was 380 million yuan, a significant year-on-year decrease of 27.41%. Even from a month on month perspective, all revenue in the third quarter showed a downward trend, which is still reflected in the performance data of Mango Super Media's membership growth. Alibaba Entertainment, which includes Youku, had a revenue of 5.69 billion yuan in the third quarter, a decrease of 1% from 5.779 billion yuan in the same period last year. Tencent Video has not released specific performance data, but it was mentioned in Tencent's third quarter financial report that the number of paid members of Tencent Video has decreased month on month.
Taking the drama section that everyone is most concerned about as an example, since the beginning of this year, Tencent Video has produced popular products such as "Flowers Blooming", "Celebrating the Second Year", and "The Story of the Rose". The ancient puppet "Mo Yu Yun Jian" on Youku platform has become a dark horse in the third quarter and even the "drama king" in terms of popularity. "Border Water Memories" has a high popularity in the summer suspense drama track. However, iQiyi as a whole appears to be relatively weak. The previously highly anticipated "Fox Demon Little Red Lady Moon Red Chapter" did not break through as much as expected. Instead, it was the popularity of "Tang Dynasty Mystery Record: Journey to the West" that caught up, but it only surpassed 10000 after 24 episodes of live streaming.
After entering the fourth quarter, the ancient puppet show "Eternal Night Star River" unexpectedly became a "bestseller" due to its book theme. "Small Lane People" is the most popular era drama theme of Noon Sunshine, which has gained high popularity and reputation due to co broadcasting on the network. The former is from Tencent Video, while the latter is exclusively broadcasted on Mango TV. IQiyi's participation in the same period of time in "Dream Returns" was criticized by public opinion for its bizarre character design and chaotic plot, with a score of 4.9 on Douban. A film and television industry practitioner said to a reporter from Southern Metropolis Daily, "iQiyi's TV series are really lacking in explosive products this year, and membership is bound to decline. Some of our cooperative projects feel that paying the final payment is quite difficult." However, in the third quarter, iQiyi's variety show "King of Comedy Single Talk Season" ranked first on the Yunhe Data Variety Chart for ten consecutive weeks, consolidating its strong position in the comedy variety show track.
Increase investment in micro dramas to attract new and retain members
From the revenue cost of iQiyi in the third quarter, the expenditure reached 5.6 billion yuan, a year-on-year decrease of 3%. The content cost in the revenue cost is 4 billion yuan, a year-on-year decrease of 5%. Financial report explanation: The decrease in content costs is mainly due to a reduction in film supply this quarter.
It is worth mentioning that iQiyi's emphasis on micro dramas is continuously increasing. It is reported that iQiyi is undergoing a redesign and upgrade of two major apps, which are gradually being launched. After the revision is completed, the content supply of iQiyi APP will mainly focus on long videos, supplemented by free micro dramas. In terms of commercialization, membership mode will be the main mode, supplemented by advertising mode; The revised iQiyi Speed Edition APP mainly promotes free micro dramas and supplements them with long video content. In terms of commercialization, it mainly adopts advertising mode and membership mode as a supplement. Our goal is to enhance content appeal by optimizing long videos and incorporating micro dramas, "said Wang Jun, Chief Financial Officer of iQiyi." We will rigorously implement these measures and believe they will create long-term value for the company
During the conference call after the financial report, Gong Yu, founder and CEO of iQiyi, said, "At the end of September this year, we decided to introduce micro dramas. The user base of micro dramas is very different from that of traditional film and television users, and this kind of content is a good supplement to iQiyi's content. Especially this year, the free mode of micro dramas has emerged, and the number of micro drama user groups has rapidly expanded. The new free mode is also an opportunity for us
He introduced that in the past two years, iQiyi has introduced micro dramas (i.e. 1-5 minute vertical dramas) through effect advertising and has now begun to experiment with innovative business models. There are mainly two existing business models: one is free+advertising, and the other is single point payment. After joining the membership model, we believe that it has a very high value in retaining and attracting new members. In terms of obtaining micro drama content, we will acquire micro dramas and short dramas through copyright purchase, buyout, or account sharing. Gong Yu revealed that in the future, the main source of micro drama budget will be through reducing investment in inefficient long video content and increasing moderate, rational, and reasonable investment in micro dramas.