Content IP, another path besides traffic business

This article explores the commercial potential of content IP and its value beyond traffic, analyzes how to achieve profitability through high-quality IP, and is recommended to professionals who are interested in content marketing and IP development. I hope it will provide inspiration for your business model innovation.

Tencent Video released a big bomb at the beginning of the year.

As an absolutely popular drama with a total online reservation number of over 8 million before it was broadcast, the fairy idol drama "Traveling with the Phoenix" starring Zhao Liying and Lin Gengxin premiered on March 18. Its popularity exceeded 28,000 within 146 minutes of its broadcast, setting a record for the fastest drama to enter the must-see club on Tencent Video.

In order to be the first to watch the subsequent episodes, many people expressed their willingness to spend money on the show. Tencent Video and Mango TV set up independent paid membership activity windows for "A Journey with the Phoenix" for viewers, and Himalaya also launched a paid membership for the audiobook version of "A Journey with the Phoenix". Tech Planet found that on Mango TV's Tmall official website, the 9-yuan monthly membership product with "A Journey with the Phoenix" attracted more than 3,000 purchases within 24 hours.

Good content will never lack consumers. In the past year, relying on membership and subscription business, the profitability of the entire content industry has greatly improved. The popularity of TV series such as "Kuang Bi", "The Three-Body Problem", and "Longing", and the explosion of animations such as "Battle Through the Heavens" and "The Star Change" have led iQiyi and Tencent Video to hand in a financial report that is satisfactory enough to the secondary market. The crowdfunding of peripheral products of "The Wandering Earth" exceeded 100 million in 8 days, and "Lord of the Mysteries" and "Spirit Walker" broke the average subscription record of Qidian. All these have verified the value of high-quality IP.

After upgrading and fighting monsters all the way, high-quality IP is gradually becoming the money bag of the content industry.

1. Paid content returns to high growth

Will paid content be successful in China? This is a question that the entire content industry has always needed to answer. But now, it seems that investors no longer need to have such doubts.

Tech Planet found that since the second half of last year, major content platforms of different types around the world have shown a high growth trend in subscriptions.

In China, iQiyi’s fourth quarter and full-year financial report for 2023 showed that iQiyi’s membership service revenue in 2023 was 20.3 billion yuan, a year-on-year increase of 15%, which also benefited from the production of high-quality content.

In an interview with the media earlier this year, iQiyi CEO Gong Yu stated, "During the broadcast of 'Knives Out', our membership reached the highest level in history at 147 million (Note: iQiyi's average daily membership in Q1 2023 was 129 million), and the average daily number of paying members increased by 17 million."

With a vast IP reserve, China Literature has also enjoyed the dividends of high-quality IP. According to the latest financial report, in 2023, China Literature achieved revenue of 7.01 billion yuan and net profit of 800 million yuan, a year-on-year increase of 32.3%. In particular, the average monthly active users of the China Literature platform reached 210 million, and the average monthly paying users reached 8.7 million, a year-on-year increase of 10.1%. Among them, the revenue of its paid content platform Qidian Reading increased by 40% year-on-year.

At the end of 2022, after Qidian Reading App hit a record high in the number of daily active users since its establishment, in the 2023 financial report of Yuewen, Qidian Reading's revenue performance was particularly impressive. As an Internet product with a history of more than 20 years, it is not easy to remain evergreen, and growth is even more curious. Taking Qidian Reading as an example, we can get a glimpse of the secret of the current content platform to achieve high subscription growth.

The growth of content platforms is inseparable from hits, such as "The Strange Immortal" and "The Lord of Mysteries". Among them, "The Strange Immortal" is the first work of Qidian Books in 2023 to break 100,000 average subscriptions during the serialization period, "The Spiritual Walker" broke the record of the fastest average subscription of 200,000 on Qidian Books, and "The Lord of Mysteries" broke 100,000 average subscriptions and more than 4 million comments. Its sequel "The Ring of Fate" broke the record of the fastest online article to reach one million comments.

These hits have also broken through the circle. Users spontaneously re-create and spread their favorite online articles on Xiaohongshu and Douyin. Taking Douyin as an example, the cumulative playback volume of the topic short video of "Lord of Mysteries" has reached 500 million times, and the official theme site "Curly Baboon Research Society" in its starting point has gathered more than 600,000 fans, and the trend of IP is very obvious.

Users pay for high-quality content, and the platform increases revenue for outstanding authors. Stable paid income continues to attract new writers to join. The phenomenon of "one book becoming a god" represented by "Dao Guiyi Xian", "Chi Xin Xun Tian" and "Xuan Jian Xian Zu" is prominent. According to the latest financial report of Yuewen, 60% of the new writers on Yuewen platform in 2023 were born after 2000, and the number of new writers with total income of more than 100,000 yuan increased by 60% year-on-year.

The trend of users being willing to pay for high-quality content is also reflected in foreign content platforms. According to the latest financial report data from Netflix, the largest paid streaming platform, in Q4 2023, Netflix's total number of paid users worldwide reached 260 million, with a net increase of 13.12 million, exceeding market expectations of 8.91 million.

Analysts pointed out that high-quality content has always been the key to success, especially for streaming platforms. Especially in an increasingly competitive environment, only by focusing on content can there be a chance to stand out.

2. Next Station IP

The growth trend of paid content platforms means that good content is gradually favored by consumers. However, good content is not just a one-time consumption. By incubating high-quality IP, domestic paid content platforms have formed a set of business operation models from IP, products to channels, on-site activities, etc.

For example, Bilibili has built bilibiliGoods around IP, and also has the cultural and creative derivative brand BEMOE. Moreover, starting from the first quarter report of 2023, Bilibili renamed the original "e-commerce and others" business segment to "IP derivatives and others", which shows its emphasis on IP business development.

iQiyi has carried out a series of IP derivative activities and service development based on hot content, such as the "Farming Wheat Field Music Festival", "Lotus Tower Theme Concert" and IP peripheral derivatives such as "Kuangbi" and "Lotus Tower".

Just as "Traveling with the Phoenix" originated from an online novel and was adapted into a film and television drama by New Classics Media, a subsidiary of Yuewen, the trend of online novel IP as the source of online content adaptation is becoming more and more obvious, and the development system spanning the entire life cycle of IP in various content forms is accelerating.

According to the "2023 China Online Literature Development Research Report" of the Chinese Academy of Social Sciences, among the TOP10 popular dramas in 2022 on long video platforms such as Tencent Video, Youku, and iQiyi, paid online literature adaptations accounted for nearly 50% of the total, becoming an important source of film and television adaptations.

In terms of the source of IP for film and television adaptations. The main domestic sources are Qidian Reading and Jinjiang. Apart from Tong Hua, Teng Ping, Jiu Ye Hui and other veteran authors who became famous earlier and established their own studios, a large number of ancient puppet TV series and TV series adaptations come from Jinjiang's female-oriented works. On the other hand, popular TV series and TV series such as "Celebrating More Than Years" and "Zui Xu" are derived from the well-known male-oriented online literature IP of Qidian Reading. It is worth mentioning that the number of reservations for the second season of "Celebrating More Than Years" on Tencent Video has exceeded 12 million, making it the first TV series on the entire network to have exceeded 10 million reservations.

Note: The screenshot is from Yuewen’s official website.

This trend is more obvious in animation. In the 2023 animation list announced by Tencent Video, 57% of the animation works are adapted from online literature IPs. In the list of the 2023-2024 National Animation Conference of Bilibili, 43% are online literature-adapted animation works. Most of them are Yuewen IPs. According to Yunhe data, 6 of the top 10 works in the 2023 online animation playback list are adapted from Yuewen IPs. Judging from the TOP10 Tencent Video Classic Best-selling List in 2023, which is directly linked to new members, three animation works adapted from Yuewen IPs, such as "Fighting in the Sky", "Douluo Dalu" and "Devouring the Stars", have long been in the top five.

When IP has a visual image, especially after being adapted into film, television, and animation, its commercialization ability will be improved. For example, the popularity of animations such as "Douluo Dalu" and "Mortal Cultivator" has driven the mobile game adaptation effect of IP. The cumulative turnover of the "Douluo Dalu" series of mobile games has exceeded 10 billion yuan, and the mobile game "Mortal Cultivator: The Human World" entered the top 5 of the domestic iOS best-selling list when it was first released in 2023.

With a visual image, IP will be more effective in derivative licensing. The GMV of blind box series such as "Lord of Mysteries" and "The King's Avatar" exceeded 16 million; consumer product licensing covers 3C digital, automobiles, fast-moving consumer goods, catering and other fields.

From an international perspective, in December last year, the list of the world's highest cross-media production revenues showed that six IPs had revenues of more than $50 billion, with Pokémon firmly at the top of the list with revenues of about $100 billion, of which 67% came from licensed products, the highest in the world. Netflix announced that its offline experience store "Netflix house" will open in 2025, when fans can experience their favorite film and television IPs in person, buy themed clothing, taste themed food, and even experience the obstacle course in "Squidward's Game". While Hayao Miyazaki's "The Heron and the Boy" won the Oscar, Ghibli's offline theme park is in high demand, becoming a new tourist hotspot in Japan.

For platforms that are serious about content creation, the commercial value of IP is being further released.

3. Traffic to the left, IP to the right, long-termism to the distance

Every enterprise should find its own survival model. As the 19th century British romantic poet Blake said, "Only by taking a different path can great achievements be made, while squeezing around in the streets will not achieve anything."

ByteDance is good at traffic and rapid iteration. Short videos, free novels and short dramas have emerged, relying on ByteDance's advertising infrastructure to quickly realize cash. Another model is the long-term route, relying on IP incubation and operation to continuously improve its profitability.

From a longer-term perspective, traffic models and IP models will coexist. Just like Netflix and other high-quality content can comfort consumers on a pleasant Saturday afternoon, Tiktok, Douyin and Kuaishou can make consumers feel happy in fragmented time. They all serve hundreds of millions of users and eventually grow into companies with a market value of tens of billions.

Traffic business is very competitive, and many people complain that they are working for the platform. IP business may last for a hundred years after success, but the road to success is not easy.

First of all, there must be a good IP foundation, just as the success of the film and television works of "The Three-Body Problem" is inseparable from the greatness of the novel "The Three-Body Problem", which requires good content at the source. An author of Qidian Reading told Tech Planet that in order to ensure the quality of the work, the author needs to discuss the topic and outline with the editor before writing, such as the writing field he was good at in the past and the content he plans to write this time. There are even many authors who have to revise the beginning of the work with the editor repeatedly for more than a dozen drafts, and only start writing after thinking clearly.

The second is the long-term systematic development of IP. After the release of the movie "Dune 2", fans of the original novel and moviegoers quarreled on social media. The development of IP not only needs to achieve resonance between different types of IP adaptations, but also needs to balance between fans of the original novel and the actual experience after development. This is a difficult problem for the entire IP industry. Take "New Douluo Continent", the first self-developed mobile game developed by Yuewen, as an example. It took three years to adjust the strategy and test and polish it based on the original IP before it was recognized by the core fans of "Douluo Continent".

Finally, we must adhere to long-termism. This is not just a slogan, but also requires infrastructure. Youku has proposed anchoring long-term value since 2022, creating products with "strong IP + full ecology", while China Literature has formulated three major layouts to drive business to achieve scale growth, including AI, going global, and accelerating IP visualization. For example, the short drama layout is superimposed on the planned acquisition of Tencent Animation to accelerate the visualization process of China Literature's online literature IP and further release the commercial value of IP.

After a long journey, you will be able to see some great sights. On March 1, Akira Toriyama, a great manga artist, passed away. For many Chinese manga fans born in the 1980s and 1990s, Toriyama's representative IP "Dragon Ball" was the "master" of Japanese manga that accompanied them in their childhood.

The sales of Dragon Ball peripheral products in China have skyrocketed, and the related comics on Taobao were once sold out. As an IP with a history of more than 40 years, Dragon Ball is a historical benchmark in terms of both influence and commercial value worldwide. If a good story is to continue to thrive, it is inseparable from the long-term operation of high-quality IP, and the IP business will also have more new stories to look forward to.

Author: Chen Qiaohui

Source: WeChat public account "Tech Planet (ID: tech618)"