How long is the shelf life of the “price-increasing medicine” of long videos?

Recently, long video platforms have repeatedly been trending on the Internet because of news related to member rights and member payments. The efforts made by long video platforms in member rights are mostly not supported by users. So, what is the logic behind the long video platforms' choice to raise prices and tighten rights? Let's take a look at the author's analysis and interpretation.

iQiyi, Youku and Tencent Video have repeatedly raised membership prices amid controversy, and it seems that they can remain safe and sound every time under the cover of hit dramas.

The cost of producing high-quality dramas on the platform will be transferred to consumers through membership services to a certain extent. The way of transfer is nothing more than stimulating more members to pay and increasing the payment price of individual members.

Right now, the number of users in the long video industry has approached its ceiling, and the number of paying users that can be stimulated by the content is very limited. The platform needs to grow in segmented scenarios such as the number of projection screens and the number of logged-in devices.

Under the constraints of the law of value, the platform can only constantly test the highest price users can pay for content in the interval between each hit drama.

1. Detailed Member Rights and Interests

The more you criticize, the higher the price. After Youku and iQiyi, Tencent was also criticized for limiting the number of login devices and other issues.

Allowing multiple devices to log in with the same account is a benefit enjoyed by long video members, but if the same account can be logged in to too many devices, it will be detrimental to the platform's profitability.

Based on the monthly membership price of 25 yuan, if 5 devices are allowed to log in at the same time, the membership income contributed by a single user is only 5 yuan, which is a considerable loss for the platform.

For long video platforms that find it difficult to drive membership revenue growth by attracting new users, starting with old users and working on membership rights may be a way to find a new revenue source.

Taking iQiyi as an example, from 2020 to now, the price of the continuous monthly subscription for gold VIP membership has increased from the original 15 yuan to the current 25 yuan, with an increase rate of one year.

The price increase was accompanied by a refinement of membership scenarios. First, the various packaged services in the past were split up; second, new segmented scenarios such as advance screenings and paid coupons were created.

Among these, advanced screenings were once regarded as another important channel for increasing revenue besides membership fees.

With high-quality content as the foundation, paid on-demand services based on membership packages will not cause strong resistance from users.

The early preview was first introduced to the audience by relying on the hit drama "Joy of Life" in 2019. The appeal of the drama itself attracted loyal users of the blockbuster. That year, 5.2 million people contributed 156 million yuan to the paid on-demand viewing of "Joy of Life" on Tencent Video.

But compared to the heavy content costs, this is just a drop in the bucket.

Although this model has demonstrated its commercial value, the implementation process has been controversial because it is a bit abrupt. First, the price of 6 yuan per episode is too high, and second, the membership agreement does not clearly inform consumers that they need to pay extra for advanced screenings, which infringes on consumers' right to know.

Later, the platform supplemented the membership agreement and lowered the price of each episode for advanced screening, maintaining it at 3 yuan per episode. The adjusted price is more reasonable, but the impression that advanced screening is a disguised way of cutting leeks has been planted in the minds of users, and subsequent episodes that try to pay for on-demand viewing are inevitably criticized.

In fact, the industry is still in the process of exploring how to reasonably price a single episode. For the same price, people may feel it is worth it or not, and some users may complain that it is not worth it. In addition, there is a risk of leaking the source of the film by opening the channel for advanced screenings.

Taking multiple considerations into account, iQiyi, Youku and Tencent Video have all tightened their pace of advanced screenings in the past two years. The three platforms have also successively issued statements announcing the cancellation of advanced screenings.

Last year, Tencent Video launched a pre-sale gift package for the advance screening of "Dream of Red Mansions" in disguise, and only 18 yuan was required to watch the remaining eight episodes. The average price per episode was less than 3 yuan, which was much more cautious than that of "Joy of Life".

Being cautious about advance screenings is beneficial to the long-term development of this model. After all, this form of charging still has certain market controversy, and it is necessary to find a suitable market access point.

This also explains why long videos have recently begun to restrict screen projection and login devices. The main purpose is to crack down on black and gray industries such as account leasing and increase profits.

It is undeniable that the refinement of the membership payment system has caused fluctuations in industry development, and of course the platform’s promotion is also indispensable.

From initiating advanced screenings to restricting screen casting and account logins, the continuous segmentation of member usage scenarios by long video platforms has resulted in an increasingly large membership payment system.

Gold VIP, Platinum VIP, Student VIP, Sports Member, FUN Member, Star Diamond Member, each type of membership has precise restrictions on the various complex membership rights such as the terminals that can be used, the channels that can be viewed, etc.

You can't get fat in one bite. There is often only a fine line between optimizing services for segmented scenarios and exhausting all resources.

IQiyi, which was previously boycotted by members for limiting the screen projection clarity, today officially announced that it will resume 720P and 1080P resolution screen projection services for gold VIP members.

Whether it was the cancellation of the advance screening or the restoration of the clear screen projection today, it was all a game between the platform and users in the segmented market. At present, consumers have the upper hand.

2. The logic behind the price increase

The ever-increasing content costs and the increasingly difficult to increase payment rates are the main factors behind the price increase of memberships.

Last year, cost reduction and efficiency improvement became the common theme of iQiyi, Youku and Tencent Video. Relying on drastic layoffs and budget cuts, iQiyi was the first to achieve profitability. Under the guise of cost cutting, the platform was actually concentrating its budget on the route of high-quality products.

Previously, the platform shared investment risks by producing a number of mid- and low-end dramas. Although mid- and low-end dramas are unlikely to bring excess returns by becoming hits, they can continue to provide stable returns.

Unfortunately, due to changes in the market environment, the platform does not have enough funds to pile up content in a broad manner, and the audience's aesthetic tastes are getting higher and higher, so it can only cut off the mid- and low-end content with increasingly poor profitability.

In fact, investing a limited budget into a few hit products is an act that simultaneously amplifies both benefits and risks.

Greater returns mean that after resources are concentrated on a few high-quality dramas, the polishing of the scripts and the shooting and editing of the dramas will be more refined, and the probability of subsequent big hits in the market will naturally be higher. The excess profits brought by the big hits will be enough to cover the additional costs of the platform.

On the contrary, if none of the dramas to be released become a big hit, the loss will also be considerable, which is why many dramas are jointly produced by two or more video websites. The risks that can be shared on the content side are limited, so iQiyi, Youku and Tencent Video naturally turned their attention to the membership side.

In addition to the cost pressure on the content side, the standardized development of the entire industry is also guiding the platform's reforms on the membership service side.

It is an indisputable fact that the long video industry, including iQiyi, Youku and Tencent Video, is transforming from a content distributor to a content manufacturer, and the quality of the platform's self-made content is also improving year by year. In addition to the previous channel fees, viewers need to pay the platform for the newly added content fees. The direct manifestation is the rising membership prices in recent years.

In the past, most of the video content on the Internet was pirated free resources. After the industry was rectified, copyright entered the public eye. At the beginning, in order to cultivate the audience's awareness of paying, the platform attracted users to use legitimate video websites to watch with preferential membership prices; it also turned a blind eye to membership black and gray industry services such as account leasing and low-cost monthly packages. After all, in a sense, this is also a way to expand the user base.

Now the entire long video industry has entered the era of stock operation. Cracking down on account rentals and restricting login devices are the inevitable choices for iQiyi, Youku and Tencent Video to increase membership service revenue. Compared with foreign video streaming Netflix, it will determine whether the account is shared among family members based on the IP address used by the login account, account activity and other information. Accounts that the system determines are not family shared will be restricted from logging in.

In comparison, although iQiyi, Youku and Tencent Video are increasing their efforts in supervising account sharing, they are still some distance away from Netflix.

At present, Netflix, which claims to never add advertisements, has begun to test the waters of paid subscriptions; iQiyi, Youku and Tencent Video, which have long turned a blind eye to illegal and gray industries, have stepped up their crackdowns. Domestic and foreign long video platforms have all made efforts from the user side, which is also a microcosm of the slow growth of the entire long video industry.

3. The game between platform interests and user bottom line

In the long run, membership price increases are inevitable, and it becomes crucial to minimize the audience's disgust.

The quality of the series is the basis for the membership price increase. In the past three years, iQiyi has raised prices every time during the peak period of hit series. Last year, after the small success of "Cang Lan Jue" and "Feng Chu Ban Xia", iQiyi immediately announced a price increase.

Although it inevitably met with protests from users, the subsequent hit "Kuaisan" made the audience pay despite the curses.

I have to say that the timing of this price increase is very clever.

The foreshadowing of the first two hit dramas has reduced users' resistance to a certain extent. After the price increase, the hit "Rampage" used the quality of its content to divert users' anger at the price increase, and replaced it with a willingness to pay. In fact, Netflix also adopted the same price increase + price increase of hit dramas, and judging from Netflix's payment rate and package prices, this strategy is feasible.

Of course, blindly raising prices is likely to cause user protests, and appropriate price cuts and promotions can attract more users. While maintaining the overall increase in membership fees, iQiyi, Youku and Tencent Video will launch promotions such as 6 yuan monthly packages for new users; for low-frequency users, they will give discounts to monthly users who can cancel at any time and launch a 15 yuan discount package.

Such irregular promotional activities take advantage of people's desire to get a bargain and are very helpful in cultivating users' movie-watching habits and acquiring low-loyalty users.

Previously, iQiyi had laid off a large number of employees to reduce losses. When profits have not yet been on track, it will definitely make various attempts on the membership pricing side to maximize its own commercial interests. For a long time, the membership price increase of iQiyi, Youku and Tencent Video will be a normal phenomenon.

However, prices fluctuate around value, and the membership prices of iQiyi, Youku and Tencent Video cannot increase indefinitely. After a certain extent, the losses caused by user churn will be higher than the benefits brought by the increase in user unit price.

In this case, it is very necessary to go overseas to find new users.

At present, iQiyi, Youku and Tencent Video have been planning the Southeast Asian market. In addition to exporting domestic self-produced dramas to Southeast Asia, they are also working with local production teams to shoot more market-oriented dramas. On the one hand, the production costs such as actor pay in the local area are lower than those in China. On the other hand, the cultural similarity also makes the dramas produced by iQiyi, Youku and Tencent Video more likely to become local hits.

The cost of content has been greatly reduced, but the number of new users that hit dramas can bring is quite large.

Compared to the little "hard-earned money" earned by racking one's brains to work hard on domestic membership rights, this huge blue ocean market may be more worthy of exploration.

Author: Xia Tian

Original title: How long is the shelf life of iQiyi, Youku and Tencent’s “price-increasing drugs”?

Source public account: Ginkgo Technology (ID: yinxingcj), bringing you the best business people and stories.