In-depth interpretation of the full loss of the video industry

Since the introduction of iQiyi into Baidu, Baidu has repeatedly mentioned that the significant increase in bandwidth and content costs has mainly come from video services; Tencent has also said that it will find a reasonable position for video services, namely Tencent video; Sohu’s financial statements in recent quarters all bluntly stated that our other business is okay, that is, the video business has to burn money, which drags down the overall profits; Youku potatoes have a net loss of RMB 9.0 billion in 2014, and RMB 6 billion in 2013. The net loss exceeded 50%.

Content copyright procurement costs and bandwidth consumption costs are two major ways to burn money. Pirate piracy is done by small companies. Big companies are afraid. <br> Current innovations in advertising form are difficult and user pay habits have not yet been developed. In the absence of profitability for the entire video industry, it is unrealistic to rely on large-scale burning of money to buy dramas to snatch users.

The grabbed users are also loyal and jump to other sites in minutes.


On the one hand, it is the booming development of the world and investors' favor, but on the one hand, the huge losses revealed in the financial report are increasing. Whether it is behind the Internet giant BAT's silent support or the development demands of the video website industry itself, video companies need to rethink their exploration of the business model.

From March 24th to May 11th, Storm Technology listed on the GEM has reached a daily limit of 33 daily stops. This is known as the miracle of A shares. The stormy technology with online video as its main business is still confusing after the big upswing. It still looks confusing, but what professionals can be sure of is that its stock price has deviated significantly from the company's actual value.

While the stock price skyrocketed, StormTech delivered a loss-making "report card": The company suffered a loss of RMB 3.2085 million in the first quarter of 2015, compared with RMB 6.8681 million in the same period last year.

This status quo is not just an embarrassment for a storm company, but it is almost a paradox for all video sites: investors are generally optimistic, but companies are difficult to make money. Why are investors so keen on video sites? Let's take a look at the achievements of video sites in recent years.

Drink thirst, drink thirsty, had to drink! Drink and drink!

Online video is an irreversible trend

From the staking and savage growth to the crowds, the online video industry has continued to smoke, and the pace of major video sites in the city has never stopped.

According to survey data, the operating rate of TVs in Beijing has dropped below 30%. From the scramble for users, the diversion of advertisements, and the deconstruction of discourse power, the impact of online video on television media is cruel and realistic. Traditional television media has already had to face the situation in transforming online television.


30% of this stalk was smashed numerous times, the wrong argument, the operating rate is actually 70%

Today, even the live banners that have been held for many years by television stations have quietly moved to the hands of video sites.

I never imagined that I could see my favorite sports event in places other than CCTV5, and I never thought I could watch my favorite star concert online through "Live Music", and the right to the concert would be mastered. In their own hands, while watching the movie awards ceremony, behind-the-scenes variety of tidbits information can be seen simultaneously on the video site.... These new live broadcast forms of video sites allow users to once again see the charm that cannot be ignored behind the Internet.

According to statistics, the total number of broadcasts of the “Beijing International Film Festival” in Tencent video exceeds 14 million, and the “Star Wars Celebration”, an exclusive live broadcast of Tencent video, has a total playing capacity of more than 22 million, which directly proves the video website. It is becoming an important platform for users to watch live events. The reason is that video websites provide a bigger platform. Users watch more than just a single content on a live TV. They also include more innovative content such as behind-the-scenes, tidbits, star information, and more from video sites.

One of the great developments brought about by the mobile Internet era is that people's fragmentation time has been effectively used, especially the younger generation's favor and pursuit of mobile devices, and the rapid development of mobile terminal technology, and gradually oversteps its uniqueness. The PC side provides a more enjoyable experience and experience.


Some, but not all, radish vegetables, love each other, some people like new media, some people like the old way, and exist instead of replacing.

Data from the China Internet Audiovisual Industry Report shows that in 2014, the market size of the online audiovisual industry reached 37.84 billion yuan, an increase of 48.8% from 25.42 billion yuan in 2013. Among them, the network video as the core business of the network audio-visual industry almost occupied half of the country, the market scale increased by 44% year-on-year, close to 20 billion yuan.

As of July 2014, China's online video users exceeded 439 million, and the use of online video exceeded 70%; mobile video users approached 300 million, and mobile video usage exceeded 55.7%.

As online video becomes more powerful, traditional television stations are also rapidly changing their way of thinking. A few days ago, the executives of CBS (CBS), the highest rating television station in the United States, announced that they will produce programs such as TV dramas for Netflix, Hulu, Amazon and other online video platforms. This means that programs produced by outstanding TV stations in the future will no longer be The traditional TV audience is netizens.


TV stations sell programs to video sites, and some sell, some don't sell, and sell does not sell. Interestingly, if the website is bought, it proves that the website is still unable to independently replace the TV station. It is still a distribution route.

Just two years ago, the major television stations and online video sites were still irreconcilable, and television stations withdrew their wonderful episodes from the website in an attempt to create a crackdown on the bottom.

At that time, the television station hoped to establish its own online video portal and independently provide online viewing services. However, after a year or two of competition, the official website of the TV station did not form a climate. On the contrary, copyright video sites such as Netflix and Amazon have grown rapidly. These websites have achieved great success in the original online drama, and they have the advantage of traditional television programs. Was eroded.

Obviously, this indicates that video sites that continue to be explored on premium content are now shaking the traditional TV station's solid position with unpredictable impact.

The development of the online video industry has entered a new stage. The scale of video websites has reached a certain size and independence has already emerged.


The conclusion is a bit impetuosous. On the one hand, it is anxious to buy content from the TV station. On the one hand, it says that it has impacted the stability of the TV station. The impact is on the cable TV. Well, where you look is watching TV programs. . .

Video industry still loses fully

After undergoing the reshuffle in 2012, the video industry gradually formed a new market structure. At that time, a number of industry insiders predicted that the video industry will enter the profit stage in 2013. However, by 2015, in the first quarter of the past, almost all video sites were still losing money. Throughout 2014, the video website industry’s losses amounted to 888.6 million yuan, much higher than the 580 million yuan in 2013. In the past few years, video websites that rely almost entirely on advertising revenue have used the most traditional business model.

“For the video industry, because the income from paid services is quite limited, it is generally not more than 5%. At present, advertising revenue can be said to be the only source of revenue.

An insider told this reporter.


The TV station’s advertising model was cloned. In addition to the television production and broadcasting, the TV stations transmitted terrestrial wireless broadcasts, live broadcasters, and cable TVs. There was basically no transmission cost, and most of the fees were for landing fees. The video sites, in addition to the content Purchase production and broadcast costs, but also more broadband transmission bandwidth costs, no loss is a strange thing!

Unlike the Internet industry such as e-commerce and games, the weakness of the online video industry is that it is too far away from money. Although Baidu did not explicitly publish the financial data of iQiyi, since the iQiyi was incorporated into Baidu, Baidu has repeatedly mentioned that the substantial increase in bandwidth and content costs mainly comes from video services; Tencent has also said that it will It has found a reasonable position for the video business, that is, Tencent video; Sohu’s recent financial statements all bluntly stated that our other business is okay, that is, the video business has to burn money, so it drags down the overall profit; Youku potatoes have a net loss of 2014. The RMB 9 billion yuan, compared with RMB 6 billion in 2013, had a net loss of more than 50%.

People in the industry believe that it is unrealistic to rely on large-scale money to buy dramas to snatch users in the current situation where advertising forms are difficult to innovate and users' payment habits have not yet been developed. At the same time, the entire video industry is not profitable.

The reason is simple: First, there is no core content-manufacturing capability that passively works for upstream content providers; secondly, the main mode of video sites is now free + advertising; and finally, the payment model is the month of water, and the long-established user inertia and The content copyright environment makes the income of paying users almost negligible.


In fact, video websites are also e-commerce. Others sell tangible goods. What you sell here is program content. The advantage is that you don't need to distribute. You can't do it because the goods you sell are wrong. People can watch TV for free. You pay for it here, you don't have to pay for advertising but you PK, but TV stations, video sites should think about it, do you steal or buy TV shows to subvert the TV station? Or you want to broadcast something that the TV station doesn't broadcast or have, and then let Users pay to see?

On the one hand, it is the booming development of the world and investors' favor, but on the one hand, the huge losses revealed in the financial report are increasing. Whether it is behind the Internet giant BAT's silent support or the development demands of the video website industry itself, video companies need to rethink their exploration of the business model.

Video site separates from traditional TV stations

At the beginning of the video industry, there were hundreds of video sites. Today, the video industry has gradually entered a stage of rational development.

From the perspective of market structure, after the integration in 2012, several mainstream video sites such as Youku Tudou, Iqiyi, Sohu Video, LeTV, and Tencent have basically formed. The share has exceeded 60%.


The TV station is the first camp of CCTV, Hunan, Jiangsu, Zhejiang, Beijing, Shanghai and Shandong.

In the past few years, major video sites have long relied on the content of traditional television stations.

In May of last year, Hunan Satellite TV changed its previous Internet copyright distribution model. It no longer distributes its flagship variety shows such as "Where is Daddy" and video sites, and instead builds its own online platform Mango TV. It can be seen that TV stations will be more and more cautious in selling content copyrights. In particular, after the television station has strengthened its own new media business training, the competition between the video website and the television station has reached a stage of intense heat.

Hunan Satellite TV's "meat-cutting" move was regarded as the goal of the transformation of traditional radio and television networks to the Internet. This has also accelerated the pace of video websites getting rid of television resource dependence and turning themselves to self-sufficiency.

According to the data, in the first quarter of 2015, the contents of the video website industry's self-made dramas went online 58 times, nearly four times more than the 15 in the same period in 2014; and in the introduction of copyright (internal drama + overseas drama), the number of Q1 in 2015 was Eighty-eight departments had a sharp drop of 25% from 107 in Q1 in the same period in 2014. However, in terms of overall traffic, the total number of TV programs broadcast on the Q1 video site in 2015 reached 105.3 billion, up 80% from the same period.

In fact, the industry's role of original content in online video has gone far beyond the original expectations of industry and users. The birth of self-made content not only taps into the exploration of the new business model of the video website industry, but also brings it into an era that can truly compete with traditional television stations.

Naturally, video sites do not want to be “controlled” by television stations. The major video sites have already begun to cultivate their own “hematopoietic function” by increasing the investment in self-produced dramas. In particular, since the advent of the media era, it seems that video sites have found a content production model that can compete with television stations for differentiation. That is, through the signing of influential big V or self-media people, the production of programs around them, through the influence of media people and the video site's broadcast platform binding, so that the program has a stronger power of communication.


Buying a program from a TV station or creating a self-produced program is a problem! People with well-known and influential programs do not sell, and self-control doesn't have visibility or influence!

As a new media site, video sites will eventually compete for content competition.

The possibility of self-made drama and PGC's success

In fact, the video website has been exploring new ways of earning money beyond the sale of copyrighted advertisements in the past two years. Whether it was the UGC that was once in vogue or the self-made drama that was heavily invested in 2014, it was trying to get out of the current business model.

After all, video websites, as emerging Internet media, still have their advantages. Through the big data mining of video websites, subdivided data with huge value benefits can be analyzed in massive data. This has been a successful case in the United States.

In the past two years, Netflix's home-made play House of Cards has attracted attention. It is said that Netflix inferred the key elements of the success of the House of Cards based on data: like the user of the BBC series, David Finch's expression style, Describe Kevin Spacey's performance. The facts have proved that the conclusions based on big data analysis are very reliable. The "house of cards" has caused a comedy boom in the United States and other 40 countries. Netflix has achieved great success.


The reason why the house of cards is esteemed everywhere shows that he is still a case and a special case. It is not a common phenomenon.

Of course, Netflix's success lies in its data can be tapped, Netflix is ​​an online DVD rental site, through the user's direct rental data, you can learn that users like some common elements, so successfully launched the "cards This is a high quality and beautiful drama.

The benefit of big data analytics is to be responsive and available on demand. For the profit model of domestic video websites, in which areas can generate value?

The most basic application should be content recommendation. Providing users with more videos that match their preferences, increasing clickthrough rates, and gaining more advertising exposure are the most direct forms of profitability; secondly, based on data, users are screened by conditions and promote profitable content in different dimensions. Such as the promotion of the network of film and television works, the content of warm-up coverage, recommended video on demand video.

Since the beginning of 2015, various video sites have gradually increased their investment in PGC. This business was developed in 2015 by the core business of positioning multiple video sites. Compared with self-made or UGC, since PGC is cooperated by professionals, the content is more secure, but whether it can be reconstructed by the PGC business model of the video site has yet to be tested.

The so-called PGC means that professional video production staff or agencies put their production video content on the open platform of the video site. Unlike traditional purchase videos, video sites no longer pay copyright fees to the copyright owners, but instead The form of sharing advertising revenue.

The network drama began to rise. Note that he is not a TV drama. He is a network drama!

What caused the video sites to suddenly become paradoxically more focused on PGC?

It is understood that, compared with the UGC model, PGC is more professional, and the quality and quality of the content are more assured. At the same time, due to the adoption of the sharing model, the operating cost of PGC will be equal to that of UGC, but the income is higher; on the other hand, PGC. What is created is a business model that is shared with the production distributor and divided into revenues, which reduces the cost for video sites to purchase copyrights. This is a subversion compared with the previous model of buying resale advertisements through copyright.

"The so-called new media is not an emerging media. Its spirit is a grassroots feeling. It is the communicator who puts down his body and reciprocally shares information. Its characteristics are interaction and sharing, trying to make information in the collision produce more information." Video Website Based on the Internet and based on their own big data analysis, to increase self-control, closer to the Internet users is their advantage.

Feelings, but also see feelings, in fact, what is the interests of the good or not! The real feelings are grass pomegranate, high-definition without code, the real army out, people still earn enough pours!