Compilation/Qiaofeng
Last month, Netflix, the "king of streaming media", delivered a poor answer.
In the first quarter, 200000 paid users were lost, and the net profit fell 6.4% year on year, even considering the launch of low-cost packages with advertising in the future... Who would have thought that Netflix, which has been popular for ten years, hit the south wall this time.
Netflix exploded, the domestic head video streaming platform - IQIYI The new financial report of.
On this Thursday, iQiyi released its first quarter financial report of 2022. The financial report shows that the company's net profit based on non GAAP financial indicators was 162 million yuan, compared with a loss of 1 billion yuan in the same period last year. IQIYI, which has been losing money for years, finally made a profit for the first time in 12 years.
However, iQIYI's online advertising, content distribution and other revenues declined year on year, and only the revenue from member services increased by 4% year on year. In the first quarter, the average number of daily subscription members of iQIYI was 101.4 million, compared with 105.4 million in the same period last year. In addition, the average monthly income of members increased from 13.64 yuan in the same period last year to 14.69 yuan.
Behind the profit, iQIYI still faces a peak in the number of members, but to avoid the situation faced by Netflix, iQIYI has not found a way out.
Is Streaming Media Still Worth Investing
In recent years, many multimedia groups are focusing on streaming media business Netflix These media groups have to start thinking about whether these investments are worth it?
It will be the first time for the two popular TV series "Black Money Resort"（ Ozark ）And Strange Tales（ Stranger Things ）At the launch of the fourth quarter, Netflix announced the loss of users and predicted that it would continue to reduce 2 million users in the next quarter.
So far, Netflix, which has also been the underdog of Hollywood for many years, finally fell off the altar this week, and the myth of its rapid growth in subscription volume for ten years also came to an end. As soon as the news came out, Naifei's share price fell by nearly 40%. Last November, the market value of Netflix was as high as $300 billion, but now it has fallen below $90 billion.
It is time to take a comprehensive look at the streaming media industry represented by Netflix.
In the past few years, the great success of Netflix has prompted many major media groups in the United States to launch their own streaming media platforms, such as Disney Hulu and Disney+, warner HBO Max of Brother Discovery, Peacock of NBC Universal and Paramount+of Paramount. In addition, technology giants Amazon and Apple It also launched streaming media studio. These streaming media platforms all adopt the operation mode (membership subscription system) pioneered by Netflix.
Netflix has reshaped the film and television entertainment industry and triggered a fierce battle for users. The growth of the streaming media industry in the past is based on the following market assumptions: there are as many as one billion potential paying users (households) of global streaming media services. But now, some analysts say that the actual market volume is much smaller than this figure.
The expected decline of Netflix's subscriptions sounded the alarm bell: the prospect of the streaming media industry may not be as good as expected.
Burn money to be king
The recent dismal performance of Netflix seems to mark the end of an experimental streaming media era. This era is characterized by rapid growth Long and Crazy money burning.
Before the emergence of Netflix, the basic operation mode of the television industry was to create a popular series and update it constantly, in the process of which an increasingly large audience was cultivated. But the emergence of Netflix has subverted this model.
In 2007, Netflix launched streaming media services in the United States, which took away the audience's attention from cable TV.
At first, Netflix provided users with the right to watch various dramas by obtaining the permission of other film and television companies. Since 2012, Netflix has started to launch home-made dramas, which have been very successful, producing such popular products as House of Cards. Netflix has subverted the traditional TV mode, and launched the entire collection at one time, so that members can watch it at one time instead of updating it regularly.
This model has achieved great success. In the following ten years, Netflix has developed nearly 222 million users in 190 countries and regions around the world, an increase of more than 750%, and made profits for the first time at the end of last year.
The rise of Netflix benefits from the long-term loose monetary policy and the historic bull market. Under the market condition of such abundant funds, as long as investors recognize the Netflix model, the company can continue to burn money. In the low interest rate environment, investors eager to obtain income buy a large number of Naifei's bonds to continue to fund the company's uncontrolled spending on content production.
From 2018 to 2021, Naifei has invested a total of 55 billion dollars in film and television production, and has launched fierce competition with major television stations and Hollywood film and television studios. Netflix's move triggered a market competition in the whole industry. Each company was burning money crazily to survive and kill all its competitors. In 2019, Amazon spent $1 billion just to shoot the TV version of The Lord of the Rings, which is the most expensive TV series.
Some insiders said that the reason why the streaming media industry received a large investment in the three years 2017-2019 was that the incoming players were grabbing users, seizing market share and betting on the future. Netflix is more convinced of this.
As more and more powerful players entered the game, and people stayed at home during the epidemic, the demand for watching movies increased sharply, an "arms race" of streaming media content began. It is estimated that the total investment in content production in the streaming media industry will exceed $100 billion this year, and Netflix alone will account for $17 billion.
Tom Nunan, a professor at the School of Drama, Film and Television at the University of California, Los Angeles, and the producer of the 2004 Oscar best film Impact Effect, said that these investment amounts were "unprecedented". "It is generally the US Department of Defense that has this level of funding budget, which is not sustainable."
a sudden change in the situation
Until recently, Wall Street was still cheering for the huge investment in the streaming media industry. In December 2020, Disney announced that it would produce a new series of heavyweight Marvel and Star Wars through Disney+, and its share price once hit a new high.
Now, this optimistic market sentiment has been greatly diluted. In February this year, the streaming media industry ushered in the first bad omen - the day after Paramount announced its large-scale investment in Paramount+, the stock price plummeted nearly 20%.
At that time, Wall Street was not willing to believe that streaming media had been bogged down. Until they saw the Q1 financial report of Netflix, investors were convinced that in the streaming media era, no matter how good the program is, it is difficult for the film and television groups to make big profits as in the past.
The latest popular drama "Strange Tales" to be released by Netflix A former head of streaming media said: "Streaming media is definitely more expensive than cable TV."
In response to the decline in the number of subscribers, Netflix announced a series of measures.
On the conference call after the release of the financial report, the chief financial officer of Netflix, Spencer Neumann, said that the company would "recover some of the funds used for expenditure", and also said that it would continue to exceed its competitors in film and television production costs.
In terms of advertising, Netflix finally decided to put down its posture. Reid Hastings, the co-founder of Netflix, has said that in order to curb the loss of users, it is possible to launch services with lower prices but supporting advertising within a year or two. He said: "Although I have always opposed complex advertising and advocated simple subscription, I respect consumers' choices more."
Amazon's TV version of The Lord of the Rings Hastings also said that Netflix's top priority is to improve the quality of its programs - Ted Sarandos, the co CEO, is responsible for this.
Analysts agree. According to the recent analysis report, Netflix should create more high-quality dramas and develop them into a normalized high-quality brand. The report said that "the quality of Netflix dramas, especially those in English, is totally out of proportion to the production costs."
Gong Yu, founder and CEO of iQIYI, also said at the financial report meeting yesterday that the production ability of the top original content in the industry needs to be further improved. He pointed out that an important factor affecting the growth of the number of members is that the content overlap between peers is still too high. Each company has too little exclusive broadcast header content, which will lead to the number of paying accounts owned by the same paying user at the same time.
At present, Netflix is facing fierce competition with veteran HBO, Disney, NBC Universal and Paramount. Amazon and Apple can't be ignored - although streaming media is not their main business, after all, the big guys are not poor in money and can afford it.
He has been trying to integrate Netflix into Sarandos of Hollywood to defend the quality of Netflix dramas. He said that many films produced by Netflix, such as Don't Look Up, Red Wanted, and Plan of Adam Beyond Time and Space, have been popular around the world recently, but the ratings of these films were not given.
Reid Hastings, co-founder of Netflix Sarandos also reminded investors that Netflix is still a novice in content creation. He said: "We have only been engaged in content creation for ten years, but many of our friends and businesses are 'time-honored brands'."
However, Wall Street may have lost patience with the streaming media. Some analysts have asked film and television companies to rethink their streaming media investment strategies. Sony It has been adopting the so-called "arms dealer" strategy, that is, to make money by selling its film and television programs to streaming media companies. Some analysts believe that traditional manufacturers such as NBC Universal and Paramount can consider giving up streaming media business and adopting Sony's strategy to become content providers of streaming media.
