1. Changes in the First and Second Line Streaming Media Patterns
Youaiteng still firmly occupies the first echelon, but the seemingly stable pattern also breeds variables.
For video platforms, market penetration and daily life are the key data to measure the platform. Aurora data statistics show that as of September 2018, the market penetration of Tencent Video and IQIYI is 48% and 44.6% respectively, while Youku is 30.8%. While the overall penetration of B station, Mango TV and other platforms is only 7.9% and 7.8%, there is still a big gap between YouAiteng and Tencent. Rapid growth, rapid rise.
In terms of platform daily live data, data from Erim Usertracker in the first two weeks of October last year showed that the mobile DAU of Youku, IQI and Tencent videos reached 771 million, 167.8 million and 168.3 million respectively, and the average daily use time of mobile users was 130 million, 200 million and 210 million hours respectively. Youku is far behind the other two companies in terms of daily life and duration. In addition to Youaiteng, Aurora data show that the daily life of mobile terminal of B station last September was 17.9 million, more than twice that of mango TV.
Although the above platform data is far inferior to Youaiteng, as a listed company, Mango TV has shown an advantage in profitability.
According to the financial report, the loss of IQI in the first three quarters of 2018 was 396 million, 2.1 billion and 3.1 billion yuan, respectively. Except for the first quarter loss, the loss of Q2 and Q 3 increased by 120% and 180% respectively compared with the same period in 2017. Youku and Tencent videos did not disclose specific data, but they also publicly expressed their losses; Mango TV, which relies on Hunan Radio and Television and has the advantage of content cost, has its own advantages. The results show that last year Q1-Q3 Mango TV operator Happy Sunshine realized business income of 4.010 billion yuan, an increase of 85.80% over the same period of last year, and realized net profit of 616 million yuan, an increase of 103.72% over the same period of last year.
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II. Content input continues to increase
According to the financial report, the content cost of Q1, Q2 and Q3 in 2018 is 3.9 billion yuan, 4.7 billion yuan and 6 billion yuan respectively. The total cost of Q1, Q2 and Q3 in the first three quarters is 14.6 billion yuan, which has exceeded the total content cost in the prospectus in 2017 by 12.616 billion yuan. Although the other two companies did not disclose specific figures, the cost is bound to be high from the number of copyright content they purchased and the essence of their own content.
Under the fierce contention for content, as the two most important content categories of the current platform, variety shows and dramas show great changes in 2018.
2018 is a brilliant year for variety arts. Yunhe data show that as of November 2018, the number of online synthesizers is expected to reach 157, the highest in four years. From Q1 to Q4, there are explosions almost every quarter. Youaiteng has produced explosions "Here! It's hip-hop, Idol Practitioners, Creation 101, and so on. They are all included in the company's quarterly earnings report and become an important force in recruiting new members.
As another important content of the platform, the number of online big movies has maintained a downward trend. According to the 2008 China Network Audiovisual Development Report, Q1-Q3 broadcasts 1,030 large networks and is expected to total 1,373 in the whole year, which is nearly half of the peak value of 2,463 on-line in 2016.
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III. Payment Enters Scale
In terms of growth rate, IQI Q1, Q2 and Q3 membership increased by 72%, 75% and 89% compared with the same period in 2017, while Netflix's international membership growth rate remained around 40% this year, while its domestic membership growth rate was about 10%. The following figure shows the growth trend of Netflix native members. The current rapid growth of domestic streaming media members is similar to that of Netflix 2012-2013.
Netflix Membership and Growth in the United States (Source: National Institute of Gold Securities)
With the increase of the number of members, the income of members has gradually become the main part of streaming media revenue.
According to the Research Report on the Development of Chinese Network Audio-visual Industry, the proportion of advertising revenue in the total revenue of streaming media is basically the same in recent years, while the income of members is increasing year by year. According to the financial report, the membership income of Q1, Q2 and Q3 is 2.1 billion yuan, 2.5 billion yuan and 2.9 billion yuan respectively, while the advertising revenue is 2.1 billion yuan, 2.6 billion yuan and 2.4 billion yuan respectively. As of Q3 last year, membership income has become the largest source of income for IQI.
Source: Research Report on the Development of Network Audio-visual in China
Payment members are increasing, but their willingness to pay for the long term is not high.
However, the domestic payment model is just beginning, and it will take more time to improve the retention of users'members. In order to enhance membership stickiness, the major platforms have tried their best.
With the fragmentation of user's entertainment time, their aesthetic fatigue cycle of content is rapidly shortened. In the face of long-term video content, user's patience to watch is declining significantly. QuestMobile reported that in June 2018, the total time spent on short video users increased by 471 to 726.7 billion minutes, while the total time spent on long video only increased by 91% to 76.17 billion minutes in the same period; in September, the total time spent on long video and short video was 12.575 billion hours and 12.279 billion hours, respectively.
The Scale and Time Percentage of Active Users in the Main Secondary Industry of Mobile Video in September 2018
Faced with the occupancy of short video content and user time by the platform, long video platforms began to increase the short video content in the platform in order to increase traffic and user residence time.
Layout of short video related content, for the platform, on the one hand, is to catch more people who have fragmented video viewing habits, so that they continue to stay on the long video platform; on the other hand, the innovation difficulty and production cost of such content are more friendly, for the platform, such an attempt kills two birds with one stone.
Behind the disappearance of tens of billions of dramas is a more rational expression of traffic from users to platforms.
VI. Changes in Streaming Media in the International Market
While the domestic market is facing many changes, the international market is also in a changeable situation.
By Q3 in 2018, Netflix had 137 million members worldwide, leading the way in more than 30 streaming media outlets in the United States. Sandvine, a company that provides intelligent network bandwidth management services, reported in October that Netflix has accounted for 15% of global network traffic (excluding China and India).
A number of giant companies are laying out streaming media services, focusing on the big cake of streaming media, intending to grab market share from Netflix.
Among them, Disney announced in 2017 that it would withdraw its content from Netflix in 2019 to fill its streaming media platform, which is regarded as Netflix's biggest rival. This approach is likely to increase Netflix's content cost again. At the Moffett Nathanson Media and Communications Summit last May, Ted Sarandos, Netflix's chief content officer, said that Netflix's content budget for 2018 would reach $8 billion, an increase of about 26% over the content cost shown in Moffett Nathanson's data in 2017. Faced with the increasing cost of content and the increasing number of entrants, Netflix will increase the competitive pressure, or change the industry structure.