The growing iQiyi certainly won’t miss the “fat meat” of sports. Iqiyi has already entered into a strategic partnership with ATP, the international Professional Men’s Tennis Association, to become ATP’s exclusive new media partner in the Chinese mainland for the next four years. Iqiyi’s move illustrates its ambition to grab a foothold in the empty sports market.
Sports ace of contention, iQiyi or a few points
Until The State Council upgraded national fitness into a national strategy, the sports industry has gradually become a new outlet for investment. The capital inflow has changed the sports market pattern and the monopoly of sports broadcasting right by traditional TV media has been broken. The rapidly developing Internet videos began to cover sports fans, and the number of users on the platform increased. In order to grab more traffic, various Internet videos began to compete for sports copyright. After the struggle, LetV held the copyright and occupied a large share of the media and sports market.
With the unrest of LeEco Group, LeEco Sports gradually declined, and the media sports market, which had been swallowed up, became a land of no ownership. Facing the huge blank market, various forces began to stir up. In order to provide more protection in the fierce war, the video platform began to compete for the sports market. It is difficult for IQiyi to win the trump card of sports, but compared with other video platforms, its advantages are not small.
First, financial advantages. In the capital-intensive video industry, IQiyi has strong capital support, which is not unrelated to baidu. From 2011 to 2012, Baidu purchased the shares of IQiyi, becoming the largest shareholder holding 69.6% of the shares. With the capital support provided by Baidu, IQiyi has achieved rapid development and become a video website with the same strength as Youku and Tencent Video.
Second, profit structure. The optimization of profit structure is a major advantage of IQiyi compared with other video platform giants. By the end of February 2018, the number of paid users reached 60.1 million. Iqiyi has become a video platform with high membership and user payment rate. As its profit structure becomes clearer, iQiyi’s ability to attract money is growing.
Third, the layout of the platform. Since 2016, iQiyi has integrated the content of the platform. Sports, games, e-commerce, dating, movie tickets, literature, Qixiu and other entertainment and life services have entered the home page of the platform. Iqiyi has changed from a simple video platform to a one-stop entertainment platform. Especially in the field of sports, iQiyi’s tennis business has entered a mature stage, and its tennis membership services have been comprehensively upgraded, leading the platform’s sports content to realize commercial realization.
Pain points still remain, iQiyi wants to win the throne is not easy
On the other hand, we can’t ignore the problems iQiyi will face. Although the media sports market has collapsed, there are Tencent Sports, Suning Sports (PPTV) and other giants in the covetous.
Tencent has chosen the football field and won the Copyrights of France 1, Italy a, FA Cup and SUPER League. Suning Sports has a multi-dimensional layout, involving football, badminton, tennis and other fields. And in the field of sports, basketball and football can attract more users. Not to mention Tencent, Youku’s financial strength and iqiyi are equally matched. Youku was acquired by Ali in the period of loss and became a member of Ali. Now Tencent and Ali are in fierce competition, and the entertainment industry has become one of the main battlefields of the two sides. In this form, both sides will increase their video platforms. As the two video platforms continue to significantly increase investment, iQiyi will face strong competition.
However, for the whole sports market, the illegal broadcasting behavior is not banned repeatedly, which greatly damages the legitimate rights and interests of the platform to buy the event copyright. At present, China’s competition copyright protection is slightly inadequate, resulting in rampant piracy. Taking Chinese Super League competitions as an example, according to the monitoring Report of Chinese Super League in the 2017 Season released by Guandong Technology, there were 240 games of infringement in the 2017 season, and the proportion of infringement was 100%. A total of 57 platforms for livestream infringement were found, with 1248 livestream infringement links, 38 platforms for on-demand infringement, and 76,416 links for on-demand infringement. Pirated broadcasting reduces the income of platforms that purchase copyright, and the opportunities for platforms to make profits through sports events shrink, while the high sports copyright increases the content cost of video platforms.
Although sports is an important sector for video platforms, there is no denying that even if IQiyi has swallowed the fat meat, it will still be difficult to climb to the top position in the industry.
On the one hand, engagement is in the best interest of the platform, and in order to maintain engagement, the platform must continue to produce quality content. Take the advertising industry as an example, the advertising business and value of video platform are closely related to the number and stickiness of users. As an intermediate advertising trading platform, it is difficult to master users because there is no technical barrier, so it is difficult to have the ability to raise prices. In order to increase revenue, iQiyi must strengthen user engagement. As a result, IQiyi has to spend a lot of money on content, especially the cost of sports copyright. Even for a platform like IQiyi, it is still not easy.
On the other hand, in terms of profitability, although iQiyi’s profit structure has been optimized compared with other platforms, its profitability is still unsatisfactory. Youku and Tencent Video both projected losses of 8 billion yuan in 2018, compared with 3 billion yuan for IQiyi. Compared with other video platforms such as Youku and Tencent, iQiyi’s losses are relatively small, but it has been in the red. According to its prospectus, iQiyi posted a net loss of 2.575 billion yuan in 2015, 3.074 billion yuan in 2016 and 3.739 billion yuan in 2017. In such a severe form, iQiyi profit is imminent.
In addition, the lucrative market of video platform makes capital flow one after another, old giants continue to develop, and new video platforms continue to emerge. If a video platform becomes dominant, the market value of us $50 billion is hidden behind it, which is an irresistible temptation for capital. However, this also makes it difficult for the video platform market to appear a dominant situation. As the market value of video platforms continues to rise, the probability that video platforms will be caught in a price war will also increase.
It is not easy to win the top position. Iqiyi’s own problems and constraints of the industry have become the biggest obstacles on its way to development. Under the dilemma, how should iQiyi develop in the future?
Iqiyi still has a long way to go
The future development of video platform focuses on two points, one is the content that video platform depends on for survival, the other is to determine its profitability to attract capital.
In terms of content, the future development direction of video platform mainly focuses on multi-field layout and self-made content. First, video platforms are diversifying to meet the different needs of different users. On this basis, iQiyi has to start a comprehensive business layout, in addition to popular film and television, variety shows, but also to join the game, technology and other industries that are relatively small for video websites. Although niche industries have smaller audiences, they lose less money on copyright costs than the popular mass sector. It is also desirable to segment the platform into different industry segments to increase user engagement and attract paying users from different segments.
Second, self-made content is an important power point for video platforms. Self-produced content on the platform can alleviate the problem of excessive consumption of copyright costs, and also have the opportunity to export content. Investment of capital and manpower is an important condition to produce quality content. Besides, it also needs to cooperate with some quality production companies and teams to develop, as well as the series development of quality IP dramas.
In terms of profitability, the current profit points of video platforms are too weak. In order to achieve profitability, in addition to working hard on the existing profit points, we need to find new profit points. Start from the source, expand video platform related business. For example, IP can be developed in all aspects, from peripheral products to movie tickets can be sold, forming a small mall, and give full play to the fan economy, holding idol-related activities. Through the continuous expansion of the layout to form the entertainment industry matrix, improve the profitability of the platform.
However, iQiyi cannot do anything about capital’s pursuit of the video platform market for the time being, and can only rely on the market to adjust itself. Under the possibility of price war, when the capital finally unbearable began to withdraw, the video platform market will appear monopolistic giant.
In general, the trump card of sports can increase the advantages of video platforms and provide them with more protection in the fiercely competitive war. With the decline of leEco Sports, a giant in the media and sports industry, the market formerly occupied by giants has been vacated. This blank market is both an opportunity and a challenge for video platforms.
If iQiyi wants to achieve better development, it needs to expand the business of the platform, seize this rare opportunity, and achieve expansion by using its own advantages to conform to the development trend of The Times. Only in this way can iQiyi win the trump card of sports. In the process of competition with Tencent, Youku and other video platforms to maintain sufficient advantages, for the future to become the industry hegemon to lay a solid foundation.
Article/Liu Kuang public account, ID: Liukuang110