Major Chinese video streaming platform iQiyi recently announced a membership price increase and rival Youku began limiting membership logins to a single device in the latest moves by China’s mainstream long-form video sites to try and improve their profitability amid heated competition with short-video apps.
Why it matters: The push by mainstream video platforms to increase membership prices, limit member account logins, and tighten control over content investment all highlight the struggle of long-form video platforms to achieve profitability as they face increased competition from short-form video apps such as Kuaishou and ByteDance’s Douyin. They also demonstrate the pitfalls of such adjustments: both iQiyi and Youku’s new policies have triggered a wave of user complaints.
Details: iQiyi’s new membership rates have increased by as much as RMB 20 ($2.95). The Baidu-backed video streaming platform said the price increases would help fund better quality content.
- Long-form video platforms mainly rely on paid membership and advertising revenue generated by content. For iQiyi, membership accounted for 56% of its revenue in the third quarter of 2022.
- Led by Tencent Video, iQiyi, and Youku, Chinese long-form video platforms have increased their membership prices at least twice since the end of 2020. iQiyi’s continuous monthly subscription price has gone up 67% to RMB 25 during this time. Youku raised prices for the first time in five years last June, with some fees increasing by nearly 30%.
- The number of paid members using Tencent Video has been decreasing for five consecutive quarters, with the long-form platform recording 120 million paid users at the end of September, a decrease of 7% on the same date last year.
- Tencent Video has also tightened the assessment criteria for its content production unit, with investment in TV series and a show’s membership conversion rate now included when evaluating projects, local media outlet Tech Planet cited a producer as saying in a report on Jan. 9.
Context: With cost-cutting and efficiency measures, iQiyi achieved three consecutive quarters of profitability in 2022, while Youku and Tencent Video’s losses continued to narrow.
- iQiyi reported a net profit of RMB 187.2 million in the June-September period of 2022, with hugely popular fantasy romance drama “Love Between Fairy and Devil” helping the company attract more than 10 million new paid subscribers, according to the company’s own data.
- Despite iQiyi’s performance surpassing expectations in recent quarters, reports that Baidu plans to sell its 53% stake in the video platform persist.
- After a long-time copyright dispute between short- and long-form video platforms, many of the latter group now allow approved short-video platform partners to edit or produce spin-off videos from their exclusive copyrighted content. LeTV and Kuaishou reached a cooperation agreement in 2022, for example, as did iQiyi withTikTok sister app Douyin.
- Tencent is among a number of mainstream video platforms to have made a significant investment in new content as part of China’s streaming wars, with the firm signing a RMB 1.8 billion ($284 million) deal with Beijing Jetsen Technology, China’s largest film copyright holder, to purchase the streaming right to 6,332 films and TV shows last year.
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