The future of video websites is traffic, not content realisation

When a smooth video website Logo appears on the exhibition board of the Beijing International Film Festival, it may indeed represent the development pattern and trend of the video industry. However, when we double-checked the financial data of major video websites, we felt that we were not in an illusion.

Let's take a brief look at it below:

iQiyi : Although Baidu did not explicitly publish the financial data of iQiyi, since the iQiyi was incorporated into the Baidu report, Baidu kept mentioning that the substantial increase in bandwidth and content costs mainly came from the video service, which is icky. Art. According to Reuters, Baidu’s online video services have more than doubled their revenue in the fourth quarter and their total revenue for the year. But the key is that iQiyi is still not profitable, money still has to continue to burn!

Tencent Video: Since Tencent does have too many plates and too many lines of business, there is basically no way to publish the financial data of Tencent videos. Thanks to Tencent's strong social system, its revenue continued to grow substantially in 2014, an increase of 270% compared to 2013. However, according to industry insiders, Tencent’s video hasn’t made any money yet, but Tencent is not bad and will continue to burn a suitable position for the video business.

Sohu Video: Sohu’s financial statements in recent months have been bluntly stated that our other business is okay, that is, the video business has to burn money, so it drags down overall profits. But Zhang Dage said, I have 1.1 billion U.S. dollars in my hand. This money does nothing else. It burns on the Sohu video until it burns a future.

Youku Tudou: Youku Tudou had a net loss of RMB 9.0 billion in 2014, compared with RMB 6 billion in 2013, and the net loss exceeded 50%. The feelings are listed, and the money from the investors is not appropriate. Of course, this is a joke, but the cruelty of China's online video market, that is, you have to keep burning money, can not stop for a moment.

Storm video: just listed capital upstart, continuous 26 daily limit to create A shares history. However, the company's financial statements show that in 2012 the company's profit was 55.84 million yuan, in 2013 it was 38.53 million yuan, in 2014 it was 41.94 million yuan, and in the first quarter of 2015 it was -321 million yuan. The scale of the market value of this storm video is straightforward, how do you think this loss is also to the rhythm of superiority? Whether you make money before the storm or lose money, it shows the vulnerability of online video business profitability.

As for PPTV, popular network, Suning and BesTV have also announced the basic financial data, or a word: burn! The two words are: burning! Three words are burning!

Oh, yes, there is a great eco-friendly company, LeTV, but people's revenue and gross profit are all greatly increased. However, since people are all big ecosystems, they are not limited to video services. Or do you dare to say that his video business is not losing?

Limitations of existing models

Since the appearance of this video site, the impression is burning and burning. It is simply for the capitalists to keep on dreaming while continuing to dig. Someone asked this question. Is this investor a fool? Can a video website make money when it is used?

In fact, it is unfortunate to say here that video sites under the existing model may never earn money. Why do you say so?

1. There is no core content creation capability that passively works for upstream content providers. Content production capability is far from being a simple matter for video sites to do some variety shows and self-produced TV shows. It does require the cultivation of artistic talents and skills. But unfortunately, whether you admit it or not, the main force of this piece is still concentrated on the TV station because the TV station has been doing this since the time it was produced. Not long ago, there was an old predecessor in a dinner hall telling a case. The television station just started The program schedule (that is, what we now call the EPG) is very inaccurate. It is not impossible but unwilling. These directors think that I am creating artistic works. How can I use time to limit my expression? You can see that video websites that use Internet technology to build themselves have a long way to go in terms of improving content production capabilities. What is the result of this? Content core resources are controlled by the content providers. The ability to realise your downstream channels is even stronger. It's just for people to get dressed. People can set prices on the floor. It is said that after a video website bought the Internet copyright of a well-known variety show, it relied on its own operations to realize double the income of copyright purchase. However, the second year of the people's variety show column directly raises the price twice. What should you do?

2. The main mode of the video site is now free + advertising, but you go to see the advertising revenue of the TV station. However, with only a small number of television stations on the bright surface, most television stations do not have enough advertising revenue to run on a daily basis and need financial or other business subsidies. Someone just said that many people do not know that many places are declining broadcasters to subsidize TV stations. This is ironic. The Internet viewing environment of video websites has caused uncontrollability of advertisements, which means that the arrival rate does not reach the level of TV stations. To give a simple example, when people watch TV, they often adjust their stations to skip advertisements. But if you are not on ATV, you will see advertisements on BTV or CTV. That means the arrival rate of the entire TV commercial is still there. Guaranteed. But what about online video? Your patch ad may be skipped by QQ chat. The advertising value of video websites has narrowed in recent years, but it is very difficult to reach the level of television stations. TV stations are not easy to make money, video sites?

3, payment mode is the month of water. China’s pay-TV has been doing this for decades, and it’s still a virtue. We must not attribute all the problems to the system. The user inertia and content copyright environment that have been formed for a long time is the killing of Land Rover. Netflix's online paid video is a success, but people's success is based on traditional pay TV. The difference is only the difference of the communication channels. China’s pay-TV development is so difficult that it is unrealistic to count on online paid video to prop up the future of the industry.

Traffic instead of content monetization

There is a term in economics called cross-subsidization. According to the explanation of Baidu Encyclopedia: Cross-subsidy is a pricing strategy. The idea is to promote sales of more profitable products by consciously selling a product (referred to as “preferential products”) at preferential or even loss-making prices. (called profitable products).

In fact, there is no shortage of similar cases in this world. Do not look at the five major leagues in Europe now, such as playing cheerful, in fact, most of the team is losing money, but for the loss of the team must let the team survive? Because football-related gaming industry produces dozens of times more than the football industry itself, this is the greatest significance of football teams. By the same token, movie fares abroad cannot earn money, but they may also lose money. However, the profit margins of movie theater products such as popcorn and coke are high, and the most critical is that movie theaters bring a lot of people. Bringing value added to commercial properties in the cinema at the location. You look at the day-to-day business of those small stores near the main campus of the Eighth National Congress. It is certainly not enough to make business income to pay rent, but this is a facade of people, relying on the business of recycling gifts to make money.

Having said so many cases, it is actually necessary to say that the existence is reasonable, and that capital must be burned on video sites. It must be justified.

Network video is essentially the traffic flow of the Internet economy, and traffic has to be realized. So the business of online video is not the content realizing business, but the traffic realizing business. Content depends on advertisements, cashing out on payment. However, there are too many ways to realize the flow of cash, relying on value-added services, relying on drainage, relying on games, and so on. Isn't the popular T2O now a way to realise TV traffic? The video site's V2O has been doing, and it's actually a way of realizing traffic. Therefore, it does not matter if the video service itself is depleted, as long as the traffic-derived things can make money and make big money.

The future business model of a video site is likely to be not the realization of the content but the realisation of traffic.