*Iqiyi actually made a profit. This is the reaction of many people * after iqiyi announced its financial report for the first quarter of 2022. On the afternoon of May 26, Beijing time, iqiyi released its unaudited financial report for the first quarter as of March 31, 2022.
This is a financial report with a profit much higher than expected: on the whole, iqiyi's revenue in the first quarter was 7.3 billion yuan, the net profit attributable to iqiyi was 170million yuan, and the expected loss was 665million yuan. This is the first time iqiyi has made a profit in 12 years.
Figure source: screenshot of iqiyi financial report
Along with the profits, the profitability of iqiyi also increases. According to the financial report calculation, iqiyi's gross profit margin increased significantly to 17.8% in the first quarter, only 11.3% in the same period last year, and only 12.2% in the last quarter; The profit margin reached 1.3%, and the loss rate was as high as 13% in the same period of last year and last quarter.
In addition, iqiyi also won the bid to highlight the relevant data of member income in the financial report. Iqiyi pointed out that its member arm (i.e. monthly average revenue per user) was 14.69 yuan in the first quarter, 13.64 yuan in the same period last year and 14.16 yuan in the previous quarter.
Although iqiyi's unexpected figures in the first quarter were not much dazzling compared with other industries, this is an unprecedented event for the video streaming media industry, which has lost money for more than ten years, and why many people are surprised.
For the first time, the outside world linked these achievements to iqiyi's previous layoff adjustment and member price increase. These actions accompanied by widespread doubts are indeed very direct contributing factors to iqiyi's profit this time. However, the fact is that as a profit-making company that does not do public welfare, these actions have had an effect rather than backfire.
Take the price increase of members. According to the financial report, iqiyi's average number of daily subscription members in the first quarter was 101.4 million, a net increase of 4.4 million compared with the fourth quarter of last year. The member service revenue that contributed the most to iqiyi's revenue in the first quarter also increased by 4% year-on-year to 4.5 billion yuan. These figures prove, at least in the short term, that the member price increase strategy does not necessarily "scare away" users.
Behind this, the content broadcast on iqiyi platform in the first quarter and the impact of the Spring Festival and the epidemic situation on people's home conditions are inseparable. High quality content is the premise for users to be willing to pay. At the beginning of 2022, realistic dramas such as earthly life, heart dwelling and dear child have received a lot of attention; The willingness to pay people at home caused by the Spring Festival and the epidemic is a more direct increase.
Figure source: Official stills of the world
The controversial layoffs, as the most direct means of cost reduction, are directly reflected in the reduction of operating costs and the improvement of management efficiency.
In December last year, iqiyi implemented layoffs involving multiple departments. It was reported that, in addition to the core dramas, variety show procurement and production departments, the user product department, short video recording, intelligent hardware (VR), animation and games were all among the layoffs, and the market and other public departments also had layoffs indicators - these are basically marginal businesses born in the era of capital enrichment.
According to the financial report, iqiyi's sales and management expenses in the first quarter were 740million yuan, a year-on-year decrease of 38%; The R & D cost was 470million yuan, a year-on-year decrease of 29%.
These adjustments are easily dismissed because they are full of short-term attributes. But an interesting fact is that this is the first time that someone has really done these "simple and rude" things, and has really made a profit - the discussion about whether video streaming media is a good business that can make money has obviously been lingering on all practitioners, but no one has really tried to solve it in the most brutal way.
On the one hand, practitioners always say that they have suffered from years of brutal growth, high content costs all the year round, and short videos occupying development space. On the other hand, it seems that they don't look up to the hard work of doing dirty work. The marginal business of telling stories for capital is continuous, and the main business is abandoned. At the same time, they don't look up to short videos.
This pride, or fantasy, is constantly being broken, especially in April this year, as the long-term fantasy object of domestic streaming media Netflix Released a bad quarterly report. In the first quarter, the number of global paying users lost 200000. For the first time in 11 years, there was a wave of "unsubscribing". The revenue growth rate of $7.868 billion also returned to a new low after 2014. This makes the global streaming media industry more urgent to begin to reflect on themselves. Used to the streaming media platform in the high light era in the past, they have been reluctant to admit that they are not suitable for large-scale business at all. But it is no longer appropriate to have illusions now.
Thoroughly exposing this kind of entanglement in this industry may be the most important significance of iqiyi's profit this time. Although it is a short-term profit, it is the first time to prove that video streaming media can still be a profitable and sustainable business if they "operate on a small scale" and do what they are good at.
Iqiyi's financial report is like shouting: peers, complain for so long, the problem in the final analysis is whether we want to make a profit or not.
This time, I realized that you are free.