The following is the 4q20 financial report conference call minutes Android member pricing is the same as IOS, resulting in slower member growth From Iqiyi recommended by recordtrend.com. And this article belongs to the classification: Network entertainment, Webcast, Network video.
On February 18, 2021, iqiyi today released its unaudited financial statements for the fourth quarter and full year of fiscal year 2020 as of December 31. According to the report, iqiyi’s total revenue in the fourth quarter was 7.5 billion yuan (about 1.1 billion US dollars), down 1% year-on-year; its net loss was 1.5 billion yuan (about 237.2 million US dollars), compared with 2.5 billion yuan in the same period last year, narrowing the loss year on year.
After the release of the financial report, the company’s management, including iqiyi founder and CEO Gong Yu and CFO Wang Xiaodong, held a teleconference to interpret the main points of the financial report and answer analysts’ questions.
The following is the main content of the analyst Q & a session of this conference call:
Jeffrey analyst Thomas Chong: Good morning, thank the management for accepting my question. My question is about our long-term growth of paid members. Just now, the management also mentioned that we have many different studios producing content in terms of content, and then we can see that the paid subscription data has improved. I would like to ask how we should look at the growth of paid subscribers in the future, and what are our long-term goals? thank you.
Gong Yu: let me answer this question. In the first quarter of last year, our membership reached the highest level in history. The data released in the first quarter of last year were not the highest, because it was the highest in the middle of the first quarter. Later, due to the lack of content, the number of members decreased. The first reason for the lack of content is that because of the epidemic situation, cinema movies are not on the cinema, so we can’t get cinema movies. The second is that the TV series are affected by the epidemic situation and the audit, and the broadcasting is delayed. Thirdly, due to the influence of the stop of advertising and sponsorship by advertisers, variety shows are also delayed. There are also some other influences, such as animation production and so on. These are the main reasons for the decline of the number of users and members. But this situation has been improved. There will be a lot of home-made content broadcast this year, of course, the copyright content will also be broadcast according to the regular plan. This year, the box office situation of cinema films in Spring Festival is very good, exceeding the expectation of the whole industry, which also brings us good news, which means that a large number of cinema films will be broadcast in the cinema this year, and the second window period will be broadcast on the Internet.
In addition, this year’s membership growth is more optimistic than last year’s. Members’ ARPU (average revenue per user) value, we expect to grow. But it’s not going to grow in a large proportion. The first reason is that our pricing on Android devices has been raised to the same level as that on IOS. Second, we will reduce some promotional activities.
Eddie Leung, analyst at Merrill Lynch and Bank of America: Happy New Year. I have two questions. The first one is to follow up the question Thomas just asked. If we have more content, in terms of cost, do we have any concepts in the first quarter that we need to pay attention to? This is the first question. Another problem is that I think you also talked about the distribution of large screens. Last year, you also launched some cooperation with TV manufacturers. So I would like to ask how many people watch iqiyi on TV from the perspective of users or duration? Then, in the future, do we have any considerations in terms of content production?
Gong Yu: let me answer the second question first. The first question about content cost is for Xiaodong to answer. At present, the duration of users generated on the smart TV terminal is similar to that on the mobile terminal (including mobile phones and tablets). The duration of TV terminal is slightly longer, accounting for more than 40%, that is, the total duration of mobile terminal and TV terminal is close to 90%.
Wang Xiaodong: I think when we discuss launching more popular content, what we focus on is not more, but more popular content. As we have mentioned before, the total content cost investment of our membership business is almost the same as before. What we are doing now is to increase the quality of content, not the quantity of content. But when we talk about some new growth factors of content cost, yes, you can see some increase in content cost. For example, we plan to expand our investment in overseas markets slightly to strengthen the foundation for future growth. However, I think only when you mention additional or new business areas will you see some obvious increase in content costs. But our core business is the same as before, and the cost of content will still be well controlled in the future.
Jiren Zhang, analyst at Citigroup: Thank you. Happy new year. Then I have two small questions about content. First, can the company talk about users’ preferences for content and what changes have taken place in recent years? The company has just said that, for example, our super big pop money is more and more rare. On the contrary, as long as there are several big pop money in a year, for example, 18 years later, there may not be the same pop money. On the contrary, there are several OK content. Can you tell us the impact of this trend on content production and member recruitment? This is the first part of the question. Then the second part is about the schedule. Because we have seen some exchanges with friends in TV series. Recently, we have seen that in the entertainment terminal, we also exchange some content with our friends. Can we explain the reasons behind this?
Gong Yu: let me answer. The first question is about the content of popular dramas. As far as this point is concerned, Yanxi strategy is a special drama. In the past, the drama was not only popular in Chinese mainland, but also popular in Southeast Asia, and even in other parts of the world. In recent years, there is no such kind of popular drama. There are many reasons, including the stricter government audit standards and the influence of other aspects of the industry. For example, we now have more entertainment consumption patterns. In addition to the epidemic period in 2020, the consumption of films in 17, 18 and 19 years has been increasing. I mean the consumption of cinema films, including short videos, has been increasing. So a variety of entertainment consumption will affect the emergence of long video pop content. But this may be understood more from perception.
From the data point of view, the mainland data shows that the number of popular content in recent years is almost the same. In the whole industry, the number of popular dramas fluctuates between 6 and 10. In fact, this has been the case for many years, because the demand for dramas and films is rigid. In terms of data, it means that if you don’t watch that one, if you watch this one, it will always produce the first few TV dramas with very concentrated traffic. Moreover, the flow of popular dramas has little difference from year to year, maintaining a stable state. The head play is like this. In the future, we may continue to make some innovations according to the new environment. For example, in recent days, “my husband” is on the air. The flow of this play is very large, and it is likely to become one of this year’s blockbusters.
The law of variety show’s popularity is different from that of TV series. The popular content of variety show is more sequels, such as “wonderful flower said”, we just broadcast “wonderful flower said 7”, it is a language program, but its traffic is increasing every season. The flow of the seventh season just broadcast is the same as that of pure entertainment, large entertainment programs and large entertainment variety shows. This is the characteristic of variety show, which is the accumulation of large flow.
The second question is iqiyi and Tencent video, as well as other video platforms, such as Youku or mango, solidified content or joint investment content. It’s better to judge and analyze specific cases. For example, TV dramas are the dramas broadcast by TV stations. We buy copyrighted dramas. Usually, our industry is broadcast jointly by everyone, and then for example, “ha ha ha ha ha” is produced by an independent production company and invested jointly by iqiyi and Tencent video. These are discussed separately by each project. Generally speaking, the principle of independent broadcasting is: first, the self-made content of each platform is independent broadcasting; second, the head content of pure network broadcasting, some of which will be independent broadcasting.
Alex Xie, analyst at Credit Suisse: thank the management for accepting my question. My question is about cost control. We can also see that in the fourth quarter, the cost control was very good, and there was a year-on-year decline. I don’t know how to look at such a trend in 2021? Will this trend continue?
Wang Xiaodong: Generally speaking, we believe that this trend will continue in the next few years. When it comes to cost, I think there are two main factors: content cost and other expenses. As for content cost, I have just said that the content cost of core business, as a percentage of revenue, and even the amount of cost, will grow healthily in the next few years. In the future, content growth may be driven by two factors. One is content category. We always have plans to enter some new fields, such as iqiyi homemade films. The second is the expansion of overseas markets. I think these two factors may drive up the cost of content in the future. However, from time to time, you may still see some fluctuations in the cost of content. In addition to the content cost, I think the remaining more important expense item may be marketing cost, including content promotion, such as brand promotion, family application promotion, etc. But on the whole, I believe that in the next few years, you will see a very healthy trend in the proportion of these costs or expenses in the income.
Zhijing Liu, analyst of UBS group: thank the management for accepting my question. First of all, I wish you a happy new year. I mainly want to know what is the development of suike now? And how do we strategically view the medium video content ecology corresponding to instant video and its importance to long video business?
Gong Yu: Happy New Year. In fact, it took more than two years for this business model to be established. The good thing is that this business model has been established for about half a year. It’s not a business model, or its own model is positioned on the point of video interest community, which has been defined clearly for about half a year. In other words, with video as the medium, this video is not only short or medium video, but also long video. The length of the video itself is short and long, but the most video played is usually a few minutes, that is, five or six minutes to ten minutes. It has a wide range of contents, including various interests, such as slim, which is a kind of material like mud, which can be made into various shapes, and then such as cockfighting and cricket fighting. Of course, movie stars are also important communities. What I mean is that with video as the medium, people with various interests and hobbies can make friends by watching video and sending video. This positioning has been clearly determined. Its traffic was high and low last year, and now it is in a stable state. I hope the traffic can start to grow this year.
Let me explain this in a more general way. I’ll take station B as an explanation. In fact, station B is developed as a secondary interest community. He made great efforts to break the circle last year, that is, its users not only care about the secondary content and topic interest, but also begin to pay attention to other interests. At the moment, it starts from the interest community outside the second dimension, and then develops more interest communities. It is such a route. In addition, I would like to ask Xiang Hua to add more information about the price increase of members in November last year.
Yang Xianghua: Hello everyone. I’d like to share with you some changes after the price adjustment last November. After the price adjustment, we adjusted the price of Android to the same as that of apple. Therefore, some trends after the reduction are that we find that the order volume of Apple terminal is on the rise, while the order volume of Android terminal is on the decline, but the customer unit price is on the rise. The second is that we provide some price protection policies for the regular users of Android, who are continuously contracted monthly, that is, its price is not adjusted. We found that the retention rate and renewal rate of this part of users have increased in the next month. The third is the new users, the continuous monthly subscription users who subscribe at the new price, and their renewal retention rate in the first month has also increased. Overall, the price adjustment is better than we expected. After the price adjustment, the impact of the decline of new users is very short-term and has disappeared in a very short time. However, we still think that it will be a better result for the rise of ARPU value and the growth of long-term membership.
The SEC is an internal secret investigation. The management has faith in the investigation results. The total revenue of 1q20 is 7.6 billion yuan, exceeding the expectation. The net increase of members in a single quarter is 12 million. Leading data: what is the growth rate of members of iqiyi’s payment meeting in the second quarter of 2018? Iqiyi: revenue of 29.7 billion yuan in 2020, a year-on-year increase of 2% iqiyi: total revenue of 7.4 billion yuan in 2q20, a year-on-year increase of 4% station B: strong growth of 1q18 games and value-added business, driving the company’s revenue to double CMB: Why are video websites talking about big data in the new century? Netflix: 3q19 financial report teleconference record CEO said that this year has indeed suffered some impact Netflix: 1q20 home isolation users’ entertainment demand has increased, and the net number of paid members has increased by 15.77 million Netflix: the growth of paid members in the first half of 2020 is comparable to that in 2019. The number of paid users of Netflix: 4q19 financial report teleconference record is expected to increase by 7 million in the first quarter
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