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 ended March 31, 2022.
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This is a financial report that far exceeds expectations: Overall, iQiyi’s revenue in the first quarter was 7.3 billion yuan, and the net profit attributable to iQiyi was 170 million yuan, while the expected loss was 665 million yuan. This is the first time iQiyi has achieved profitability in 12 years.
Source: Screenshot of iQIYI Financial Report
Along with the increase in profits, there is also the profitability of iQiyi. According to the financial report, iQIYI’s gross profit margin increased significantly to 17.8% in the first quarter, compared with 11.3% in the same period last year and 12.2% in the previous quarter; the profit margin reached 1.3%, which was still as high as in the same period last year and the previous quarter. 13% loss rate.
In addition, iQIYI also highlighted member income-related data in the financial report. iQIYI pointed out that its member ARM (that is, the monthly average revenue per user) was 14.69 yuan in the first quarter, compared with 13.64 yuan in the same period last year and 14.16 yuan in the previous quarter.
Although compared with other industries, the unexpected figures of iQiyi in the first quarter are not that dazzling, but for the video streaming industry that has been losing money for more than ten years, this is an unprecedented event, which is why many people surprise.
The outside world immediately linked these achievements to iQIYI’s previous layoffs and member price increases. These actions accompanied by widespread doubts are indeed very direct contributing factors to iQIYI’s profitability. But the fact is that, as a profit-oriented company that is not doing public welfare, these actions have had an effect, not a backlash.
Take membership price hikes, for example. According to the financial report, iQIYI had an average daily subscription membership of 101.4 million in the first quarter, a net increase of 4.4 million from the fourth quarter of last year. Membership service revenue, which contributed the most to iQIYI’s revenue in the first quarter, also increased by 4% year-on-year to 4.5 billion yuan. These numbers prove, at least in the short term, that membership price hikes don’t necessarily have to “scare off” users.
Behind this, it is inseparable from the content broadcast on the iQiyi platform in the first quarter and the impact of the Spring Festival and the impact of the epidemic situation at home. High-quality content is a prerequisite for users to be willing to pay. At the beginning of 2022, reality dramas such as “The World“, “Home in the Heart” and “Dear Child” have received a lot of attention; people’s willingness to pay at home caused by the Spring Festival and the epidemic It is a more direct improvement.
Source: Official stills of “The World“
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, except for the core drama, variety show procurement, and production departments, there were no layoffs for the time being. Animation and games are among the layoffs, and public lines such as the market also have layoff indicators – these are basically marginal businesses born in the era of capital fertilization.
The financial report shows that in the first quarter, iQIYI’s sales and management expenses were 740 million yuan, down 38% year-on-year; research and development expenses were 470 million yuan, down 29% year-on-year.
It’s easy to dismiss these adjustments because they’re full of short-term properties. But an interesting fact is that this is the first time that someone has actually done these “simple and rude” things, and it has really made a profit-the discussion about whether video streaming is a good business that can make money has clearly been It haunts all practitioners, but no one really tries to solve it in even the crudest way.
On the one hand, practitioners always say that they are suffering from years of brutal growth, high content costs, and short videos occupying development space, but on the other hand, they seem to despise the marginal business of doing dirty work and telling stories for capital. Constantly, the main business is abandoned, and at the same time, short videos are also despised.
This pride, or fantasy, is constantly being shattered, especially in April, when Netflix, the longtime fantasy object of domestic streaming media, released a poor quarterly report. In the first quarter, its global paid users lost 200,000, the first wave of “unsubscribes” occurred in 11 years, and the revenue growth rate of US$7.868 billion also returned to a new low since 2014. This makes the global streaming media industry more urgent to begin to reflect on itself. Streaming media platforms that are accustomed to the high-gloss era in the past have been reluctant to admit that they are not a business suitable for scale. But now it’s not the time to have any more illusions.
Thoroughly exposing this entanglement in this industry may be the most important meaning of iQIYI’s profit this time. Although it is a short-term profit, this is the first time that video streaming can still be a profitable and sustainable business if you “run a small business” and do what you are good at.
iQIYI’s financial report is like shouting: colleagues, complaining for so long, the problem is whether we want to make a profit or not.
This time, I got it first, you can do whatever you want.