Whether you like it or not, the era of paid video is coming

As we all know, there is a deep-rooted user habit in the Chinese Internet - free. People have become accustomed to "the wool comes from the pig". Whether it is a content provider such as a video website, an audio website, or a tool such as a photo editing software or a text software, it is very difficult to charge users directly.

However, the video industry, which is "burning money endlessly", is welcoming a wave of "payment". Tencent Video Hollywood membership, which has exclusive HBO content such as "Game of Thrones", iQiyi membership, which takes advantage of "Grave Robbers' Chronicles", and 360 Online Cinema paid viewing, which is backed by Enlight Media and 360... More and more video websites have included content payment as a profit model to be developed in the future.

At the end of last year, Tencent Vice President Sun Zhonghuai said at the Tencent Video V Vision Conference that the spring of paid services has arrived. At the beginning of this year, Wang Changtian , president of Enlight Media, publicly stated: "The time has come for the paid model."

Is video payment a spiritual victory for the industry, or is it a real trend? Both internal and external reasons and objective facts lean towards the latter.

Four reasons why you have to start a paid model

The arrival of the paid era is not groundless, but rather meets the "right time, right place, and right people". The "free model" in the past could not support the survival of video websites. The maturity of payment methods, the gradual formation of user payment habits, and the crackdown on piracy over the years, coupled with the fact that people can clearly see that the paid model does not bring petty profits, but purifies the entire industry chain and provides the best support for high-quality content.

In summary, there are four main reasons for the launch of the paid model:

1. Video websites have too many places to "burn money", and it is difficult to achieve profitability by relying on a single advertising model.

Copyright prices have been rising year by year. For example, statistics show that from 2008 to now, TV program copyright fees have increased by nearly 20 times. The online copyright fees of some popular variety shows have exceeded 100 million yuan. Copyright fees are the biggest pitfall for video websites. In addition to TV programs, movies and TV series, the online live broadcast rights of offline concerts and the self-made content of opinion leaders are also the focus of competition.

The money is not just spent on copyright fees. Bandwidth costs are growing exponentially with the growth of video website traffic. Several large domestic video websites spend more than 10 million yuan on bandwidth each month. The technical costs of building and maintaining high-definition live broadcast sources, storage devices, and compression servers should not be underestimated.

Of course, in order to get rid of their reliance on high-copyright content, video websites have chosen to produce their own dramas. The investment in self-produced dramas includes acquiring IP copyrights for novels, games, etc. and producing self-produced dramas.

Interestingly, in the United States, the video broadcasters that have achieved success with their own dramas all rely on the paid model to survive. Whether it is Netflix, which produced "House of Cards", Amazon , which won the Golden Globe Award for "Transparent", or HBO, which has always been gorgeous and sophisticated, all rely on subscription fees rather than advertising fees to survive. In this regard, the completely free Hulu has made no achievements.

The ambitions of video websites go far beyond the websites themselves. The layout of TV boxes, smart TVs and other hardware devices also requires money.

Such huge and multiple expenses make it impossible for video websites to "cut costs", and they can only take the path of "open source". It is imperative to develop a paid model.

According to iResearch data, advertising revenue accounts for 63.4% of online video revenue and is the main source of revenue. However, the proportion of advertising revenue has begun to shrink, and other types of revenue, such as video value-added services and copyright distribution, have increased significantly. Value-added services such as membership fees only account for 5.1%, and there is huge room for growth.

2. Users' payment habits are gradually formed and payment methods are mature.

Tencent Technology Penguin Intelligence conducted a survey of 17,909 people on whether people are willing to pay for online videos. The results showed that 79.8% of users are willing to pay for online videos. From another perspective, if video service providers can stimulate users' consumption needs and enthusiasm, then the future market potential and imagination space will also be huge.

However, willingness to pay is not enough, mature payment methods are also needed. In just a few years, online banking and mobile payment have developed rapidly. The diversification and simplification of payment methods provide functional support for video websites to successfully launch the payment model, making payment objectively possible.

3. Years of experience in combating piracy

In addition to the push from within the video sites and the pull from outside of user payments, cracking down on piracy can be said to be a necessary condition for the "pay-per-view model" to truly have a market.

Imagine if you can easily find free pirated content online, who would pay to watch it? In the face of piracy, any ethics and morals seem relatively powerless.

Last year, the total number of patent administrative enforcement cases nationwide increased by 50.9% year-on-year; the national industrial and commercial system investigated and dealt with 67,400 infringement and counterfeiting cases; the national copyright system filed and investigated more than 2,600 infringement and piracy cases. The launch of the "Sword Net 2014 Special Action" to combat online infringement and piracy, and the closure of a large number of BT websites, are all achievements in China's fight against piracy.

4. People expect that the video industry will truly enter a virtuous circle in the future.

High-quality content brings user payments, and user payments support high-quality content.

Comparison of payment models between China and the United States

The payment model that is about to start in China has been developed in the United States for quite some time. The following figure compares the payment situation of major video websites in China and the United States.

From this we can see that the payment methods are roughly divided into two types: "calculated by time" and "calculated by content volume".

When it comes to attracting paying users, both Chinese and American companies need to work harder on content quality and speed.

Tencent Video uses exclusive content from its collaboration with HBO to attract users, while iQiyi uses the popular IP "Grave Robbers' Chronicles".

Another aspect that people have to pay attention to is speed. The time difference between online theaters and traditional theaters has become the key to measuring speed. If a theater movie can be quickly released online, the potential for users to pay for it will be huge.

In the United States, it usually takes more than half a year for a blockbuster movie to be played on streaming media. But in September last year, Netflix announced that it would cooperate with Harvey Weinstein and IMAX to jointly promote "Crouching Tiger, Hidden Dragon 2: Sword of Destiny", which will be released simultaneously on the Netflix website and designated Imax theaters on August 28, 2015. After the news came out, traditional theaters, which have been declining in the ecological chain of film distribution in recent years, immediately responded: top theaters including AMC said they would jointly boycott the release of this film in the United States.

In China, the arrival of the paid model has paved the way for online cinemas. The cooperation between video websites and traditional film companies may be able to minimize resistance.

"China's box office revenue may surpass that of the United States in 2017. The current box office revenue in the United States accounts for less than 30%, and the rest of the revenue comes from derivative networks, etc. The future value of Chinese films lies more in copyright." Wang Changtian said that if copyright income accounts for 50% in the future, the box office will double and may exceed box office revenue within three years.

Whether people like it or not, video payment is here. It is time to restore the original meaning of the saying "there is no free lunch in the world" which was once subverted by Internet myths.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.