Hitting the profit pain point, video websites are brewing a paid model

Can video websites, which have always had profit pain points, go further in terms of user payments?

On June 15, the reporter learned from the relevant person in charge of Alibaba that Alibaba will launch an online video streaming service TBO in the next two months, similar to HBO in the United States. Its content includes domestic and foreign film and television works and internal productions of the group, and 90% of the content requires users to pay.

Moreover, at the recent Shanghai TV Festival Forum, some video websites said they would gradually implement a pay-to-watch model. It is understood that as early as next year, paid domestic dramas may appear on the Internet for the first time.

According to the 2015 China Online Video Big Data Report released by Penguin Think Tank and Tencent Video, by the end of 2014, the number of online video users exceeded 433 million, accounting for 66.7% of the total number of Internet users in China. Many video websites told the 21st Century Business Herald reporter that currently less than 10% of the video industry has paying users, but the growth rate of paying users is very fast, and they are optimistic about the future development of paid services. It is not difficult to find that Chinese video websites seem to be slowly breaking away from the "free model".

Paid Discovery

In fact, as early as five years ago, video websites had already begun to experiment with user-paid services. Youku Tudou responded to a reporter's interview by saying that it had launched models such as movie-on-demand, monthly membership subscriptions, and high-definition live broadcasts of concerts at the end of 2010.

According to the reporter, there are two main ways for users to pay at present: one is to pay for some content on demand, and the other is to pay for membership on a monthly, quarterly or annual basis. The on-demand payment is mainly concentrated on popular movie resources, and the charging standard is around 5 yuan per time. After paying, members can watch more movies and enjoy the ad-free function. As for TV series, the relevant person in charge of Sohu Video told reporters, "Currently 99% of TV series on video websites are free."

Even so, video websites are trying more payment models. The expanded payment objects are mainly concentrated in two categories. One is exclusive content such as self-made online dramas, such as Guo Degang's crosstalk theater on Youku Tudou, and the fifth season of Youku's self-made online drama "Hip Hop Quartet" in 2013; the other is relatively high-quality foreign TV series, such as HBO's "Game of Thrones" introduced by Tencent Video.

However, the video website will still give users free options, launching limited-time free, free after hits, etc. Tencent Video told reporters that it will launch weekly American dramas in the future. If you want to watch for free, you have to wait for one episode to be updated per week, while paying users can watch all episodes.

At the Shanghai Film Festival Magnolia Forum, well-known producer Hou Hongliang said: "When we were working on All Quiet in Peking last year, screenwriter Liu Heping took the initiative to propose using this drama to test the waters for paid online viewing, but it ultimately failed to materialize. There is another model for paid viewing, and if it can be comparable to American dramas, then it will be natural for viewers to pay to watch." Currently, there are no examples of paid domestic dramas on video websites. Ding Daoshi, director of the Speed ​​​​Tour Research Institute, also said that the quality of domestic films is generally not high, and the content is not enough to attract users to pay.

Many video websites also said that self-made web series will be a key focus of the trial of paid services. Ding Dao Shi believes that "in the future, web series will be more likely to be produced by websites themselves, with their own money spent on IP, invested in filming, and broadcasted exclusively on their own platforms." In other words, users will be more willing to pay for high-quality PGC content compared to UGC with uneven content levels.

According to Ent Group Research, the content expenditure of video platforms has been rising year by year since 2013, and the scale of investment in self-production has also been rising. It will grow to 2 billion yuan in 2015, accounting for 25% of the total investment in copyright and self-production. Among them, Youku Tudou Group invested 600 million yuan in self-production content in 2015, doubling the amount in 2014.

In addition, from the banning of Qvod to the rectification of Renren Video, actions such as cracking down on piracy have also fueled the paid model.

Return risk

So, how many users are willing to pay to watch videos?

According to data from iResearch's recent report "Online Video Quarterly Data Release", advertising is still the main profit model in China's online video market. In the first quarter of 2015, video value-added services accounted for only 8.6% of revenue, higher than the proportion in each quarter of 2014. Although user payment accounts for a small proportion compared to advertising, the increase is considerable. Youku Tudou's 2015 Q1 financial report shows that Youku Tudou Group's user business revenue increased by 706% year-on-year in the first quarter. User business revenue has achieved a month-on-month growth of more than 60% for five consecutive quarters and contributed 11% of total revenue.

Judging from the data, although the number of paying users is still very small, the growth rate is rapid.

Tencent Video said that the number of paying users increased by 270% in 2014, while Youku Tudou revealed that its consumer business achieved a 30% month-on-month growth in the first quarter of 2015 and a year-on-year growth of 706%.

Ding Daoshi told reporters that the number of paying users grew rapidly last year and this year, and this year will be a turning point. However, the current advertising revenue driven by video clicks and traffic is far greater than the revenue from paying to watch dramas.

"Paid domestic dramas will not become mainstream, and most of them will still be free. There will definitely be some pilot projects next year. For example, a drama has 20 episodes, the first two episodes are free to watch, and the next few episodes are charged, but the quality must be excellent." He suggested making profits through dramas and e-commerce, because charging based on video clicks is too small, and selling derivative products such as clothing may be a more reliable way to make profits.

Luo Lan, an analyst at Analysys International, said that the cultivation of users' payment habits is still insufficient. In addition to the payment habits, paying to watch dramas also faces the challenge of whether users are willing to pay for the quality of the paid content. In the case of advertising revenue as the main source and users' willingness to pay is not strong, the payment method will inevitably have revenue risks.

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.