How far are video sites from profitability?

Regarding the profitability of video websites, the industry seems to have not paid much attention in the past two years. Although video websites are working hard to diversify their revenue and continue to expand the incremental market, the result remains the same - losses.

From the launch of the first batch of video websites in 2005, to the competition among more than 200 video websites in 2007, to the current battle among BAT giants, the competition for land among video websites is still going on.

The cost of purchasing high-quality copyrights keeps rising, and the single profit model based on advertising revenue is difficult to break through. These two major problems have caused the "shortage of food and ammunition" video websites to fail one after another, and their survival space has been greatly challenged.

Especially last year's exclusive broadcasting strategy for copyrighted content and the astonishing speed of burning money have caused the leaders of various companies to once again reassess the competitive situation in the industry, and profitability seems to have become a distant issue again.

According to the judgment of the bigwigs, 2017 may be a turning point. In 2014, the major players in the video industry have already emerged, but in order to form a stable market structure and ranking, the competition between the various players will have to last until at least 2017.

Of course, while the arms race is going on, video websites are actively seeking new business models in order to get out of the vicious circle of losses as soon as possible and achieve a higher level of market leadership.

According to the interpretation of Pang Yiming, a professional analyst in the video industry, at present, the largest profit model of video websites is still advertising revenue; the second part of the income comes from secondary copyright sales, through the operation of the video website itself, and the purchase of distribution rights of traditional media, and then the development of new sales channels for sales; the third part is to provide users with value-added paid services, such as users purchasing VIP movie accounts, and user value-added services such as movie acceleration.

In addition, video websites are also launching shows or games, which have proven to be effective and can bring cash cows to the platform. The development of the industrial chain of high-quality IP and investment in blockbuster movies are the new wave of revenue expansion paths for video websites.

However, as iResearch data shows, more than 60% of the revenue of the video industry is still from advertising. Mainstream video websites are even more dependent on advertisers, and this figure can even reach 90%. In addition to conventional patch ads and website hard ads, video websites are also tirelessly exploring how to increase revenue from advertisers. At present, there are three major focus points.

1. Homemade strategy and content marketing.

Self-made content has become the main focus of video websites this year, not only because self-made content has advantages such as low cost and differentiated brand image, but also from the perspective of advertisers, self-made content is easier for brands to conduct content marketing. From the current marketing trend, advertising will become more and more "soft", and brands are increasingly pursuing subtle communication and emotional resonance with users.

2. Video advertising productization and data value-added products.

iResearch believes that with the rapid development of the online video industry and big data technology, advertising products based on big data analysis that provide advertisers with more efficient and accurate advertising services will become a hot spot in the industry, and video advertising productization will become the key development direction of advertising sales for core online video companies. In 2015, mainstream online video companies will accelerate the launch of various precision marketing video advertising products.

3. Watch and buy, explore video e-commerce.

The screen is the channel, the content is the store, and the combination of video and e-commerce is a marketing form that video websites have been promoting since last year. Video platforms can not only help advertisers build their brands, but also connect merchants and consumers based on content, bringing direct effect conversion and sales closed loop. This is a very important innovative attempt for video websites to realize traffic and develop small and medium-sized merchant customers.

How far are video websites from profitability? This question may remain unanswered in the next two years, but video websites have already made many innovative explorations and experiments in revenue diversification.

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.