Theatrical movie Lost in Russia is broadcast online for free on iQiyi: unhealthy and unsustainable

Today (February 28), iQiyi released its unaudited financial report for the fourth quarter and full year ended December 31, 2019. The financial report shows that in fiscal year 2019, iQiyi's total revenue reached RMB 29 billion (approximately US$4.2 billion), a year-on-year increase of 16%, of which the fourth quarter revenue was RMB 7.5 billion (approximately US$1.1 billion), a year-on-year increase of 7%. The operating loss in the fourth quarter was RMB 2.5 billion (approximately US$363.2 million), a year-on-year narrowing of 24%.

In a conference call after the release of the financial report, Gong Yu talked about the market structure of long videos. He said: "From the user-side traffic share to advertising revenue to membership revenue, iQiyi, Tencent Video and Youku currently account for about 80% to 90% of the market share. So this structure is already stable, and there is no sign of any significant change."

Regarding Toutiao's free broadcast of cinema movies during the Spring Festival, Gong Yu said: " During the Spring Festival, Toutiao bought a movie and may buy more movies in the future. This movie is a top cinema movie and is played to users for free, relying on advertising revenue. We think this is not a sustainable and healthy business model. Obviously, the cost of a three-minute movie is several times, or even 10 times, higher than that of a variety show. A business model that relies on advertising cannot be sustainable for a long time. Of course, it is acceptable to do so for marketing purposes such as attracting new users. Therefore, for our current long video industry, there will be no changes in the model and no lasting impact."

Gong Yu also talked about the much-watched advance screenings during the conference call. Gong Yu said that the advance screening model is currently very successful, but there are very few TV series that have tried advance screenings, so it does not account for a high proportion of total revenue. In the future, advance screenings will become a norm and a regular broadcast method to expand the scale.

It is worth noting that the advance screenings were questioned when they were launched. Some netizens said that they were willing to pay for membership, but they did not want to pay for the membership and then watch the drama. What do you think of the advance screenings?