Tencent Video's "Joy of Life" advanced on-demand large-scale paid experiment hurts both sides

The way of harvesting leeks is advancing with the times. At first, "leeks" was an exclusive name for ordinary retail investors in the stock market. Because they are at a disadvantage, their funds are likely to be harvested after the big investors sell off. While some people leave the market at a loss, fresh blood will be injected, just like leeks, harvested and grown. P2P, digital currency, blockchain, knowledge payment... Before the hot spots turned into bubbles, they were all harvested attentively. Now, "leeks" has become a self-deprecating term for some video platform users, accompanied by anger and confusion.

It all started with Tencent Video and iQiyi's advanced on-demand service for Joy of Life - members can get the privilege of advanced on-demand service by paying 50 yuan again, and will always watch 6 more episodes than members. This rule expired on December 16, but it still supports unlocking individual episodes at an additional cost of 3 yuan per episode.

This is not the first time that advanced on-demand viewing has appeared on a video platform. This summer, Tencent Video made an all-round and multi-angle attempt to "take advantage of" the show "The Untamed", and unlocking the finale through advanced on-demand viewing was one of them.

The protests were huge, but the fact is that the criticism and the money spent go hand in hand. It was rumored online that Tencent Video's final on-demand revenue exceeded 150 million yuan, making it a lucrative business.

Although Tencent Video told Sina Technology that this was a number calculated by netizens themselves and the specific on-demand revenue was kept confidential, it is undeniable that advanced on-demand viewing has indeed brought benefits to the video platform.

On the day of the celebration party for The Untamed, a fan wrote down the following sentiment: "I was willing to be a loser, but I am more worried about whether this pattern will continue in the future?"

Now it seems that her worries were not unnecessary.

Members' anger: Where is the spirit of the contract?

"It's so disgusting, this is a money grab!" A Tencent Video user said that after seeing the advance on-demand viewing of "Joy of Life", he felt that not only did he pay the membership fee in vain, but the value of the membership was also diluted.

There are two main reasons why users of video platforms pay to become members: first to watch and to remove advertisements. However, in the past decade of paid membership development, members have received more content and their rights and interests seem to have decreased.

The first pot of gold for the membership business of domestic video platforms mostly comes from movie content - Yang Xianghua, President of iQiyi Membership and Overseas Business Department, even called it the foundation of iQiyi's membership business. iQiyi also achieved its first 5 million members growth.

However, if you want to spend money to buy copyrights and make your own productions, 5 million members are far from enough. In 2015, "Grave Robbers' Chronicles" took the lead in launching a paid trial, and members could watch the entire series first. Since then, video platforms have entered the era of "membership + advertising" dual-engine drive, and differentiated scheduling methods such as "members always watch N more episodes" and "members watch the entire series at once" have emerged.

Members and advertisements have always been contradictory. Members hope to avoid advertisements when watching content, but the better the content, the more favored it is by advertisers. Therefore, in addition to patch ads, boot ads, creative mid-insert ads, embedded ads, pop-up ads, etc. are emerging in an endless stream.

After iQiyi pioneered the paid viewing experience for members on domestic video platforms, Tencent Video further developed it. The advanced on-demand viewing of "The Untamed" was only the first step, followed by "You Are My Dear Mr. Right", "The Moon Shines in My Heart" and "Once Upon a Time There Was a Spirit Sword Mountain", until "Joy of Life".

"You can't sell me membership, force me to watch ads, and sell me TV series twice." The aforementioned Tencent Video user believes that ads within ads, payment after payment, is just like the garden within a garden at many tourist attractions in China. The Internet is just a refurbishment of the old model. "Suddenly advancing the on-demand broadcast of a popular drama without informing consumers in advance is a swindle." He told Sina Technology that he refused to pay for the advanced on-demand broadcast of "Joy of Life" because "having no bottom line is to condone evil."

Explanation of membership rights in the membership service agreements of Tencent Video (left) and iQiyi (right)

Explanation of additional fees in the membership service agreements of Tencent Video (left) and iQiyi (right)

Li Min, senior partner of Shanghai Han Sheng Law Firm, analyzed in an interview with Sina Technology that there is nothing wrong with the regulation that different levels of members enjoy different rights and interests, but the membership services provided by the video platform should be consistent with its previously released advertisements, instructions or service commitments, and should not be changed at will during the validity period of the consumer's membership service, otherwise it would violate the principle of good faith.

Even if it is changed, it should not be lower than the original standard. Specifically for "Joy of Life", if the video platform does not mark the words "advanced on-demand" in the promotional pictures, it may lead consumers to mistakenly believe that they only need to open a membership to watch all updated episodes. In this case, consumers should be provided with the option and means to cancel the "VIP Member Service Agreement" and refund the service fee.

Platform calculation: It is not easy to move forward with losses

Content production and diversified operations require a lot of investment. When the growth rate of ARPU (average revenue per paying member) is lower than the average content cost growth rate, video platforms have to continue to explore revenue possibilities.

Either distribute the cost to each user and increase the unit price of paid membership; or leverage synergy and open up new revenue sources.

In June this year, Yang Xianghua said in an interview that there was no need to raise membership prices for the time being, and that discounts and offers could be reduced. Less than half a year later, his answer became "I have this idea." Although there is no clear timetable, price increases are on the agenda. As for how much to increase, "more in-depth and detailed research should be conducted," Yang Xianghua said.

The financial report shows that in the third quarter of 2019, iQiyi had 106 million paying members, with an average monthly ARPU of 11.7 yuan per person and a monthly membership price of 19.8 yuan.

According to Tianfeng Securities' estimates, if the price per user is raised by 10-15 yuan per year, it will bring in an additional revenue of 1.06 billion to 1.59 billion yuan.

An investor who has been paying close attention to the entertainment industry told Sina Technology that price increases depend on the market development and whether users' payment habits are mature. The same is true for the promotion of differentiated payment models, but at this stage, it must be done step by step. "Whether it's raising prices or charging by segmentation, it won't be done by only one company. It just has to be started by someone, step by step."

Another video platform practitioner who did not want to be named emphasized that compared with advanced on-demand viewing for member users, providing non-member users with paid extra updates and adjusting their viewing frequency may bring a better experience.

Tencent Video and iQiyi have successively responded to the controversy caused by advanced on-demand viewing.

The former admitted that the information provided to members was not sufficient and was not considerate enough about their consumption psychology. On this basis, the latter further explained the original intention of advanced on-demand viewing - to meet users' needs for more diverse content.

To sum it up in one sentence, it is "not done well" rather than "not done right".

In the view of Shi Songyuan, senior investment manager at Taihe Capital, the platform's attempts to further increase user payments should focus on launching truly innovative and excellent product content. When the content becomes more and more high-quality and member rights are truly improved, price increases will be more easily accepted.

"It's definitely a process. Didn't we spend a long time educating users when we were preparing for membership fees?" said the person who used to work for the video platform. "All industries are profit-seeking. No one wants to do a business that loses money, especially when the overall environment is not good."

The industry is in a tough spot: Piracy and genuine products clash

Now, the advance on-demand viewing of "Joy of Life" has evolved into a large-scale content payment experiment.

However, the emergence of a variable made the experimental results exceed expectations - piracy.

On the evening of December 19, the full set of Joy of Life was leaked. Shared, saved, disappeared, and shared again... a strange piracy carnival was set off on social platforms.

A user of the three video platforms "Youku, iQiyi and Tencent Video" described himself as "getting up early and staying up late to watch "Joy of Life", although he did not watch any of Tencent Video and iQiyi.

He admitted that the video platform's advance on-demand operation is understandable. By charging more for high-quality content IP, the video platform can make more money, and then produce more good works, forming a virtuous circle.

At this point, he changed the subject: "But I won't pay for advanced on-demand viewing. First of all, it's really expensive. Plus, as a member, I've already spent money, so I don't mind watching pirated content."

Another Tencent Video user held the same view: "Isn't it okay to watch a pirated version on Tencent Video VIP 5? I have already paid for the membership, and I don't feel guilty about watching pirated content. If there is a second payment, there may be a third and fourth payment. If cracking down on watching pirated content is justice, then please crack down on multiple payments as well."

Some users even attributed the leak of the entire series to advanced on-demand viewing. In response, Wu Guanyong, director of the Copyright Monitoring Center of the China Copyright Association, explained that there is no necessary connection between piracy and advanced on-demand viewing. The more popular a TV series or film is, the more pirated copies it will generate and the wider its distribution will be.

At present, there are nearly 40,000 infringing links of "Joy of Life". Piracy is rampant and it is difficult to celebrate the rest of the year.

On the morning of December 20, New Classics Television, Tencent Pictures, Tencent Video, and iQiyi issued a joint statement, announcing that they had reported the piracy to the public security authorities and the People's Court and filed a case. While thanking the audience for their love, they also called on them to watch through legally authorized platforms and jointly resist piracy.

The last paragraph of the statement is sincere: "All the crew members have worked hard for 173 days and nights to present this painstaking work to everyone. We sincerely hope that we will meet again in the future. We would like to express our heartfelt thanks for your attention and support! We hope that everyone will unite as one to fight against copyright infringement and piracy!"

A person working in the film and television industry expressed his feelings to Sina Technology that only those who create content can understand the effort behind these words.

"The film and television industry looks glamorous on the surface, but it's actually not doing well. Producers have to bargain with agencies and broadcasting platforms. What they lack most is money, and what they lack least is uncertainty. If the top producers with relatively strong voice can't make a comeback with top content, is there any hope for others?"

Paradoxical reality: How to vote for content

After the advance on-demand viewing of "Joy of Life" was launched, related topics have never left the hot searches, from #Tencent Video responds to the controversy over advance on-demand viewing of "Joy of Life"# to #Tencent is sued for advanced on-demand viewing# and #Is it reasonable to pay for advance on-demand viewing of film and television dramas#, to #Joy of Life complete series leaked# and #Joy of Life has nearly 40,000 pirated links. The comments were full of curses and the public was very excited.

"You don't even know if they are members, let alone whether they are criticizing the advanced on-demand service, the video platform that launched the advanced on-demand service, or the paid content itself." The aforementioned film and television industry practitioner said that many users complained about the poor quality of domestic TV series, and the video platform was still considering "fleecing", which she did not understand. "'Good' and 'bad' are relatively subjective evaluations. Individual cases do not represent the whole. Just like the level of a drama cannot summarize the level of the entire industry, can the preferences of a user represent the market?"

"No, right? So differentiated payment is necessary. Only by voting for good content in your eyes can you have the opportunity to see more such content." The person said.

However, returning to "Joy of Life", the advanced on-demand service resulted in a lose-lose situation for both sides.

The producers and video platforms are in a pity. They worked diligently to adapt a big IP into a film and television series, and insisted on pre-ordering it amid huge controversy, but were caught off guard by piracy. The backlash from users will not only cause a decline in the number of views, but will also make it more difficult to attract advertising investment in the future. Moreover, this is only the first season. If the market feedback is not good, will there be a second season?

Members who paid for advanced on-demand viewing and those who did not pay and did not watch pirated content were also in a miserable situation. The original logic was that those who spent the most money would take the lead, but the reality was that the latter were just running behind, only slightly better than non-member users. The former thought they were running the fastest, but they didn't expect there was a "plug-in" like piracy, and they were completely overtaken.

Matt Haig wrote in his book "A Reason to Live": "The world is deliberately promoting anxiety because happiness is bad for the economy." Anxiety induces the impulse to consume, but what is more worrying for members of the video platform is that once the Pandora's box of advanced on-demand viewing is opened, there will never be an end.

Ma Lilingshan, co-founder of Wuyuan Culture, expressed support for the advanced on-demand model: "This is certain in the long run." She regards user backlash as "the price of being a pioneer." "We cannot deny a feasible or even optimal business model under the current circumstances just because the specific operating methods can be improved." She said.

If differentiated payment models such as advanced on-demand viewing are the general trend, the first thing video platforms need to solve in the process of re-educating users is piracy - after targeted payment, will some price-sensitive members start to leave and turn to piracy?

Users who have to go through this process should also think about whether your insistence on paying for your favorite content will change because of the existence of piracy? If every consumption and every penny you spend is a vote for the world you want, what kind of voting method can you accept?

The answer to this question may still have to be found through voting.