“Cutting leeks” by on-demand viewing: Is VIP a benefit or a trick?

The "advanced on-demand" charging model, which was suspected of "cutting leeks" from the beginning, has once again caused controversy with the recent hit of "Sweeping Dark Storm". On September 9, the China Consumers Association expressed the view that video platforms should "have fewer routines and more sincerity", and VIP services should comply with laws and regulations and match quality and price. Advanced on-demand is voluntary, and the restriction of unlocking episode by episode should be cancelled.

Advance on-demand viewing is just the trigger. Problems such as excessive advertising and chaotic renewals are no longer new. It is understandable that Internet platforms seek commercialization, but they need to balance the pace of commercialization and user experience.

Illegal or breach of contract?

A Beijing Business Daily reporter saw on the "Watching Calendar" of "Sweeping Black Storm" that the series has 28 episodes in total, and will be broadcast exclusively on Tencent Video starting from August 9, with one episode updated every day, and members can watch four episodes in advance. From August 19, members can unlock the episodes in sequence at a price of 3 yuan per episode, with one new episode unlocked every day. If consumers participate in the advance on-demand viewing throughout the whole process, they will need to pay an additional 42 yuan in addition to the membership fee.

Tencent Video wrote in its announcement at the time: In response to the advance viewing needs of VIP members, Tencent Video officially upgraded the paid advance on-demand service for VIP members in 2020. On the premise of ensuring that the original content update rhythm of ordinary users and VIP members remains unchanged, VIP paid advance on-demand service will be provided for content with the "advanced on-demand" label.

The so-called "upgraded service" means that Tencent Video will provide paid advance on-demand services in a "more planned and scientific" manner in 2020 after initially testing advance on-demand services in 2019. For dramas that will be available for on-demand services in the future, they will be marked before they go online.

In fact, similar models are not uncommon on major video websites. In 2019, The Untamed launched "advanced on-demand" for the first time a week before its finale, earning billions of dollars in revenue. Since then, many popular dramas have adopted this model. The controversy at the time mainly focused on the fact that "advanced on-demand" cut off the rights of VIP users to watch dramas in advance, and also led to the spread of pirated resources.

In 2019, Wu sued iQiyi to the Beijing Internet Court because he believed that iQiyi's "paid advance on-demand" method for dramas including "Joy of Life" violated his legitimate rights and interests as a gold VIP member. After the trial in June 2020, the Beijing Internet Court ruled that there was nothing wrong with the "advanced on-demand" model itself, but it should not harm the existing rights and interests of members. The "paid advance on-demand" clause updated after Wu purchased the membership service is not effective for Wu.

"When old members purchased membership, iQiyi, Youku, and Tencent Video promised all members a right, which is to 'watch popular dramas first'. In the introduction of this right, members can watch all film and television resources in advance, so iQiyi, Youku, and Tencent Video cannot and should not charge these old members for 'watching film and television resources in advance' again. If they do, they should refund it." Wu Shengwei, a lawyer at Shanghai Zhengce Law Firm and a party to the case, told Beijing Business Daily. Despite the court's judicial recommendation letter, iQiyi still did not refund the corresponding fees, and no relevant administrative penalties were found.

At the end of 2019, iQiyi updated its membership agreement and added a super on-demand clause. The above-mentioned Tencent Video "upgrade service" is similar to this. The new agreement mentions that even if you buy a membership, you cannot watch all the film and television resources in advance, and you need to pay extra for advanced on-demand.

"Advanced on-demand viewing itself is not illegal, but it may constitute a breach of contract for some video website members." Chen Wenming, director of Zhejiang Xiaode Law Firm, told Beijing Business Daily, but as my country's Internet laws and regulations become more and more complete, laws and regulations may be introduced in the future to determine the illegality of this model. "Compliance with the law is the bottom line, and it should not be an advantage that companies use to promote. If a company regards the legal bottom line as the bottom line of the company and ignores user experience and social reputation, then the company will also face the risk of losing the favor and trust of consumers."

Voluntary or money-making?

The previous round of controversy over advanced on-demand viewing was temporarily stopped by the video platform updating its terms. The recent controversy caused by "Sweeping Dark Storm" is more focused on "unlocking episode by episode."

According to Tencent Video's rules, members must unlock episodes one by one when choosing advanced on-demand streaming, meaning that they can only purchase the 16th episode after purchasing 15 episodes. Some netizens think: "If you want to watch advanced on-demand streaming, all episodes will be released at once. There is no difference between paying for each episode and regular streaming. It's too ugly!"

In response, the Shanghai Consumer Protection Committee stated on August 26 that since the fee is charged by episode, consumers have the right to choose the episode they want to watch. The so-called "unlock and watch in sequence" is suspected of bundled sales and ignores consumers' right to choose.

According to Article 9 of the Consumer Rights Protection Law, consumers have the right to choose goods or services independently, and have the right to decide whether to buy or not buy any goods, and accept or not accept any services. Meng Bo, a lawyer at Beijing Jingshi Law Firm, told Beijing Business Daily: "If online video platforms require consumers to pre-order in sequence, it is suspected of being illegal."

After being named, Tencent Video released a "Statement on Optimizing Advanced On-Demand Services" on September 1, stating that in order to improve the user experience, Tencent Video will adjust the unlocking rules as soon as possible to support users to unlock selected episodes. While protecting the rights of consumers, it will allow users to enjoy a more personalized drama-chasing experience.

"Video platforms require charging per episode, purchasing episode by episode, or unlocking episode by episode. Regardless of whether consumers need it or not, they must purchase in order to achieve advanced on-demand viewing. This undermines consumers' right to choose independently and goes against their true wishes. Recently, the Shanghai Consumer Council made clear criticisms of the issue of video platforms restricting the unlocking of episodes for advanced on-demand viewing. Two platforms have promised to make improvements, support unlocking selected episodes, and improve user experience. However, some video platforms still turn a deaf ear to it. Under the guise of protecting users' viewing experience, they ignore consumers' voices and damage their legitimate rights and interests." The China Consumers Association said in the article.

Does this mean that in a model where episodes can be unlocked individually, "advanced on-demand" is reasonable? Chen Wenming believes that the reason why the China Consumers Association said that "episode-by-episode purchase" is unreasonable is not because the model is illegal, but because the model infringes on consumers' right to choose independently and violates their true wishes, causing many consumers to express doubts and dissatisfaction with it. Even if the requirement of "episode-by-episode purchase" is cancelled, "advanced on-demand" itself still infringes on the existing rights of ordinary consumers and members. Consumers have the right to express doubts and dissatisfaction with the model itself, and the model may still be deemed unreasonable.

Industrial balance remains difficult to resolve

Although some platforms have made adjustments in response to the questions raised by the China Consumers Association, video websites such as Tencent Video and iQiyi have not responded to the association’s statement on September 9.

According to public data, membership and advertising are the main sources of revenue for video websites. Taking iQiyi as an example, in the second quarter of 2021, iQiyi's total revenue was 7.6 billion yuan, of which membership service revenue was 4 billion yuan, online advertising service revenue was 1.8 billion yuan, and the number of subscription members was 106.2 million.

In fact, the reason why netizens are willing to pay to watch movies is not only because VIPs enjoy priority viewing rights, but also because of everyone's support for genuine movies. Netizens are more willing to spend money to become VIPs, support genuine movies, and enjoy high-quality audio-visual experience.

According to statistics, 30% of online dramas and 59% of online first-run TV dramas achieved "advanced on-demand viewing" in 2020. In the survey, viewers who spent a total of 10-50 yuan accounted for 30%. Audiences are also willing to spend money when watching online variety shows. In 2020, a total of 229 online variety shows were launched, of which 60% were multi-version and derivative programs that were only available to members for paid viewing, reaching 137.

However, losses have always been an industry problem for online video. "In recent years, the advertising market has been highly competitive, and the scale of video membership has been high. On the one hand, online video needs to continue to invest in good content, and on the other hand, it also faces revenue pressure. In this context, various companies have accelerated their exploration of membership service tiers, which tests the ability of companies to balance user experience and commercial interests," said Li Jinqing, an analyst at Bida.