iQiyi to do Netflix Plus mode Gong Yu said not to pursue short-term returns and profits

On March 29th, iQiyi was listed on NASDAQ. Earlier today, Yiqiyi founder and CEO Gong Yu accepted a series of media interviews.

In the interview, Gong Yu said that iQiyi does not pursue short-term returns and profits, which is more in line with the interests of iQiyi and shareholders:

In the whole industry of video entertainment, although some detours have been taken, the development of the whole industry is very positive. Iqiyi will surely be able to walk away. In fact, it has proved that we have reached the middle. This kind of opportunity gives Iqiyi more desire to invest in exchange for more room for development in the future. Therefore, under such conditions, we are more committed and continually investing, rather than pursuing short-term returns and profits, more in line with the interests of iQiyi and iQiyi shareholders, and more able to realize iQiyi as a technology-driven Entertainment companies must achieve their vision of their vision.

In the past 8 years, brand advertising and membership payment have been the two driving forces for the growth of iQiyi. Gong Yu said that his confidence in the profitability of iQiyi comes from three major drivers: brand advertising, membership payment and information flow advertising. "Because the first three drivers have laid the foundation for the development of the next five to eight years, so Iqiyi can look for the fourth or fifth driving force more calmly."

Gong Yu pointed out that international investors are very concerned about China's online video industry. Regarding whether iQiyi expands its overseas business, Gong Yu said that in the short term, it is still in the stage of planning and trial. The business model is significantly different from Netflix:

For iQiyi, because the Chinese market is big enough, we want to make the business model more abundant in China's main market. Our business model is the “one fish eat more” model, or the Netflix Plus model. Netflix is ​​the business model of preferred content + subscription revenue. For Iqiyi, this is the foundation. At the same time, for content, Iqiyi will establish an ecosystem to pass literature, comics, light novels, online games, shopping malls, etc. IP is connected in series to form "one fish eats more". That is to invest a dollar to make content, expressed in different forms of literary works. Through various advertising modes such as advertising, charging, rewarding, paid reading, and derivative authorization, we will monetize a market, thoroughly understand a market, and fully exploit its monetization ability.

Talking about the relationship with Baidu, Gong Yu said that Baidu is the biggest shareholder of iQiyi, and the probability of conflict is very small, but it does not rule out inconsistencies in some technical details:

Baidu is the largest shareholder of iQiyi, and according to the shareholding structure, Baidu has a higher proportion of voting rights. Most of the benefits are completely consistent, so the probability of conflict is very small. However, it does not rule out that there are inconsistencies in some technical details. However, the inconsistency of the model is on the pure business level. It seems that I have no impression of an 8-year history and it is inconsistent. Changing the direction of the business, emphasizing self-control, and transforming too much business, Robin Li Yanhong believes in my judgment and believes in the execution of the team.

In terms of equity, this is a market-oriented mechanism with very regular rules. Everyone follows the rules in accordance with the spirit of the contract and rationally analyzes them. I don't remember that there are serious conflicts now, and maybe more business rationality. Analysis and decision making.

He also revealed that in history, Baidu has supported iQiyi in terms of business and resources. Over 7 years ago, more than 85% of iQiyi’s daily traffic peak was provided by Baidu, but now with the iQiyi Ecology Big enough, Baidu's contribution has been less prominent. Now including the future, the synergy between iQiyi and Baidu is very obvious.

On the day before Iqiyi landed on US stocks (March 28), the same video site for domestic video sites (B station) was also listed on NASDAQ, but the stock price broke on the same day. Gong Yu said that he did not pay attention to the fact that China Stocks recently concentrated on US stocks. From the characteristics of the industry to the scale of the company's development, the United States capital market has been particularly different at this time. In terms of stock price, for Iqiyi, what I want to make is the long-term and own value.

Attachment: Gong Yu online question and answer

Q: There is pressure on all video websites. What is your confidence in the future profitability of iQiyi?

Gong Yu: In terms of profitability, China's online video industry is quite special. In fact, we look at the Chinese entertainment industry. Because the online video industry is positioned as an entertainment company, the biggest piece of video is entertainment, so we have to analyze Look at the entertainment industry. In fact, we review China's retail industry, online and offline retail industry, we have seen very clearly in the past decade or so, the online retail industry is developing very rapidly, far beyond the economically developed regions or countries. An important reason is that the offline retail industry is not mature enough, not strong enough, and there is a lot of room to develop, which gives the online retail industry. For the same principle of the entertainment industry, China's offline entertainment industry is in a preliminary stage of development, not only rapid development, but also left a lot of space, giving people more imagination and development space. Driven by Internet technology, the entertainment industry's development space has been expanded, like catalysts, to make it develop more rapidly. As the most important industry in the online entertainment industry, the online video industry is very easy to seize this opportunity. This opportunity is not only big but also numerous. The usual economic law, a big opportunity, and a multi- chance, require more up-front investment. Therefore, in terms of the entire industry, although some detours have been taken, some enterprises have not reached the final point, but the development of the entire industry is very positive. Excellent companies like iQiyi will surely be able to walk away. In fact, we have proved that we are leaving. In the middle of the journey. This kind of opportunity gives Iqiyi more desire to invest in exchange for more room for development in the future. Therefore, under such conditions, we are more committed and continually investing, rather than pursuing short-term returns and profits, more in line with the interests of iQiyi and iQiyi shareholders, and more able to realize iQiyi as a technology-driven Entertainment companies must achieve their vision of their vision.

Q: In the current income structure of iQiyi, members and advertisements are the two most important ones. What do you think about the future growth of these two parts of income and other income sectors?

Gong Yu: You gave me a chance to share the income structure of iQiyi with you. In fact, Iqiyi has a history of 8 years. There are two driving forces. One is brand advertising. This is basically the industry that can correspond to traditional TV. Advertising, in addition to the industry's own rapid development, objectively also got some cakes from the TV brand advertising industry. For iQiyi, it has developed for 8 years. For the whole industry, it has been developed for more than ten years. This is a mature industry. According to the third-party data, this industry now accounts for about 30% of the total video advertising market. It will grow to more than 60% in five years. This is a development space with rapid growth and a very large base. We will continue to spare no effort to invest in this area and gain more market space. From the perspective of another development direction, iQiyi has taken the lead in paying users in the industry in 2011, and it is a monthly user. Although the user base is small and slow to develop during the years from 2011 to 2015, It was our first attempt to eat crabs that made the market grow explosively after 2015, and we got the biggest cake. In the next five years, this cake will be seen from the business model, Netflix, a very successful business model. From the perspective of development space, the annual growth rate, compound growth rate, and annual average will always be greater than 35% in the next five years. Even more than 40%, such a large base has continued to grow at such a high speed for more than five years. It is a very good temptation for us, and we are more willing to invest in this aspect. The first point and the second point, the past time has been many years, but in the next five years, there is no problem at all, driving Aiqiyi to continue to grow at a high speed. Later, some new opportunities will be born, such as information flow advertisements. For iQiyi, we now have hotspots, tabs, and the second big column is a short video stream. We have iQiyi Na, it is An independent information stream product, also has the social product iQiyi bubble, which is a social product based on the feed stream fans paying attention to the star and paying attention to the content he likes. The social product is now in the off-season, 45 million DAU, high season At the time of more than 60 million DAU, everyone is very clear about the DAU situation in China's SNS market, and definitely ranked first. These have laid a particularly good foundation for the third driving force of information flow advertising, and have played a greater role in promoting the development of the future, five years or even eight years. We are looking for the fourth or even the fifth driving force, because the first three driving forces, the development of the next five years or even eight years has laid the foundation, so look for the fourth or fifth, for the iQiyi More calm. Now maybe it's a new business we started up, such as reading, live broadcasting, games, etc. Maybe we are not doing it yet. We have not found a business that can grow explosively in the next two years. In short, from the long-term and future of the past. Looking forward, for Aiqiyi, it is definitely not a short-term, we have to be a century-old store, we must turn our own planning into a wave of non-stop and have a strong driving force, let us go for a long time. Go on.

Q: How do you personally interact with Robin (Li Yanhong)? If you are in conflict with Baidu’s interests, how do you convince Robin and how to win more benefits for iQiyi?

Gong Yu: Actually, I represent the interests of the management team and shareholders of iQiyi. Baidu is the largest shareholder of iQiyi, and according to the shareholding structure, Baidu has a higher proportion of voting rights. Among the shareholders of iQiyi, the biggest shareholder is Baidu. I represent the management team and protect the interests of shareholders. Therefore, most of the interests are completely consistent, so the probability of conflict is very small. However, it does not rule out that there are inconsistencies in some technical details. However, the inconsistency of the model is on the pure business level. It seems that I have no impression of an inconsistency in the history of 8 years. I change the direction of the business, emphasize self-control, and transform too much business. Robin is more confident in my judgment and believes in the execution of my team. In terms of equity, this is a market-oriented mechanism with very regular rules. Everyone follows the rules in accordance with the spirit of the contract and analyzes rationally. I don't remember that there are serious conflicts now. It may be more of a business. Rational analysis and decision making.

Q: Regarding the future of iQiyi, is the target of Disney? If so, when do you think this can be achieved?

Gong Yu: I am exactly 50 this year. I am over half a hundred years old. It is an important period. If I follow the Chinese labor law and still have 10 years of work, I hope that within 10 years, I can build a blueprint framework. It can be realized that it is not Disney. Disney's basic business model establishes an online entertainment kingdom in China, but this entertainment kingdom has a lot of similarities with Disney from the basic business model and logic, but because it is in the Internet world because In the Chinese environment, so it has more special points, we need to innovate together, to do things that many predecessors did not do.

Q: Iqiyi has now landed in the international capital market. Do you have any plans to expand the vision of foreign markets in the next step, how do you operate it?

Gong Yu: We are still in a short-term planning stage. We are different from Netflix's huge business model. Netflix is ​​a very simple and focused business model to replicate in all regions of the world. For iQiyi Because the Chinese market is big enough, we would like to make our business model more abundant in China's major markets. Our business model is the business model of “One Fish Eats More” or we are on the road show. In the process of introducing to investors, we call Netflix Plus mode, which means that Netflix is ​​a simple and focused business model with preferred content + subscription revenue. For iQiyi, this is a foundation, and for In terms of content, we have more types of content, through advertising revenue, including brand advertising revenue, including information flow advertising revenue and so on. At the same time, an ecosystem is established to connect literature and comics, light novels, online games, shopping malls, etc. through IP, to connect these services and content together to form a “one fish to eat”, that is, to invest a dollar. Make content and express it in different forms of literary works. We use a variety of business models such as advertising, fees, rewards, paid reading, and derivative licenses to monetize, to thoroughly understand a market, and to fully exploit its monetization capabilities. We are such a business model.

Q: There are still a lot of media in the West who have labeled iQiyi as China's Netflix. Now the market value of Netflix has exceeded 100 billion. What are your expectations for the stock price after Iqiyi's listing?

Gong Yu: My expectation, from the short-term, medium-term and long-term, steady growth, this is a strategy that we are very clear from a technical point of view and a vision perspective. Of course, this has an objective environmental impact. The impact of our own performance, our own performance, we are very confident, in accordance with our plan, according to the time nodes and goals, very clear step by step to achieve. You just mentioned Netflix. Netflix has been very impressed by investors in the online entertainment industry in recent years. They think this is a very good business model and a very good company. As a very good benchmark, most of them have benchmarked iQiyi against him. The basic business logic of investment is correct, but they also know that for the Chinese environment, iQiyi is a business model. More mature and more advanced, so they are also very much looking forward to iQiyi to gain more market share in the next few years, and to make their performance even better. From a technical point of view, there are also many investors who talk to me. At present, China's environment and Western investors are unfamiliar with China's business model, especially the iQiyi business model, and the value of iQiyi is also underestimated to some extent. But I don't think this is important. The most important thing is that we look at the longer-term, let us get more attention in the future and everyone's recognition of the value of iQiyi.

(Editor: Zhang Yang HN080)

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