On September 25, the 2024 iQIYI iJOY Autumn Enjoyment Conference was held in Shanghai. At the meeting, Gong Yu, founder and CEO of iQIYI, shared the new changes in the industry and iQIYI's coping strategies from the three levels of "changes in the long and short", "changes in AI" and "changes in land dramas".
In the face of the rise of the micro-short drama market, Gong Yu said that today iQIYI has launched a short theater and a micro-theater, and the micro-short dramas in the two theaters are exclusive to iQIYI members, and there is no need to pay a la carte. Regarding the changes in artificial intelligence, Gong Yu said that in the future, machines will be able to deeply understand users and content, forming a strong interaction between humans and machines. In the future, iQIYI will launch the AI intelligent assistant Taodou 2.0, which may allow users to realize "what you think is what you get". Finally, looking at the global market, Gong Yu believes that as mainland dramas continue to heat up in overseas markets, the value of mainland cultural content output in marketing has increased significantly, and it is worth content creators to focus on creating content for overseas markets.
The following is a transcript of the speech:
The theme of my speech today is change, "everything flows, nothing stays", which means that the market will never change what changes. Time is limited, so I will talk about only three changes.
Embrace the change of long and short: open short theater and micro theater exclusive to VIP members
First, the change of length. In 2010, iQiyi was launched, and the representative of short videos was launched the following year. According to the data of the State Administration of Radio and Television, the average number of episodes of TV dramas that obtained distribution licenses in 2012 was 35 episodes, each episode was 45 minutes. In 2015, iQIYI's first large-investment web series "Notes on Tomb Robbery" was launched, with a total of 12 episodes. This is the first paid drama series in China, laying the foundation for a fee-based business model. More importantly, in an environment where the number of TV episodes at the time averaged more than 40 episodes each, short series appeared and were successful. In 2016, the average number of TV series reached its peak of 44.6 episodes, and Douyin was born in this year. In 2017, the average number of TV drama episodes dropped to 42.9 episodes, and iQIYI proposed a large-scale focus on investing in 12 episodes of online dramas.
In 2020, the average number of TV series episodes will further drop to 36.9 episodes, and iQIYI's first short drama theater and the industry's first short drama theater "Fog Theater" was born. In the same year, various short dramas and micro-short dramas within 1 minute to 20 minutes were launched, but the business model was not very clear. In 2021, the average number of TV drama episodes will continue to drop to 34.6 episodes, and short dramas will start to charge, about 1 yuan per episode. In 2023, the average number of TV series episodes has dropped to 29.7 episodes. The market size of paid micro-short dramas has risen to more than 30 billion yuan. The market size increased by 268% year-on-year, which is an explosive growth.
This year, the business model of micro-short dramas has changed a lot, and the pay-per-episode micro-short dramas have become membership content. iQIYI has just launched two theaters that are very important to members today: short theater and micro theater. I would like to make three important points about these two theaters:
First, iQIYI's short dramas are not equal to short-cut low-cost online dramas, and micro-dramas are not equal to low-quality paid micro-dramas. But what exactly it is requires the whole industry to explore and innovate. iQIYI did this not early, one reason is that I haven't thought about it clearly, but we have basically figured it out now.
Second, the business model of micro-short dramas is changing. The market size of micro-short dramas has shown negative growth this year compared with last year, due to various reasons, and I will not do an analysis, but more than 90% of the revenue of micro-short dramas is used for streaming and effect advertising, which is a very "wonderful" business model.
Third, what should we do? iQIYI's current business model is that more than 70% of the revenue is distributed to content producers, and members are exclusive to them. Now the business model of micro-short dramas is to pay for episodes or multiple episodes, and the price has been declining this year, but it costs 30-100 yuan to watch a drama. And iQIYI's continuous monthly gold membership is 25 yuan/month, and the price of the annual card is lower if it is discounted. The price trend of micro-short dramas will have to fall in the future, so instead of falling naturally, why not enjoy it exclusively for members? So the business model has changed.
iQIYI has just started to do it, and there are not many micro-short dramas on the line at present, and better, more innovative, and more valuable micro-short dramas will definitely be born in the future.
Adapting to the changes of AI: Taodou 2.0, the "what you think is what you get" AI intelligent assistant will be launched
Second, the change of artificial intelligence. AI has a history of more than 70 years, and in the first few decades, it was more of an algorithm technology in the laboratory, and in 1998, when China began to have Internet media, there was also a so-called personalized content distribution, which was an algorithm plus a semi-manual method. In 2017, AI "small models" were produced for personalized content distribution, and machines can distribute everyone's favorite content according to their personal preferences, but behind it is still the intelligence of human intervention.
At the end of 2022, ChatGPT was born, and we realized that the world was about to change dramatically. Now that AI has been applied on a large scale in the industry, it can better understand the intent of creators when it comes to content creation. For iQIYI, if iQIYI does not have the support of AI and large language models, it is like a power outage and a network outage, and AI penetrates and changes too quickly in every work link.
In addition to the industry, what is the impact of AI on users?
I'll now preview the application of iQIYI, the large language model uses agents, and the machine deeply understands the user and the content, forming a strong interaction between humans and machines. This smart assistant is called Taodou 2.0, and the purpose is to achieve "what you think is what you get". "What you think is what you get" is a bit difficult, but it's interesting and worth pursuing forever. Everyone opens the iQiyi App, and there is a peach bean on the discovery page, which can talk to the characters of the current hit dramas and movies, and it has learned the way the characters in this drama or movie speak, logical, and language.
PeachBean 2.0 is not only a virtual character, but more importantly, it is like an assistant who knows you very well, and can even know your choice of content based on your mood changes. It's hard to say when Peach Bean 2.0 will be launched, and there are still some technical uncertainties.
Promote the change of land dramas: provide high-quality land drama content, supplemented by overseas local self-production
Third, the change of land drama. The search trend of land dramas among Google's global users is constantly increasing, and recently surpassed Korean dramas. In the Southeast Asian market, iQIYI's business model is called Freemium (freemium), with paid content and free content. Limited to this business model, according to the data of the first quarter of AMPD2024, between Q3 of 2022 and Q1 of 2024, the highest search volume is Korean dramas, and the second is land dramas, and the market share of land dramas in Q1 2024 has risen to the first.
Although Google search can't cover everything, it is representative, and the cultural content we do for land dramas has achieved great success overseas. Therefore, I would like to express two points here: first, the value of mainland cultural content output has been significantly improved in terms of marketing; Second, content creators should start investing in and focus on making content for overseas markets.
These three changes are shared with you, thank you!
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