Recently, Qu Toutiao is gaining momentum in the capital market.
In the US stock market last Thursday, Qu Toutiao opened up more than 30%. As of the close, the share price of Qu Toutiao rose 61.34% to $4.34.
The stock price has soared because of an internal letter from Qu Toutiao in early January, which stated that Qu Toutiao achieved an operating profit of tens of millions of RMB in the fourth quarter for the first time. This is the fact that Qu Toutiao has been listed since its establishment. Since then, the first quarter has achieved profitability.
Under the uncertain environment of the entire advertising industry in 2020, Qu Toutiao performed well, with a cumulative increase of over 180% so far this year. The internal letter also revealed that regardless of MiRead's continued investment, the total operating profit of the company's other businesses in the fourth quarter exceeded RMB 100 million.
So, what did Qutoutiao get right? While competition in the content industry is intensifying, how should Qutoutiao defend its hard-won first profit?
"MiReading" complements the long content ecology, but it is still difficult
At the time when the Chinese digital reading market is booming, Qu Toutiao has launched Mi Duo novels, adopting "free reading + advertising", and Mi Duo novels have quickly become popular online.
In the construction of content ecology, MiRead has contributed to it, and it can be regarded as one of the most successful products incubated by QuToutiao. According to the latest financial report, in the third quarter, Qutoutiao’s other income was 67.25 million yuan, an increase of 166% from 25.29 million yuan in the same period last year. The increase in this revenue was mainly due to the small increase in live broadcast revenue, Midu membership services and online game revenue.
The rapid development of Mi Duo is inseparable from the strong support of Qu Toutiao. This is mainly reflected in Qu Toutiao's support for the realization of author content. The financial report shows that the number of original contract authors on the platform continues to grow rapidly. Up to now, there are more than 100 original authors with monthly income of more than 10,000 yuan. The monthly income of head authors is nearly 500,000 yuan, and the monthly contribution of platform authors exceeds 5 million yuan.
Supporting excellent authors also enhances the appeal of their content. According to data from Questmobile, as of Q2, the average monthly user time of MiRead exceeded 700 minutes, which was twice the second place.
It is worth mentioning that MiRead has developed a new mode of IP incubation for web texts. Midu started to incubate the short drama IP model during the book update stage, incubating popular novels on the platform into short drama IP, and broadcast it exclusively on Kuaishou. This greatly solves the pain points of long net text IP realization cycle and high investment.
This strategic alliance between Midu and Kuaishou produced good results. At present, Midu's short plays in Kuaishou cover various themes such as urban, sweet pet, ancient style, and the Republic of China. From the data point of view, the total number of fans of MiRead's short drama account in Kuaishou has exceeded 10 million, the total number of broadcasts on the entire network has exceeded 1.4 billion, the maximum number of single episodes has exceeded 50 million, and the average number of episodes has reached 5 million.
With high-quality content, MiRead has launched a pay-per-view service. In the category of original short dramas premiered on Kuaishou, most of the works have already opened pay-per-view services. The original work "The Fake Wife" has paid more than 10,000 people in 24 hours. Up to now, the show has nearly 30,000 paid people, and the potential for payment is not small.
In addition, MiRead also began to refine operations on vertical content. Midu has built an internal community content system to pave the way for its own commercial realization. This forward-looking vision will bring more possibilities to Midu's future commercialization.
According to data from iiMedia Consulting, the market size of China's digital reading industry will reach 37.21 billion yuan in 2020, and it is expected that China's digital reading market will reach 41.60 billion yuan in 2021. But the author thinks that Midu is far from complacent .
(1) On the point of payment, the author thinks a bit hastily. In the digital reading market, with the cooperation between PalmRead Technology and ByteDance, digital reading has entered the stage of the giant game. Giants are constantly sniffing the entry, and the free reading mode has become an important way to raise the ceiling of the industry.
And Midu is now obsessed with paying, and it is easy to miss the bonus period for user growth. Contrary to the prevailing trend, Mi Du easily digs his own grave. MiRead should maintain and expand the original core paying users, strengthen the layout of copyright derivative business, and continue to capture the digital reading market with free cards.
(2) The rapid development of Midu relies heavily on explosive content. At present, Midu Novels has launched the popular IPs of "The Bride of the River God", "The Girl Wearing a Book", and "A Concubine", but Midu must be clear that the popular content is not common and requires a team to carefully polish it. Midu keeps trying and exploring, and the emergence of explosive models is closely related to the professionalism and innovation of the team. And in terms of the quantity and quality of IP, MiRead is far inferior to the established Reading Group and PalmReader.
However, short drama series have great potential. With the increasing willingness of users to pay in the future, IP short dramas will also release commercial value different from the content of previous long series in the pay-per-view mode. Need to keep exploring.
The sinking of the market as the main advertising business of Qutoutiao has strong risks
The reason why MiRead is successful is that MiRead has captured the content needs of low-tier consumers. In fact, the entire Qutoutiao seems to have grown in the sinking market.
With the model of "watching news to make money + accepting apprentices", Qu Toutiao has captured a large number of users in the sinking market. In order to quickly attract and open the sinking market, Qu Toutiao has always been low-profile in content, and even focuses on "Black Five" in advertising.
Since Qu Toutiao went online, its ads have been floating in the gray area. On July 16 this year, CCTV’s 315 party exposed a large number of false advertisements on the Qutoutiao App, even involving illegal gambling advertisements. After that, Qu Toutiao was removed from the domestic Android app store, which directly led to a sharp decline in Qu Toutiao’s advertising business.
According to the financial report, Qutoutiao’s advertising and market revenue in the third quarter was 1.063 billion yuan, a 23% drop from 1.382 billion yuan in the same period last year, and a 23% drop from 1.378 billion yuan in the previous quarter.
Advertising and market revenue are the main sources of income for Qutoutiao, contributing over 90% of the revenue. The shrinking advertising revenue has also caused serious losses for Qu Toutiao. The financial report shows that Qu Toutiao's net loss in the third quarter was 269 million yuan, compared with a net loss of 888 million yuan in the same period last year.
This shows that Qutoutiao's income is very unstable. Once the advertising business decreases, Qutoutiao's operating income is at stake.
The more deadly point is that interesting headlines, which are deeply ploughing the sinking market, are less attractive to the sinking crowd. According to the financial report, Qutoutiao’s monthly active users (MAU) in the third quarter of 2020 were 120.5 million, a sharp drop of 16 million from 136.5 million in the second quarter. At the same time, Qutoutiao’s daily active users also showed a downward trend, with 39.7 million daily active users (DAU) in the third quarter, a decrease of 3.3 million from 43 million in the previous quarter.
Monthly active users and daily active users both dropped sharply. In fact, there are two main reasons for this phenomenon.
(1) The participation of the sinking market giants. When user traffic growth in first- and second-tier cities peaks, users in lower-tier cities have become a battleground for Internet giants. The sinking market has huge potential. Giants hope to attract and retain users in lower-tier cities through low prices and subsidy strategies.
Therefore, the giants have gathered to sink the market, and welfare is flying all over the sky. "Online earning mode" is no longer the patent of Qutoutiao. Take the online literature market as an example, "Seven Cats Free Novels" and "Tomato Free Novels" all have subsidy policies for users, and gradually sink market users who are price-sensitive After being divided, the uniqueness of Qu Toutiao is weakening.
(2) Qutoutiao's marketing expenses have been reduced and user subsidies have weakened. The financial report shows that in the third quarter of this year, Qutoutiao’s marketing expenses have been reduced by 53.3%, from 1.503 billion yuan in the same period last year to 704 million yuan.
At the same time as marketing expenditures have been reduced, Qutoutiao’s user participation subsidies have been further compressed. According to the financial report, Qutoutiao’s user participation fees in the third quarter were 265 million yuan, a 51% decrease from 536 million yuan in the same period last year, and a 42% decrease from 457 million yuan in the previous quarter.
Qutoutiao’s reduction in user participation subsidies has directly led to the loss of users and the reduction of usage time. Users are gradually fleeing from Qutoutiao. This is very dangerous for Qutoutiao, which is sinking the market for a living, but for Qutoutiao, which has just embarked on a profitable road, the future is still full of hope.
Profit is at hand How to maintain long-term attractiveness for interesting headlines?
Since its listing, there has been much concern about when Qu Toutiao can crack the "loss curse". Unexpectedly, it was completed in the "turbulent" 2020.
In fact, a comprehensive analysis of Qutoutiao’s financial data in recent quarters shows that Qutoutiao’s losses have continued to narrow for four consecutive quarters, and profits are actually in sight.
So what did Qutoutiao get right? What should we insist on?
(1) Consider both long and short content to improve the content ecology
In an environment where Internet traffic dividends are almost divided up, Qutoutiao's growth pressure is even greater. In an era where content is king, only good content can attract more users, and only more users can attract advertisers.
High-quality platform content can effectively expand the user scale, while striving for a lower churn rate, and can also increase the duration. After all, the more attractive the product, the longer the user stays.
Qutoutiao's long and short content are both focused. After a breakthrough in the long content represented by Mireading, Qutoutiao has increased the construction of short content. This can greatly increase Qutoutiao’s advertising revenue capabilities.
(2) Adjust the organizational structure and business matrix to reduce communication costs
In order to concentrate, Qu Toutiao also adjusted its internal organizational structure. Its Qutoutiao merged with short videos and small videos to focus on short content fields. The game is independent, focusing on the breakthrough of interactive content and forward payment. This is the third structural adjustment of Qu Toutiao since its establishment.
After the reorganization, the front desk will be composed of business units such as short content, rice reading, and games. The middle desk will be composed of four parts: advertising and growth, technology, algorithms, and data. The large back-end structure will remain unchanged.
Doing so will greatly reduce the internal communication cost of Qu Toutiao, enhance the scale effect, and increase future imagination.
(3) Vertical refined operation to achieve cost reduction and efficiency increase
In order to increase the proportion of high-quality content, Qu Toutiao has also begun to refine operations on existing vertical categories.
As the core product of the Qutoutiao company, the Qutoutiao APP focuses on life entertainment and knowledge information, and continues to maintain its advantages in the special fields of square dance, film and television, agriculture, rural areas, emotions, and stories. At the same time, the proportion of high-quality content is constantly increasing.
In order to help creators transform from extensive operation to refined operation, Qu Toutiao also launched the Qu Xuetang big V training camp, and launched a small video quantity-preserving tool to support the head KOL and help platform creators to realize their profits. This is currently Qutoutiao's feasible plan to reduce costs and increase efficiency and achieve profitability goals.
Right now, the objective challenge that Qutoutiao faces is : First, in addition to Midu and Qutoutiao apps, it has not yet been able to establish a number of business growth points parallel to Qutoutiao App.
Second, the company's cash flow has dropped significantly . The financial report shows that as of the third quarter of 2020, the company's cash, cash equivalents, restricted cash and short-term investments were 514.2 million yuan, while as of the fourth quarter of 2019, it was 1.652.5 billion, a decrease of 1.138.3 billion yuan.
The first profit is indeed worth cheering, but long-term development is the goal of the company. How to seek growth on the basis of stabilizing the market business is the key to the company's upward trend in the future. Only by establishing a complete ecological business matrix and strong commercial liquidity can Qutoutiao gain a place in the increasingly competitive Internet content market.
Author: rather lack
Article source: Songguo Finance, please indicate the copyright for reprinting.