Results Wrap: The Coronavirus Boost to Streaming, by the Numbers
Plus: An online drama drought, the new definition of sexy, and our Report Corner.
The impact of the coronavirus on Chinese streaming has become clearer over the past week with the release of quarterly results from major platforms. While profitability remains a challenge for most, and advertisers remain cautious, users have shown a continued willingness to spend on content.
Bilibili’s (NASDAQ: BILI) strong community focus proved to be hugely appealing during the challenging lockdown period, and its expansion into more diversified content streams has brought it a larger audience.
Monthly active users surged to 172 million in the first quarter, an increase of more than 40 million from the last quarter of 2019 (and up 70% year-on-year), while premium paid subscribers rose from 8.8 million at the end of 2019 to 13.4 million. Its 50.8 million daily users spent an average of 87 minutes per day on Bilibili — the highest level the platform has seen in its history, according to Chief Financial Officer Xin Fan.
Reaching other all-time highs, revenues exceeded forecasts at RMB 2.3 billion ($327 million), while its net loss of RMB 538.6 million ($76.1 million) was up 160% year-on-year as marketing expenses tripled. Yet the company expects to sustain the recent levels of user interest. “We believe the pandemic only helped us to accelerate our user growth process, but it will not change or become a main factor of how our users grow,” said CEO Rui Chen. “So we're still quite confident that in the second and third quarter, we'll still see [a] relatively decent rate of user growth.”
Unlike its bigger rivals, Bilibili is less dependent on the types of traditional, larger-scale productions that were halted during the epidemic — instead, much of its appeal comes from its army of independent, professional creators that can turn around new content far more quickly.
After seeing paid subscriber growth slow in the second half of 2019, iQiyi (NASDAQ: IQ) added 12 million during the first quarter, for a total of 118.9 million. Subscription revenues were up 35% year-on-year thanks to the increasing demand for higher quality entertainment brought about by the epidemic.
“Overall, the corona outbreak resulted in the wide adoption of shelter-in-place and accelerated the evolution of users' entertainment behavior and paying habit,” said CEO Yu Gong, though he noted that retention efforts could be “adversely impacted” by delays affecting new content such as theatrical films and Japanese animated series.
While iQiyi’s overall revenues were up 9% year-on-year, to RMB 7.6 billion, advertising service revenue took a big hit in the first quarter, falling 27% to RMB 1.5 billion, and the expectation is that recovery will be delayed as some of the platform’s popular reality programming is pushed back to later in the year. The company also saw a steep year-on-year increase in net losses at RMB 2.9 billion ($406 million), compared to RMB 1.8 billion last year.
Tencent Video did not see as big of a quarterly bump in paid subscriptions as iQiyi, adding approximately 6 million subscribers for a total of 112 million (up 26% year-on-year). Media advertising was down 10% year-on-year, at RMB 3.1 billion, which Chief Strategy Officer James Mitchell attributed to budget cuts from advertisers, delays in production and broadcast of sponsor-dependent reality shows, and the ongoing suspension of NBA games from Tencent Video’s schedule.
Mitchell also noted that while advertising revenue from Chinese firms had been resilient, multinational brands — which account for half of the revenues for longer-form video content — have pulled back on their spending more sharply: “To some extent, what they're seeing in the rest of the world affects how willing they are to spend money in every country, including in China.” Still, parent Tencent Holdings (SEHK: 0700) posted strong results for the quarter, beating expectations with net profits of RMB 28.9 billion ($4.08 billion), up 6% year-on-year. Revenues were up 26% to RMB 108.1 billion, thanks to strong growth in online gaming (up 31%) and overall advertising (up 32%).
Interested in learning more about streaming platforms like iQiyi, Tencent Video, and Bilibili? Don’t miss out on our Guide to Streaming Platforms in China, which will remain free for CCI subscribers through May 27!
Mentioned in today’s newsletter: Beike, Burberry, iQiyi, Kuaishou, Lancôme, Libresse, Pepsi, Tencent, Victoria’s Secret, VIPshop, Youku.
April Was a Cruel Month for Online Dramas
While interest from brands in sponsoring Chinese reality shows has fallen somewhat, it appears to have dropped off a cliff for scripted programming in April, according to the latest monthly report from Starlink.
Six new dramas premiered on television networks in April, while 22 were released on streaming platforms, but only two secured brand participation: The twelve-episode online series “If There Is No Tomorrow” (我是余欢水), which aired on iQiyi, Youku, and Tencent Video, and Dragon TV’s international economic crime series “Hunting” (猎狐), which also aired on the three major streaming platforms.
Seven domestic brands appeared on “Hunting,” mostly in the food and beverage category (along with e-commerce platform VIPshop), while five Chinese brands appeared on “If There Is No Tomorrow,” including real estate app Beike, which had its functions prominently featured in scenes in which the lead character showed its use to pay his rent.
Meanwhile, online movies have been gaining more attention due to the ongoing closures of theaters across the country, but their overall quality remains poor, and their ability to generate revenue, while improving, isn’t anywhere near box-office levels. In April, three online films hit revenues of more than RMB 10 million each, with the fantasy-action flick “Qi Men Dun Jia” (奇门遁甲) setting a record by bringing in a combined RMB 53 million ($7.5 million) in 43 days for iQiyi and Tencent Video. (The previous record for reaching RMB 50 million was held by 2018’s “Snake” (大蛇), which took 88 days.)
iQiyi has been the leader in online movies thus far this year, with 16 films that exceeded the RMB 10 million mark as of April 30. Tencent Video and Youku have each released five films that hit the RMB 10 million mark, although Youku lags on average revenue per release.
Fewer online films are being released as platforms try to emphasize quality over quantity. iQiyi released 136 films through May 10 of this year, compared to 192 in the same period last year, and that’s a far cry from the 759 movies it released in the first half of 2016, before new regulations shut down much of the production bubble.
The ongoing theater closures are expected to shift studio attention to producing for smaller screens, which should yield higher quality productions. Traditional video streamers will also be under pressure to up their content game thanks to increasing competition from short video platforms, with Bytedance’s Xigua Video and Kuaishou getting into film distribution with exclusive offerings of theater-caliber productions.
Brand Film Pick: The Celebrity Redefining Sexy, Solo Drinking, and Periods for Chinese Women
The critically acclaimed actress Zhou Dongyu has become one of China’s most commercially valuable celebrities since her performance in last year’s “Better Days” (少年的你), which took top honors for best picture and actress at the recent Hong Kong Film Awards.
Zhou has been tapped by a range of brands including Burberry, Lancôme, and Pepsi, and last month she was named as a surprise spokesperson for Victoria’s Secret in China, despite not fitting the stereotype of the typical lingerie model. Recently Zhou has appeared in a pair of other campaigns that highlight her ability to serve as a new sort of role model for young Chinese women and aspirational femininity:
In a new minute-long video for Libresse, the Swedish menstrual pad brand, Zhou takes on the stigma and taboos surrounding periods amid cinematic shots of blood and other pops of red, stating frankly that the average woman will have more than 400 menstrual cycles during her lifetime: “These days shouldn’t just be crossed out on the calendar, they are important dates in our lives that should be highlighted with red markers.” She concludes with a call for women to stop hiding their periods, which corresponds to Libresse’s hashtag for the campaign, which has drawn more than 130 million views on Weibo and an overwhelmingly positive response.
Zhou has worked with the Chinese cocktail-in-a-can brand Rio since 2018, and her latest commercial shows her singing to herself while drinking alone on a rainy day in a cozy and zen-like cottage setting, with the tagline, “I finally give myself back to myself.” The solo-drinking concept is fairly new in China, especially for women, but pairs with the current trend for the “homebody” lifestyle that has gone more mainstream during the coronavirus.
Report Corner
CCI’s Guide to Streaming Platforms in China is free for download through next Wednesday, May 27 — if you haven’t gotten it already. Thank you to all of our subscribers who have downloaded the guide to date. We greatly appreciate your downloads and positive feedback.
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News in English
Big-budget movies will be back in Chinese theaters this summer, says the chairman of state-owned distributor Huaxia. Variety
Meanwhile, streaming platform iQiyi making two more planned theatrical releases available online, including Netflix’s “Marriage Story,” through its “early-access transactional on-demand” feature. PR Newswire
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A guide to how China is paving the way forward for fashion weeks around the world to go digital. Vogue Business
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