Excellent soil earnings show continued loss, where is the road?

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Youku Tudou reported its financial report for the fourth quarter of 2014, showing that Youku Tudou's net revenue for the quarter was 1.26 billion yuan, a 13.5% increase from net revenues of 1.11 billion yuan in the third quarter, and an increase of 40% over the same period in fiscal year 2013. The net loss was 318.1 million yuan, the net loss of 181.4 million yuan in the third quarter widened 75%, while the 2013 fiscal year was 24.6 million yuan, an increase of 11.9 times times yoy.

By contrast, it is easy to see that while net revenue has been growing, it has also been losing money, especially in 2014, where the gap was a bit larger relative to the same period in 2013. What's the problem?

In fact, since the excellent soil in 2010, to now, has been in the loss, but this loss is a bit big. For the previous long-term losses, many people in the industry believe that this is related to the operation model of excellent soil, relying on advertising revenue business model is its inability to achieve the fundamental problem of profitability.

However, since the announcement of strategic co-operation between Yusuf and Ali last year, it has accelerated the development of new businesses and tried to change their revenue growth model. Today, the soil continues to be losing money, and more than before, to say that its transformation is not related, I am afraid it is not justified.

The current development of the domestic video site is that every video platform on all video is free to watch, in addition to the income is not optimistic about the membership services, the rest of the almost entirely dependent on advertising to earn income is not able to achieve the turnround. Therefore, the transformation of the excellent soil, through the development of new business to open up a profit model other than advertising. However, a new product of new technology innovation, both at the technical level or personnel must be invested in a large amount of capital costs, which is so-called have to be cast out will have a return. Last year because the copyright, home-made drama need to spend heavily, and everything has a gradual process, especially for a new thing to improve and be accepted, all need a not short time. It seems unlikely that it will be able to recover its principal in a short period of time until the new business is perfected and the new business is not accepted by the public.

However, we cannot judge it as "burning money" in vain. While high returns mean high risk, there is certainly no return on investment. There is a friend in the industry to me that the loss of excellent soil is normal, now many sites are losing state, the urgent matter is not "circle money", but "rodeo". At present, the domestic video site competition is fierce, in the face of a high-speed growth of the market, excellent soil is clearly more important to their own long-term development, increase investment, to consolidate the existing market share. As long as the market share does not drop, of course, there is no need to worry about the revenue after. You know, Youku has the third (first QQ, second) traffic advantage in the global Chinese application.

As for those who have been disillusioned with the new business of Youku, they may wish to have some hope. The long-term loss of excellent soil can attract many large and small enterprises to invest in it, presumably to value the broad prospects of its new business. Even in the case of Pomerantz, a U.S. law firm, Brian analyst Fawne Jiang is optimistic: "We are optimistic about changing the cool growth model of the business model, and the partnership between Youku and Ali will expand its user size." ”

Promising new business, coupled with its own unique advantages, if the market to occupy a smooth, the future of the gifted soil will not be underestimated. As to when to reverse the loss situation? I want to say, please be patient with it and be patient.

Excellent soil earnings show continued loss, where is the road?