Channel has been in the self revolution

Absrtact: 2011, the U.S. Internet advertising revenue for the first time over the print media, 10 years of flat media revenue fell by half, if the inflation factor in the flat media market share of the loss is greater. This is largely thanks to Yahoo, MSN and other free Internet news impact

2011, the U.S. Internet advertising revenue for the first time over the print media, 10 years of flat media revenue fell by half, if the inflation factor in the flat media market loss of a greater share. This is to a large extent thanks to Yahoo, MSN and other free network news impact, the network media through faster, content free, tying advertising way to make traditional media pressure. From China's trend, the net advertising revenue will exceed the media in 1-2 years.

But the television media advertising from the number did not drop significantly, this is because the television media has a certain degree of competitive advantage, so that the short-term or even long-term network media is difficult to weaken, or because the time is not yet? Will YouTube, Hulu, and Amazon's video sales eventually flood levees in traditional TV media? The combination of Youku and potatoes is no doubt a great splash of speculative sparks.

Advertising Pain Index

Youku and potatoes have long occupied the top two in the Chinese market, and in the traditional sense, both have been listed out of danger, it seems that should be regarded as "ashore." But the two are still to be merged in order to survive: On the one hand, Qi Yi, Sohu, Tencent and other control of the flow of the big guys into the video field, Youku and potato flow upstream more and more is stuck in the neck, the future is very large uncertainty; On the other hand, huge broadband costs, the cost of content procurement to make the two overwhelmed, Even listing financing does not solve the bottleneck.

For example, the 2012 Q1 bandwidth cost of $113 million, which accounted for 42% of net income, was down from 44% a year earlier, but still a big expense, with a content cost of 140 million yuan, 52% of net income, and 28% per cent higher than last year's--two of the big cost of spending is enough The related data structure of potatoes is similar.

Recently, the content price of TV series has dropped sharply, besides the alliance of Youku and Tudou, Qi Yi, Sohu and Tencent are also beginning to combine purchasing, is this the foundation of the future content cost? Of course not. The game between the content provider and the video channel is completely open, and the electronic commerce has similar place, it is very difficult to maintain the high margin, at the same time, compared with the Beijing-east, Taobao Mall and other electric platform, video website monopoly degree is lower, bargaining power is weaker. It is also destined that the field will be a long-term low margin industry-unless monopolized.

But this is not all of the cost, there is also a hidden "third-largest cost", note that this cost is not incurred in staff expenditure, but in the receiving of free video user side: The advertising pain index. The data show that in order to increase revenue, Youku has been up to 45 seconds before advertising! If you continue to extend, the corresponding user experience will undoubtedly be further reduced, and ultimately damage long-term benefits. Just like watching TV, in advertising time, many people will change channels, and on the network, people change channels more easily, the total length of advertising has its limits.

Therefore, when the video site continues to increase the length of advertising, increasing the number of ads, the advertising pain index increases, it will increasingly become a network on-demand function of the second-rate TV station. However, in the operating costs, in many respects than the television stations to be higher, then, one does not produce content, and no policy monopoly advantage of the television stations should be given how much value?

As China's number one video site, Youku's recent four-quarter year-on-year growth rate of 177%, 128%, 102%, 111%, the rapid slowdown in growth, profits are still in the foreseeable future, once the growth rate down to 50%, the industry may quickly become as common as the news portal site. Sina, for example, has barely grown from 2004 to the beginning of 2011, has been floating up and down 40 of dollars until Weibo has risen to more than 100 dollars, but at present, it has fallen to 50 U.S. dollars.

The channel will eventually disappear.

We look back, whether it is news portals, video sites, or even e-commerce, what is the essence of it? Users need a certain product or service, from the channel link is rarely added value, mainly distribution and display platform, in this case, the overall trend of the channel is: the lower the cost of competitiveness, the shorter the user is more competitive, the greater the number of jet lag more competitive.

So, we see that 100 years ago when the department store appeared, quickly became the mainstream of retail, and then, Shopping Mall as the representative of the Mall and replaced, are related to the scale of efficiency; Since then, chain stores to occupy the market's largest market share, and one-stop procurement for customers to reduce costs; is the development of E-commerce, but also its lower costs, faster speed. So, Su Ning and Gome (Micro Bo) can overcome the traditional small household electrical appliances stores, and they have to face the impact of the electricity business today.

So, in this changing trend, we must pay attention to an essential problem: the upstream manufacturer's channel cost is the source of the channel's own income, which is also the "non-essential" cost for consumers to buy products. In terms of trends, the internal dynamics of the market to reduce such non-essential costs are inevitable, in other words, the channels must be shorter, more concentrated and faster-as long as the technology and management mature enough, the electric business is undoubtedly the catalyst for this technology and management.

Everything that is good for the consumer is bound to cause damage to a link upstream. No doubt, Taobao Mall, Beijing east of Suning, Gome to rob the rice bowls, and because the whole channel cost reduction, the overall employment number will also decline, but the redistribution of wealth.

Back to the video industry, the nature of the video portal and the news portal there is no essential difference, are channels, a free text content, tying ads, robbed the flat media rice bowls, a similar strategy to rob TV's job. It is important to note that their channel costs are still too high, such as bandwidth and content. This also means that if someone can integrate bandwidth resources or content resources, it is entirely possible to further reduce the cost of this channel significantly.

So, telecom operators have a congenital advantage in bandwidth, television, especially in the content of radio and television has a significant advantage, respectively, broadband operators and content operators, they can be successful? No, they have a big flaw in their genes. But a new type of operator is entirely likely to replace the Amazon model. Amazon through the powerful cloud computing capabilities to allow bandwidth costs than rivals have advantages, at the same time, through a strong content control to generate a premium capacity, and market share with the Matthew effect, the strong constant strong, inevitable to the traditional video site to form a huge impact: whether it sells streaming media content, or selling ads.

So, recently, when Amazon announced the launch of the Instant Video streaming service in the Xbox 360, streaming media service Netflix plunged more than 5% to 63.44 dollars and has fallen by more than half in 1 years.

Channels have been self revolutionary, until the unnecessary cost of the infinite trend of 0, Youku potatoes in the lives of others will also face a new revolutionaries. Therefore, the future of space, depends on how much it to occupy the television market, at the same time, but also defense, or even transform into a real "cloud content" operators.