Last August, when Yuewen group released its interim performance report, Cheng Wu, CEO of Yuewen group, mentioned that Yuewen group began to generate returns in the right strategic direction. Yesterday (March 22), Yuewen group released its annual performance report for 2021. After a year of debugging, the giant seems to have really passed the trough. According to the financial report data of Yuewen in 2021, the total revenue of Yuewen group reached 8.67 billion yuan in 2021, with a year-on-year increase of 1.7%, and the net profit attributable to the parent company was 1.85 billion yuan. Compared with the annual operating loss of 4.4 billion yuan in 2020, Yuewen has come out of the haze in 2021, because a series of effects caused by the acquisition of Xinli media seem to belong to history. In terms of business, the two core businesses of Yuewen group have not changed much. In 2021, the online business revenue of reading text reached 5.3 billion yuan, with a year-on-year growth rate of 9.6%, accounting for more than 60% of the overall revenue, which is still the basic market of reading text; The revenue from copyright operation and others was 3.359 billion yuan, a year-on-year decrease of 8.7%. IP operation is the general trend of the content industry, and there is still more room for this business to be tapped. Xinli media also released the revenue data of 2021. The company's total revenue reached 1.22 billion yuan and realized a net profit of 530 million yuan. Looking at the profitability alone, the financial report of Yuewen group can provide some comfort to the industry, and some feedback has also appeared in the capital market. On the day of the release of Yuewen's financial report, the intraday share price rose by more than 12%, while as of today's close, Yuewen's share price rose by 8%. However, the comfort has always been limited. The domestic epidemic has been repeated. From the content production end to the publicity and distribution end, the cost reduction and efficiency enhancement have been put in the first place, and the hot money in the industry has been reduced. At the same time, the regulators have continuously tightened the supervision of games, film and television, online text and other content, and the successive landslides of entertainment stars have further increased the risk of the content platform. Turning losses into profits is good news, but after the joy, everyone's nerves are still tense. Pay and free, online text industry game or survival? Observing the online business of Yuewen group, we can intuitively perceive that the paid reading and free reading in the online text market are in two distinct stages. The peak period of the paid market has passed. Only by further tapping the consumption ability of users, free reading is still expanding, and seizing the race track is a top priority. The online business of reading text is mainly divided into three parts. The company has its own platform products (starting point Chinese network, QQ reading, Xiaoxiang academy, etc.), self operated channels of Tencent products (mobile QQ, wechat reading, Tencent News, etc.), and online business of third-party platforms (Baidu, Sogou and other distribution channels). The main source of business income is the income from paid reading, online advertising and distribution of third-party online games. (pictures from the Internet) In 2021, the paid reading revenue of text reading decreased by 1.4% year-on-year during the reporting period. At the same time, the average monthly paying users of text reading platform also decreased, down 14.7% year-on-year to 8.7 million. But the good news is that the content consumption power of individual users is increasing. In 2021, the average monthly income of each paying user of reading text reached 39.7 yuan, with a year-on-year increase of 14.4%. Users' willingness to pay for content was further strengthened. Obviously, the demographic dividend of the online text payment market is gradually decreasing, and the growth rate of users is slowing down. The increment of the market is to further stimulate the consumption of heavy online text users and improve the willingness of individual users to pay. This may be a routine operation for reading. Users pay for reading based on high-quality works, which are selected by the market in the huge ocean of content, which requires the platform to have sufficient content reserves and author reserves. In 2021, Yuewen group added 700000 writers and 1.2 million works on the platform, with more than 36 billion words added throughout the year, and the content output can be imagined. It is worth noting that although paid reading users have entered the slowdown stage, the overall online users of the reading platform have reached an all-time high. According to the financial report, in 2021, the online reading Mau reached 250 million, with a year-on-year increase of 8.6% and a net increase of 19.7 million, setting a new record. Free reading plays a role. By December 2021, about 15 million daus had read free content, an increase of 50% year-on-year. In 2019, Yuewen launched the free reading app "flying reading" to seize the track, and continued to distribute free content to users through Tencent's own channels such as mobile QQ, QQ browser and wechat reading. Although there are Lianshang, Midu and other platforms in the free market, which rely on the sinking advantage to obtain traffic, and then giants such as Baidu and byte jump intervene in the market with seven cat novels and tomato novels to promote the escalation of the war. Shuqi novels, fit novels and other platforms also emerge one after another, and quickly form separatist forces, but Yuewen still builds a mountain in the free reading market with the advantages of family and industry. This mountain brings not only user traffic, but also additional traffic revenue. Free reading is profitable through advertising. According to the data, Tencent's self operated channel online business revenue reached 808 million yuan in 2021, with a year-on-year increase of 28.1%, which is mainly driven by the growth of free reading users. Four years ago, the online text market also hated the evil wind of free reading. Frankly, it is the retrogression of the user payment trend. Now paid reading and free reading have become the "two wheel drive" of the online text platform. This is not a victory, but a change in the business environment. In the first year of the "troika": there are frequent "hot money" and hidden worries? After reading group acquired Xinli media in 2018, Xinli media was closely linked with the copyright operation business of reading group. In 2019, the proportion of copyright operation business revenue of reading group once exceeded that of online business. However, there are also hidden worries about the rapid development of copyright operation in the past two years. In 2020, Yuewen film and television, together with Tencent film and Xinli media, made a combination of "troika". This year is also a year for the continuous development of Yuewen IP. After "Qing Nian Nian", Yuewen then promoted the film and television adaptation of IP such as "redundant son-in-law" and "Douluo mainland". The golden years produced by Xinli media has also completed the heat fermentation. Official data show that in 2020, about 200 IP adaptation rights will be authorized for reading. However, in 2020, the copyright operation revenue of reading text was 3.593 billion yuan, a year-on-year decrease of about 22.51% compared with 2019. Changes in the external environment can explain part of the reason. From the tax storm in the industry to the outbreak of COVID-19, the major film and television companies are getting more and more difficult, and the production and distribution of movies, TV dramas and Internet dramas are all delayed. According to media reports, in 2020, the impairment loss of TV drama and film copyright reached 249 million yuan. Xinli media, as the core of the copyright operation business of Yuewen group, is still in the cold winter, although it has a burst of money. The overall downturn of the industry has led to the re signing of the gambling agreement between Yuewen and Xinli media. In 2020, Xinli media achieved a revenue of 2.033 billion yuan and a net profit of 407 million yuan, reaching the goal of the new agreement. In 2021, there is still no lack of IP explosion. In the drama market, in the first half of the year, the popularity of dramas such as "redundant son-in-law" and "Douluo mainland" continued to ferment, and in the second half of the year, dramas such as "traitor" and "fierce knife in the snow" went online one after another; In the film market, "Hello, Li Huanying" produced by Xinli media has become the biggest winner in the schedule; In the animation market, the cartoon "Dafeng Dageng man" adapted from reading IP went online, the collection of works soared, and the animation "breaking through the sky" was continuously updated. However, the content output is not necessarily positively related to the business revenue. In 2021, the revenue from the operation of self owned copyright and other businesses reached 2.14 billion yuan, a year-on-year increase of 30.0%. According to the data, Xinli media achieved a revenue of 1.22 billion yuan and a net profit of 530 million yuan in 2021, with a year-on-year increase of 24.3%. It seems that the situation is not bad. But the variables in reality still have an impact. On the one hand, Tencent internal business adjustment. In June 2021, Tencent film, Xinli media and Yuewen film and television released 70 film and television projects, including 1921, the world, xinju and the second season of the redundant son-in-law. The "troika" is still running fast. At the beginning of this year, Tencent film was adjusted from PCG (platform and content business group) to CDG (enterprise development business group). The coordination mechanism of the troikas is no longer the same as before, What specific impact this will have on Yuewen and Xinli media is unknown, but the system is turbulent and no one can be stable alone. On the other hand, the star collapse has had an impact on Xinli media. Due to the arrest of starring Wu Yifan, the scheduling of the IP drama "green hairpin line" produced by Xinli media has changed. There is no doubt that as the domestic head content platform, reading text has an increasing influence in the online text, film and television, animation, games and other markets. With the help of Tencent ecology and the production ability of Xinli media, its own content incubation ability and IP development chain are also more perfect. The public praise and popularity of the drama "the world" in Q1 this year, and the film "the killer is not too calm" has become a dark horse at the box office, have once again proved the content output ability of Yuewen and Xinli media. However, the expansion of giants is also unstable. Whether it is in addition to paid reading, the bold layout of the free reading market, or the incorporation of Xinli media to build a complete IP development link, the new support point of reading group has not yet appeared. Driven by external forces, the content industry has become more rational and has more unexpected risks. The popular content has brought excitement, but it is uncertain whether it can leave value outside the excitement. Cheng Wu's expectation for reading text is to "create and promote IP that can be spread across generations with high-quality content and IP ecological chain, so that good stories can last forever". It is still a long time. Not only good stories, but also good business models are taking shape. (Xinhua News Agency)