Gu Yongqiang: Capital operation will be more free after delisting and returning to China, and VR will be widely popularized

For him and the Unity Group, privatization is not the end of a stage, but the beginning of a new stage. What impressed Gu Yongqiang the most about VR in unity was that he believed that VR could truly integrate games, movies and users, so that users no longer passively accept content, but could participate in it personally.

Original title Interview with Gu Yongqiang: It has been nearly a month since cultural and entertainment companies must be listed in China

and completed their privatization, but Gu Yongqiang does not seem to breathe a sigh of relief.

For him and the Unity Group, privatization is not the end of a stage, but the beginning of a new stage.

During this month, Heyi Group held three major press conferences intensively, which was rare in the past. On May 11, Youku teamed up with hardware partners such as Huawei, Samsung, and GoPro, as well as film and television production companies such as Sony, Fox, and Disney to cooperate in producing more than 10 VR documentaries this year, introducing VR copyrights for films such as "The Hunger Games" and "Divergent", and establishing an early cutting-edge technology fund for VR/AR technology.

As early as the early 1990s, Gu Yongqiang paid attention to the VR field, but at that time VR had many flaws, the pictures were not neat, the technology was not in place, and there were no mature equipment manufacturers. But since last year, with HTC, Sony, Microsoft and other manufacturers joining in with heavy investment, Gu Yongqiang has the idea of visiting again.

Last year, he visited more than a dozen VR startups and was surprised to find that content production, VR equipment and technology had undergone rapid changes. "In the Internet age, information is transparent, and the most difficult thing to judge is when to start." After returning to China after visiting the VR team, Gu Yongqiang felt that this era might really have arrived.

The essence of Youku Tudou is still a video website and a distribution platform for video content. What impressed Gu Yongqiang the most about VR in unity was that he believed that VR could truly integrate games, movies and users, so that users no longer passively accept content, but could participate in it personally.

He also admitted that the real potential of VR has not yet been fully realized, but he wants to participate in the education market earlier. Including the VR plan on May 11, Youku hopes to help more users experience VR through intensive VR content. "Then everyone will find that this experience is completely different from an ordinary screen." Gu Yongqiang said that content and equipment complement each other in the development of VR.

In addition to the large-scale popularization of VR, cooperation with Fascination Network to develop game IP derivatives, advertising auctions for Papi sauce, and live shopping for Luo Zhenyu's book club were all staged one after another during this month.

On April 20, Wang Ping, former deputy director of Hunan Radio and Television, who once operated "Super Girl", joined Utu, which became a landmark step for Utu to strengthen the production of variety content in the future.

Obviously, this video website has increasingly abandoned its role as a content sharing platform and is gradually moving faster and faster into the field of content production.

"Whether it is from platform to production or from production to platform, from the perspective of strategic layout, this priority relationship actually exists, or is established." Gu Yongqiang told reporters.

Moving from platform to production has now returned to his role as an entrepreneur.

"In the past, Tudou was a customer e-commerce company, and Youku was a photographer and a celebrity, but the content of online students at that time was relatively grassroots. Nowadays, Internet celebrities are very popular, especially in the past two or three years. The boundaries of culture and entertainment have become more and more integrated and there are no clear boundaries. A lot of content can be done and broadcast by TV stations, and the Internet can also do and broadcast." Gu Yongqiang said.

In addition, after the completion of privatization, Gu Yongqiang will be more flexible to try different new content production methods. "Wang Ping's participation is iconic, which shows that we will also have the production capabilities of TV stations."

Content production and network linkage were Gu Yongqiang's ideas at the beginning of his business. At the end of 2004, Gu Yongqiang and Zhang Chaoyang proposed the idea of leaving, because Gu Yongqiang's goals when he joined Sohu had basically been achieved. While studying with his wife in the United States, he came up with the idea of making China's YouTube.

There are three options in front of him: live broadcast, on-demand and network linkage. According to the assessment at the time, except for sports and variety shows that need to be broadcast live, everyone tends to choose on-demand video content. In addition, in terms of network linkage, since Internet video had not yet fully emerged at that time, satellite TV had little willingness to cooperate, and the terms given were extremely strong.

After comprehensive considerations, we chose the direction of the on-demand platform. "Fortunately, there were no variety shows, no productions, and no online linkage at that time. Otherwise, I wouldn't be here now and the company would have collapsed long ago." Gu Yongqiang said.

In November 2015, Alibaba announced that it would acquire Youku Tudou for US$27.60 in cash per American Depositary Share (ADS). With Alibaba's help, Youku Tudou was privatized within five months. This will also give Youku Tudou a larger market and imagination space in China in the future to a certain extent.

Gu Yongqiang believes that after delisting and returning home, he can try many things that cannot be tried in the U.S. stock market. He explained that in the U.S. stock market, all assets of a company are tied together."It's too difficult to split it up, and it's also very difficult to get venture capital." After privatization, through more diversified capital operations, businesses can be split up and more new businesses can be developed without worrying about the performance of the parent company's financial report.

After delisting, Gu Yongqiang's mentality seemed more relaxed. He repeatedly used "play" on many public occasions to explain Oni's new moves in content production.

However, at the media communication meeting on April 6 this year when Heyi Group announced the completion of privatization, Koo Yongqiang also expressed that he would allow Heyi to complete its plan to list domestically within three years.

The financial report shows that Heyi Group had a net loss of 435.6 million yuan in the third quarter of 2015, a net loss of 342.0 million yuan in the second quarter, a net loss of 517.4 million yuan in the first quarter, and a loss of approximately 1.3 billion yuan in the first three quarters of 2015, and we will not see the overall trend of achieving profitability in the future. If it wants to go public in China, the most urgent task for this video website with serious losses is to achieve profit as soon as possible.

At Youku Tudou's spring rally in April, Yang Weidong, president of Heyi Group, admitted that among the current introduction of online student variety shows, homemade dramas, and drama series on video platforms, the cost of purchasing dramas is the largest, approaching or exceeding 50%. However, unlike traditional TV stations that only monetize drama content through advertisements, video websites can adopt more diverse methods. In addition to advertising revenue when the drama is broadcast, there are also front-end payments for members to watch in advance and paid revenue derived from the drama. This kind of income from three aspects of membership, advertising and derivative products targeting a single copyright content (fish) is called by Yang Weidong to eat three things.

Youku Tudou started to start advertising revenue in 2008, and gradually scaled it up in 2011. In 2013, it added new user revenue such as members and mobile games. Gu Yongqiang recalled that in 2013, the proportion of platform non-advertising revenue was only 5%, and in Q1 of 2016, it reached between 25% and 30%, exceeding 1/4. The income of derivatives and members continues to increase.

In addition, after joining the Alibaba system, we have opened up Taobao, Tmall, Taobao games and Alipay, and we can have more attempts in member gameplay and monetization. Online auctions including Papi sauce, VR, online crowdfunding, and self-channel member-paid services are all content monetization methods that Gu Yongqiang has recently tried intensively.

It will be listed within three years. The time is not long or short. Youku Tudou landed on the New York Stock Exchange in 2012 and did not truly achieve profit in three years. After returning to China, in the A-share market where there are clear requirements for profit, can Youku Tudou really make content more valuable and achieve positive income?

"No matter what, I still want to come back. To be a domestic cultural and entertainment company, I must be listed in China. It's nothing more than a backdoor listing or a new board. I've played capital operations many times and I'll consider it." Gu Yongqiang said with determination again.

Editor: Nancy