Li Hao of Mars Culture: The market space of the PGC industry expands "Internet celebrities" into a new profit model

In 2015, the PGC (Professional Production Content) industry showed explosive growth. Yien data shows that in 2015, the output of PGC programs reached 15,000 episodes. It is estimated that 800 PGC production companies will sign contracts with video websites, and the overall market size will be valued at nearly 2.5 billion yuan. Faced with such a large-scale market, what is the development trend of the PGC industry? What is its profit model? What is the investment value of this industry?

Expansion of market space in the PGC industry

According to Li Hao, the original meaning of the so-called PGC refers to professionally produced content. PGC as defined by Mars culture refers to content provided by independent third-party professional teams for new media. These contents are all called PGC. The expression of these content is not limited to programs, but also includes online dramas, online movies, etc. Li Hao believes that since the market space and channels of PGC were opened in 2014, the industry has shown explosive growth. In 2015, the market size of PGC field, including online dramas, online movies and online programs, will exceed 2.5 billion yuan. "We roughly divide PGC content into two categories: the first category is pan-entertainment content, which mainly refers to content in the form of movies, online dramas, variety shows, animation, etc.; theater movies, TV series and TV variety shows corresponding to traditional media; The second category is a vertically segmented program, which mainly includes food, beauty, maternal and child, tourism, finance, games and other segments."

In Li Hao's view, the pan-entertainment field performed very well in 2015. A number of large-scale PGC content companies rose and created some excellent IPs, such as Miwei Media's "Strange Qi Theory" and iQiyi's "Tomb Robber Notes", etc. For now, the market structure is still very variable, because in the past two years, many professional teams from TV stations and traditional production companies have come out to start businesses. Many of these teams have strong strength and may change the industry landscape in the production field. Vertical content started relatively late, and high-quality content in many segments is still scarce. However, the user accuracy of vertical content is very high, and the associated industries behind it have a lot of room for development. Vertical programs with high fan effects will have relatively higher commercial value.

Clear business model

With the development of the PGC industry, the industry's business model has also attracted much attention. According to Li Hao, the content revenue model mainly falls into four categories: advertising, user payments, IP derivatives, and value-added services-e-commerce. Among them, the revenue model of PGC in the pan-entertainment category is mainly advertising, which is realized through hard external posting or title implantation. The core revenue source of "Wonderful Qi Shuo" is advertising. In addition, the user payment model is also gradually emerging. In 2015, iQiyi's paying users grew rapidly. This year, video websites such as Youku and Tencent are catching up. In addition, the scale of user payment on the OTT platform also has great potential.

Big online movies and online dramas with IP effects, such as "Tomb Robber Notes" and "Soul Ferry", are the most effective means to attract users to pay. In addition, variety PGC and some new user payment models are also being explored, such as live concerts. Major video websites have tried online live broadcasts of concerts before, but they are different from member payments.

The third is the development of derivatives. After pan-entertainment content is ready, there will be opportunities to be developed into games, movies and peripheral products. There will be a lot of room for development in online dramas, online movies and animation programs.

"Part of the vertical sector's revenue comes from advertising, but the core monetization method still comes from the fourth type-value-added service revenue. In the vertical domain, users are filtered out through segmented content, and after gathering, they are accumulated into fans. At the same time, users 'sense of participation and identity are increased in programs and other social platforms, and products or services are provided to users in the form of e-commerce; For example, content companies in vertically segmented fields such as "Luo Ji Thinking" and "Uncle Kai Telling Stories" are typical ones that rely on e-commerce models for revenue." Li Hao said.

There are three main profit models for agency distribution: one is the most traditional revenue-the advertising account provided by video websites, and the distribution company and CP will share the revenue; the other is the emerging revenue from user-paid content, which requires the publisher to invest a certain proportion of promotional resources to obtain; the third is commercial distribution, where content investors pay and ask the publisher to distribute as agents in order to expand communication and influence. Li Hao said that PGC agency issuance pursues scale effect and cluster effect. If it only provides issuance, it will be highly substitutable; but more competitiveness comes from the added value provided, such as integrated services of distribution, promotion, and marketing monetization, allowing CP to become dependent.

Regarding the mainstream methods of PGC monetization, in addition to advertising placement and content customization, with the growth of the "Internet celebrity" economy, can "Live streaming tipping" and "star creation" become new profit models in the future? In this regard, Li Hao said that "Internet celebrities" themselves are the gateway to traffic and have the function of attracting users. Whether it is through Live streaming tipping or e-commerce monetization, the success of the "Internet celebrities" model has long been verified in the field of game e-sports."Internet celebrities" like game anchors have a very strong ability to attract money. They can guide users to pay rewards, recommend surrounding areas, etc., so "Internet celebrities" will also have a place in the segment in the future.

Correctly evaluating PGC original content

Li Hao believes that investing in pan-entertainment content mainly depends on the value of IP. Good IP is easy to attract users and traffic, but it is usually not easy to recover costs in the first quarter. After the content is ready, it will be profitable in the second quarter. Faced with the current increasing cost of acquiring IP and source cost, how to evaluate the potential of a PGC original content to grow into IP? In this regard, Li Hao introduced that the Mars Investment PGC content team mainly evaluates it from three dimensions: creativity, operation and liquidity. Creativity refers to the ability to understand users and whether the content created can capture the hearts of users; operational power refers to the ability to promote and distribute content and whether users can be transformed into fans; liquidity refers to whether the team designed the business model is the most efficient and appropriate, whether there is enough room for growth and whether it can be scaled.

In addition, with the growth of online student content, the country also has certain standards in terms of policies. The review of online homemade dramas has begun to implement unified online and offline standards. What impact will this have on online student content? In this regard, Li Hao said that the censorship system of the State Administration of Press, Publication, Radio, Film and Television has not changed much from the past. The so-called same standard online and offline has only recently been emphasized that it has attracted industry attention. The development of the online drama and online movie market is also promoting the rapid reshuffle of the industry. At present, many of the themes that attract users to pay are themes that are not visible on theaters and TV. Therefore, new themes are only a short-term prosperity to promote the growth of payment models. Strict review of online dramas will make content focus more on quality competition and drive a large number of high-quality content to emerge. In the long run, it will be a process of integrated development with traditional themes, and the entire industry will become more standardized and prosperous.

Editor: vian