Study On The Profit Model Of The Online Video Industry In China

With the development of Internet age,the number of domestic internet user has come to 73.1 million and the penetration of Internet is about 53.2%.The online video is proved to be a new internet media which provides abundant expressions and convenient channels of vast information.The number of online videos users has taken 74 percent of the whole website users and has ranked No.4 in living habit for all internet users in 2016.This trend indicates the importance of online video industry on modern lives.However,over the last ten years development,the online video industry is still trapped in profit dilemma.For example,the most powerful online video platform,Youku & Tudou,delisted from USA in 2015 with 170 million yuan deficit and transferred to be the holding subsidiary of Ali.Hence,it is a necessary to investigate the profit model of Chinese online video industry.This paper uses the first and the only one profit enterprise in China,LeECO,as well as the only individual online video enterprise national wide,to study its unique profit model of “Platform+Content+Terminal+App” and further analyze this model in terms of the comprehensive industry angle,self-survival angle and financial angle,also of the quantity and the quality.At the industry level,through the SWOT-based analysis of Le Eco's profitability pattern,the summary has been made of its strength and opportunities,weakness and challenges.LeEco has demonstrated three major advantages: 100,000 episodes of TV series and over 5000 movies;multi-dimensional profitability through coordination among the industry chains;royal customer groups due to extensive hardware coverage.Le Eco's strategy of distribution of up-and downstream business prove to meet the three significant external opportunities supported by the government,namely the advent of Internet+ and Big Data Era,tremendous size of cyber citizens and increased awareness of paying for online information,the merger of the three networks(television,telephone and broadband Internet).Limited by the scope the industry chains remain influential,LeEco,too,has to face the inevitable weakness;the challenges of competitive opponents and concern of government regulation.Stand in the perspective of their own ecological model,the author use the classic profit model constitute the four elements to dismantle the LeEco's profit pattern.LeEco is a user-oriented,content-based company,no longer rely solely on advertising and copyright.Terminal business income,membershippayment,copyright business,TV drama revenue,advertising revenue as the main profit point;to advertisers,end products consumers,paid members,copyright distributors as the main source of profits;enriched input,video technology,the successful marketing of end products as the main lever of profits;Based on the Ecology,around the video business and the terminal industry,which create the special brand effect to create profit barriers.LeEco has demonstrated a comparatively strong superiority in terms of its profitability,operation,earning quality from quantity perspective and of statistic-based comparison with video-sharing websites like Youku and Tudou that are still in growing deficit.Despite its robust growth,LeEco has been under increasing pressure to address the cost issue thanks to the copyright,terminal and expanding business.Based on the three analysis levels,the author considers the video of LeEco takes advantages in the industry and comes into the synergy of industrial chain resources.The strategy of purchasing copyright early contributes to the profit of LeEco.The multiple structure of earning is the key element which comes into profitable sustainable.The differentiation of video content and the high quality of video service attracts the loyal customers,and the sustainable innovations come in to the fully vitality.It helps us to catch a new point about the loss in the video industry based on the model of LECO's,that is no longer rely on the traditional advertising revenue,but based on itself.Multiple revenues structure,differentiated products and extended terminal products,which can help the industry to overcome the dilemma.