{ "docId": "019dd923-622c-750b-8b9a-539b4b45e826", "docSlug": "9fb9cb7289b2", "documentTitle": "iQIYI, Inc. (IQ)", "authorId": "60_Wolfpack_Research", "authorName": "Wolfpack Research", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-04-07 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 32, "pageCount": 37, "prevPage": 31, "nextPage": 33, "slideType": "preempt_rebuttal", "function": "preempt_rebuttal", "density": "overcrowded", "nDataPoints": 40, "notes": "The slide uses a hypothetical scenario to demonstrate how DDMC's gross margin would be significantly lower if iQiyi did not pay a premium over standard TV station rates.", "elementsJson": [ "data_table", "paragraph", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-539b4b45e826/32", "deckHref": "/decks/019dd923-622c-750b-8b9a-539b4b45e826", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-539b4b45e826.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-539b4b45e826#slide-32", "components": [ { "bbox": null, "kind": "callout", "text": "If the program “If Time Flows Back” were priced at just 2x that paid by the TV stations, DDMC’s gross margin from its TV programs in 2018 would have dropped by 34.7%:", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-203f-7169-9f92-a7ddf5d70978", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "Gross Margin: -34.7%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-203f-7169-9f92-ada62a87dd11", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.76, "x": 0.12, "y": 0.19 }, "kind": "paragraph", "text": "The super-premium IQ paid was very helpful to their partner's financial performance. In 2018, 92.5% of DDMC's gross margin from its sales of major TV programs came from the two shows sold to IQ. If the program “If Time Flows Back” were priced at just 2x that paid by the TV stations, DDMC's gross margin from its TV programs in 2018 would have dropped by 34.7%:", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "62e74b9d-d80e-4e69-8344-e96c429a54c7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.76, "x": 0.12, "y": 0.59 }, "kind": "paragraph", "text": "The Chinese media has reported that competition among online platforms for top content intensified between 2016 and 2018. This resulted in some online broadcasting licenses selling for up to 2x the price paid by TV stations, especially for the popular “costume and magic/fantasy dramas” segment. However, the premiums paid by IQ still appear inflated.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7740de41-a4d3-4f31-8e3d-5d841511f2e2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.76, "x": 0.12, "y": 0.67 }, "kind": "paragraph", "text": "A CITIC report provided a table of the highest cost copyrights from the years 2012–2018. The top programs' license fees for both online and TV broadcasters increased each year until the premium ratio between online and TV peaked at 1.88x in 2017. However, there was a reversal in 2018 and the premium declined by 20% to 1.5x.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c80d866b-b67c-4379-a37d-c80557d9dea0", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Due to the competition for high-quality content between video platforms, there is also a clear gap for the pricing of the episodes’ copyrights between the TV station and online network-end. The price of some episodes on the online networks is more than twice that on the TV side. — 36kr.com", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-203f-7169-9f92-a9aa14a53e5c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.76, "x": 0.12, "y": 0.82 }, "kind": "source-note", "text": "86/87 Citic Securities report and 36kr link regarding content pricing competition.", "attrs": { "numbered": true }, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1e45479e-1951-4e82-a6c2-baa9b248362e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.7, "x": 0.15, "y": 0.27 }, "kind": "table", "text": "Wuhan DDMC: Gross Margin - Based on Reported Revenues", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "25dcbb2b-18d9-48c4-86a5-40bf679314e8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.76, "x": 0.12, "y": 0.09 }, "kind": "table", "text": "Revenue breakdown by program and platform", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "762dbfdd-4177-479c-9696-41792c009172", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.7, "x": 0.15, "y": 0.42 }, "kind": "table", "text": "Wuhan DDMC: Gross Margin - If \"If Times Flows Back\" Sold to iQiyi at a 2x Premium to TV", "attrs": null, "subkind": "scenario", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3c70e576-f5c1-4e23-acb6-3ccee9a3a770", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }