Article by Radar Finance | Edited by Zhang Kaijing | Deep Sea
On the evening of June 17, a screenshot of the report type of “Elementary and Middle School Students Online Lessons” included in the “Internet Crime Reporting Website” went viral on social media, although it was later clarified that the report type was as early as August 2020 It has appeared, but the spread of the news is enough to show the nerves of the entire education and training industry at this moment.
Prior to this, foreign media reported that China will introduce more severe than expected measures against the US$120 billion after-school training industry, including a trial ban on holiday training and restrictions on advertising. The new regulations may reduce the annual revenue of tuition companies by 70%-80%. On June 15, the Ministry of Education also established an off-campus education and training supervision department to supervise related activities.
Under high pressure, online education stocks have been declining, and many leading institutions have been reported to be layoffs on a large scale. Some investors even said that it is true that the management collectively closed the K12 education track.
It is worth mentioning that at this moment, iQiyi, who has been losing money for many years, chose to enter the game. Recently, some media reported that iQiyi launched an app called “iQiyi Education” in the Apple App Store. However, Radar Finance did not find the app when searching on June 18th. It is reported that iQiyi began to get involved in the education field in 2012, and in January this year it also incubated ubiquitous education.
CY, a veteran of more than ten years in the education industry who has worked in a leading education institution and also has entrepreneurial experience, told Leda Finance that the capital market is usually the most sensitive. The recent sharp drop in online education stocks proves the news. There is a certain possibility of implementation. But the decline will not be endless. “It may be beneficial in the past half a month to a month. It is speculated that the direction is quality education, and it depends on who moves fast.”
Is iQiyi going to become Taobao in education?
Public information shows that iQiyi has been in the education field for a long time, but progress is relatively slow.
In 2012, iQiyi and Beijing No. 4 Online School jointly created the “2012 College Entrance Examination Channel” to cut into the educational track.
In August 2016, iQiyi Ai Classroom mobile terminal and PC terminal were fully launched; at the end of the year, the company held the first “Smart·Creation·Future” annual education ceremony at Tsinghua University. According to reports at that time, the iQiyi Education Channel The broadcast traffic has reached 35 million, and the content covers various fields such as early childhood education, primary and secondary education, foreign language training, and vocational education.
At the meeting, iQiyi Education also reached long-term strategic cooperation with well-known brands such as New Oriental Online and Xingshuai Education. Since then, this educational festival has become an annual routine of iQiyi.
In 2017, online education ushered in the trend. According to IT Orange data, as of October 16, the number of open financings in the field of online education exceeded 150, and the cumulative amount of financing exceeded 8 billion yuan. So at the second iQiyi Education Ceremony at the end of the year, Geng Danhao, senior vice president of iQiyi, said bluntly that there are a large number of Internet users who are willing to pay and they are willing to pay to acquire knowledge. In 2018, iQiyi launched the paid knowledge product “iQiyi Knowledge”. Lu Yujie, editor-in-chief of the iQiyi Education Center, said that the main change in the education business in 2018 is that it has a dedicated technology and product team. On January 27, 2021, iQiyi announced the integration of iQiyi Knowledge, iQiyi Education, TV Fruit, and Meng Zhuangyuan to form “Ubiquitous Education”. The founder of Meng Zhuangyuan Zhou Liuqing will serve as the CEO of Ubiquitous Education. Independently operated outside iQiyi. Gong Yu, founder and CEO of iQiyi, said that ubiquitous education itself does not produce content, but rather distributes and operates educational content. The ubiquitous model can be understood as the logic of “Taobao”. In Gong Yu’s view, ubiquitous education is an innovative application of commercial forms in the education field. At present, the major online and offline educational institutions in China are basically iQiyi advertisers, and the company has hundreds of millions of user groups. Based on this, Ubiquitous can achieve effective control of customer acquisition costs. In this regard, some online education practitioners pointed out, “Even if the platform can connect to many famous educational institutions, consumers recognize the product in education. If he recognizes the teaching of an institution on the platform, then he will go Directly find this institution to take classes, at this time it has nothing to do with the platform. From this perspective, it is difficult to have a high-strength connection between users and the platform.” After nearly five months, it is reported that the iQiyi Education App has been launched on the Apple App Store, which has set up a classmate system, a star cluster of stars, and divided the courses into three modes: live classroom, video classroom and self-study room. , Mainly for preschool children and elementary school students. However, on June 18, a Radar Finance search found that iQiyi Education could no longer be found in the Apple App Store, only iQiyi knowledge could be found. In addition, the official account of iQiyi Education has been launched on Weibo, Douyin and other platforms. According to this, Radar Finance called iQiyi’s customer service, and the other party said that he did not know the relevant matters. “If a new App is launched, in general, in response to questions raised by users, the customer service will also receive relevant notifications, but I have not received any notifications about the iQiyi Education App.” Dilemma in commercialization Why, as a long-term video company, iQiyi wants to explore the educational track? In the eyes of industry insiders, this may be an attempt by the company to realize commercialization. Radar Finance noted that since 2016, iQiyi’s revenue growth rate has continued to show a downward trend. From 2016 to 2020, the company’s revenue growth rate was 107.21%, 60.25%, 39.19%, 14.19% and 2.86%, respectively. Although iQiyi’s 2021 first quarter report shows that the company achieved 7.968 billion yuan in revenue during the reporting period, an increase of 4% year-on-year, but according to the company’s second quarter 2021 performance guidelines, it is expected that revenue in the second quarter of 2021 will be 7.65 billion yuan. , A year-on-year decrease of 3%. While revenue is gradually encountering bottlenecks, iQiyi has lost 38.245 billion yuan since 2015. In order to monetize, iQiyi has thought of many ways, the most direct one is to increase the price by members. In 2016, iQiyi’s ARPU (average revenue per user) was 125 yuan, and it increased to 135 yuan in 2019, with an annual compound growth rate of less than 3%. In the same period, Netflix on the other side of the ocean was 7.9%. In November 2020, iQiyi announced that the gold VIP membership fee will be increased for the first time in nine years. The monthly subscription price will be increased from 15 yuan to 19 yuan, and the monthly card price will be increased from 19.8 yuan to 25 yuan. The feedback of this move is obvious. In 2020, iQiyi’s ARPU is 162 yuan, an increase of 20% year-on-year, but the cost is a decline in the number of members. At the end of 2020, the total number of iQiyi subscription members was 101.7 million, 5 million fewer than at the end of 2019, and more than 17 million fewer than at the beginning of 2020. Although the number of members rose to 105.3 million in the first quarter of 2021 from the previous quarter, this figure is still less than the 107 million at the end of 2019. Industry insiders believe that the increase in the number of iQiyi subscription members in the first quarter of 2021 is due to the hot broadcast of the hit “Zuo Son”. If there is no corresponding hot sale in the future, the number of members will hardly continue to rise. Even Gong Yu himself admitted in a letter to shareholders that, with the reduction of copyright content obtained from traditional channels, “the current quantity and quality of self-made content cannot meet the needs.” In addition to membership fees, iQiyi has also tested other tracks. Searching for the name of iQiyi in the app store, you can find many apps that are similar to the above-mentioned “iqiyi education”, such as iqiyi bata, iqiyi novels, iqiyi ticketing, iqiyi VR , IQiyi Security Shield, iQiyi Sports, etc., as well as some apps such as a lot of videos, instant creation, Qixiu, Youbing, etc., even if iQiyi’s name is not listed, they are also affiliated to the company. Gong Yu once said that iQiyi will establish an ecosystem that will link literature, comics, light novels, online games, shopping malls and other sectors through IP to form a situation where one fish eats more. But as far as the current situation is concerned, in Gong Yu’s ecological matrix, except for the long video deity of iqiyi, it is difficult to have bright projects that rank among the heads, even if it is to complete the task of reaching the waist, it will be more difficult. Qimai data shows that affected by the start of the European Cup, iQiyi Sports ranks 8th in the sports App list of the iOS system. This is also the best product of iQiyi in their respective categories except for video playback software; in addition, IQiyi Novels rank 59 in the book list; iQiyi Instant is ranked 62 in the entertainment list; iQiyi Knowledge is ranked 344 in the education list; iQiyi Creative is ranked 825 in the photography and video app list… … Obviously, if iQiyi Education is successfully launched, it will also become a member of the aforementioned matrix. However, in the eyes of netizens, Gong Yu’s move in the education industry is a bit slow. Online education hits the bottom If the rectification and naming of the online education industry at the beginning of the year were just shackles, then a series of news that came out in recent days is close to the death penalty for the education and training industry. There are more and more signs that the “three noes” policy, which was spread online in late May, is developing in the direction of becoming true. On May 24, there was news that Beijing’s Haidian Education Commission was about to introduce a “double reduction” policy, accompanied by the “three nos”: classes are not allowed during holidays, training institutions (subjects & educational quality) are not allowed to be listed, Do not allow advertising. At that time, the Haidian District Board of Education also issued an article to refute the rumors, saying that the news that “educational institutions are not allowed to start classes in summer” was not true. The Haidian District Education Commission’s rumors are very rigorous, but from the perspective of market capital trends and offline specific conditions, the above-mentioned rumors are not unfounded. In 2020, the total financing of China’s online education sector exceeded 53.93 billion yuan, exceeding the total financing of the industry in the previous ten years. Well-known investment institutions such as Tencent, Sequoia Capital, IDG, Hillhouse, Alibaba, and Softbank were all attracted to the market. But now online education has been reduced to “abandoned son” in the capital circle. Some investors who have been paying attention to the education track for a long time said that no one in their investment group discusses education projects, and some investors in the education track are also thinking about turning to the track. Previously, Bloomberg had reported that Job Gang may IPO in the second half of 2021 as soon as possible, but after the introduction of supervision, Job Gang’s response to the listing was that there was no clear plan and no timetable. In the U.S. stock market, online education concept stocks continued to plummet, which also reflected the shaken capital’s confidence in the industry. According to data from Eastern Fortune Choice, on June 17, the single-day declines of No. 1 High School Education, Good Future, New Oriental, and Gaotu reached 15.81%, 13.98%, 8.84%, and 8.39% respectively; the 10 companies with the largest year-to-date declines, Online education occupies 7 seats, and New Oriental has fallen by 95.89%. On the other hand, the online education advertisements that were previously overwhelming and offline have also been difficult to find. On April 23, May 10, and June 1, the top penalties imposed by the regulatory agencies on a number of education and training institutions were also for their false propaganda, price violations and other violations. It is worth mentioning that nearly a month after the news of the “three noes” came out, there were corresponding signs of “no classes during holidays”, which was considered the most unlikely event in the industry at that time. On June 16, according to a Reuters report, four sources told Reuters that China will introduce more severe than expected measures against the US$120 billion after-school training industry, including a trial ban on holiday training and restrictions on advertising. The new rules will be announced as early as next week and will take effect next month. The new regulations may reduce the annual revenue of tuition companies by 70%-80%. The ban on holiday and weekend tutoring will be implemented in 9 provinces and cities including Beijing, Shanghai and Jiangsu for a period of 12 months, after which it will be promoted nationwide. Reuters wrote in the report: A person close to the drafting of the new regulations by the regulator said that the new regulations will be stricter than expected and the industry should prepare for the worst. Similarly, the news of an internal discussion in New Oriental was also released, saying that classes will not be available on weekends, winter and summer vacations from 2022; subjects and non-subjects under the age of 6 will not be available; all shooting questions and search tools are all available. Online sales are further restricted; the company itself predicts that it will lose 50%+ of its revenue due to the New Deal. On the afternoon of June 18, the rumor was refuted by New Oriental. “There can be no waves without wind. New Oriental’s refutation of the rumors will not be evaluated, but the Reuters news may implement some actions, but the intensity is not easy to judge.” CY said, “The current measures are all aimed at the head, and you can see behind the stage. The intensity and effect of the crackdown are sufficient, and if it is sufficient, the scale may be relatively reduced. Moreover, before the policy is issued, it will be protected from the wind, and it depends on the market’s response.” With the continuous efforts of supervision, news of layoffs from New Oriental Online, VIPKID, Chalk Education, Gaotu, Job Gang, Ape Guidance, Good Future and other institutions have also been heard one after another. Some insiders estimate that only one summer vacation will be a job in the online education industry. The layoffs may exceed 100,000. Under the “doomsday” of the industry, news of cessation of recruitment and contract breaches spread frequently. Many freshmen who had already received offers became the most direct “victims”. They “graduated and become unemployed.” In addition, the employees of educational institutions are still in meetings in the morning, and they are notified that they have been laid off in the afternoon, and there is neither compensation nor internal transfer arrangements. An employee of an educational institution revealed to Radar Finance and Economics that no matter whether it is a primary school, a junior high school or a high school, whether it is a large class or a one-to-one basis, there are “undocumented” teachers in the institution. Under strict supervision, the company has recently started to “persuade people to leave” one after another. It is difficult for teachers without a teacher qualification certificate to continue to gain a foothold in the K12 field. Under the turmoil, is the education and training industry coming to an end? For the future of the education and training industry, CY still maintains a certain optimism. “I don’t think it will be a 70%-80% reduction in revenue. The main reason is that the capital has come in too much in the past period of time. The whole market is unhealthy and abnormal, and the cost of acquiring customers is extremely high. Now under the strong pressure of supervision, it is beneficial to the market. Standardize development and reduce customer acquisition costs.” CY said that although there are currently many restrictions on advertising and online sales of educational institutions, educational institutions do not use these methods to acquire customers from the beginning. “Isn’t Yuanzhidao a local push team of 1,000 people? The homework helper has been in the school for many years, including Yi Education and Qingbei Online School. “A school commissioner has a resource pool of 3,000 zero-turnovers every month, and only needs to pay this person’s salary. If according to the previous investment costs, so many users may need 300,000. In this way, the cost of acquiring customers will be reduced. ” CY also pointed out that the current changes are good for small and medium-sized institutions. “As long as the well-known institutions on the head may be hit, some small and medium-sized institutions with strong regionality will not be hit, and these institutions can’t invest money in large institutions, but now they are back to the same starting line. , The entire market has returned to the state it was five or six years ago.” “The country is not one size fits all, but it is a big blow to the K12 education and training track. Relatively speaking, it even encourages quality education, including art, sports, and programming. Education may be issued by the government after the census results are issued. One of the combinations is housing prices and medical care. Moreover, China’s concept stocks are unlikely to fall forever. We think it will be beneficial to release in the past half a month to 1 month. It may be a cooperation between several companies, or who has an acquisition. However, the benefits are mainly aimed at the first two or three companies to act, to see who runs faster.” Note: This article is the original article of Leidacj (ID: leidacj). Unauthorized reproduction is prohibited