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spk08: Ladies and gentlemen, thank you for standing by and welcome to the ITE fourth quarter and fiscal year 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, press star 1 on your telephone. I must advise you that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Investor Relations Director of ITE, Fan Liu. Thank you. Please go ahead.
spk06: Thank you, operator. Hello, everyone, and thank you for joining ITE's fourth quarter and fiscal year 2020 earnings conference call. The company's results were released earlier today and are available on the company's investor relations website at ir.ite.com. On the call today are Mr. Yu Gong, our founder, director, and CEO, Mr. Xiaodong Wang, our CFO, Mr. Xiaohui Wang, our chief content officer, and Mr. Xianghua Yang, senior vice president of our membership business. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Xiaodong, who will go through the financials and guidance. After their prepared remarks, Xiaohui and Xianghua will join Mr. Gong and Xiaodong in the Q&A session. Before we proceed, Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC. ITE doesn't undertake any obligation to update any forward-looking statement except as required on the applicable law. With that, I will now turn the call over to Mr. Boon. Please go ahead.
spk10: During the call, I'm certain
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spk10: We believe that as long as we focus on our core strategy, which counter on content, we will able to secure sustainable long-term growth. Up to now, we have already seen some clear response of our membership business. Now, let's go through our business segments. Membership. First, let's start with membership. As of December 31, 2020, our total subscribers reached 101.7 million. Membership services revenue declined by 3.5% year-over-year to RMB 3.8 billion, mainly attributable to the decrease of subscriber numbers during the quarter. of subscribers declined by 3 million, which was mainly impacted by the lack of top contents during the first half of the quarter. In Q4, we launched several movies that performed well during the quarter, including The 800, Ba Bai, The Sacrifice, Jingang Chuan, Legend of Defecation, Jiang Ziya, and others. However, we didn't have enough inclusive blockbusters in the drama or variety show before November 15. Starting in the second half of the quarter, we launched several well-received new dramas and shows, such as Ultimate Note, Zhong Ji Bi Ji, Qipa Talk, Qipa Shuo, And my best friend's story, ,, which to some extent helped to relieve the sliding trend of the subscribers. Despite the volatility in our membership during the first quarter, we observed some positive data points. First, our SMN membership, which can be used on all terminals, and the T or IP membership which can be used on Smart TV. Both recorded the highest quarterly net additions for the past three quarters. We believe it reflects user recognition of our premium membership benefits and the experience on the TV side. Second, our diversified high-quality content caters to the varied interests of our membership which significantly increased our membership conversion. And third, we roll out a number of membership benefits upgrades during the quarter. For example, we merged our literature membership into our VIP membership, providing an inclusive library of premium books for free. We also established a partnership with famous brands such as Starbucks and McDonald's, who provide more value-added benefits to our membership. In 2020, we provided more than 2,300 benefits for our membership. More than 60 million members have received over 200 million benefits for the whole year. which was more than four times higher than last year. Despite the volatility in total subscriber numbers in the short term, we remain confident in the mid- and long-term development of our membership services business. Our confidence is largely a result of our continuous existence of premium original content and enhancement of our in-house production capabilities. Meanwhile, we continue to develop new innovative business model across various content categories to further open room for revenue growth. Take movies for example. We made breakthroughs in our premium video on demand or Pivot Mode, and in original movie during Connor. For Pivot Mode, in December 31, we launched Fight for Love, the online movie with a huge fan base in IT super cinema through Pivot Mode. The title was triggered great work of monks on social platforms During the Chinese New Year, IT Super Cinema launched the two cinema-level films, A Fortune Diary, Ba Tai Ri Ji, and The Legend of Obtaining Treasure in Shaolin Temple, Shaolin Si Zhi De Bao Chuan Qi, with revenue exceeding our expectations. On January 4, 2021, our new revenue sharing rule for online movies will slow down. For original movies, the pivot mode without a theoretical release is a key reduction to expect in the future. We believe there are only a very limited number of online platforms that are capable to provide this kind of service. As you know, we did the pricing adjustment which took effect since November 16th. Specifically, we raised the price for our golden membership on non-iOS devices to the same level as that on iOS devices. This adjustment has some temporary impact to our subscriber numbers, but the impact was very minimal, and we have already seen very healthy growth trend of subscribers now. Moving over to our advertising business. Overall, the Chinese advertising market continues to recover and our advertising businesses stabilize. While the first quarter is a traditional off-season for advertising, our advertising revenue achieved a stable growth, both year over year and a quarter over quarter. This mainly due to our strong revenue from content marketing, which contributed 53% of our brand ad revenue, up two to three percentage points over last quarter. For brand ads, the number of advertisers on our platform continued to recover almost to the same level of last year. defined the situation that advertisers from food and beverage, cosmetics, as well as quality traditionally spend less in fourth quarter. E-commerce, medical services, as well as mobile phone advertisers contributed most of the incremental growth during the fourth quarter. For performance apps, The sequential growth during the quarter was largely attributable to the contribution of e-commerce and the network services industry. The conversion rates and the monetization capabilities of this industry improved with the rollout of new products and technologies. The year-over-year decrease was mainly driven by a decline in available inventory as well tightened regulations, such as the app rectification that was ordered by the Ministry of Industry and Information Technology. Content. We continue to execute our content strategy with a focus on up-tier content, in-house production and innovation. This is critical for capturing the entertainment demands of different user cohorts, allowing us to launch hit dramas, variety shows, and animations in innovative forms. During the first quarter, dramas, variety shows, animations, and children's channels retained their leading position among all the platforms in terms of number of subtitles and the video view shapes. According to the third-party data, video views of our drama account were 41% of overall market view shape in Q4. The comparable number of animations, including children animations, was 43%. We lagged in both of these two verticals. In terms of original content, we continue to advance serious development of IPs catering to both the basic needs of mass users and the in-depth needs of different user segments.
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spk10: For drummers following the completion of the fund of the province. We launched a new young adventure drama, Ultimate Note, adapted from which have been well received by our users and have immediately gained in popularity since its first air. Similarly, following Marry Me, and Love is Sweet, or young romance titles like My Best Friend's Story, They Are Missy, The Blooms, and Ruyi, Poor Willing, and Moon Brightens for You. continues to satisfy strong user demand for emotional content. We also would like to recommend adapted from Japanese animation. The title has been deeply loved by the younger generation. This success demonstrates that we are deepening penetration of the original Yang drama with word-call. In terms of what he showed, original content launched during the quarter includes Qipa's talk, Dimension Nova, Hua Zeyuan Xing Xing, Glory, In fact, Deng Changle's Dunhuang, and the latest talk, Jianmeimen's Cha Huahui. Among these titles, our classic self-produced show, Teapot Talk, continued to give our audience surprises in its seventh consecutive year of running. Dimension Novel created dialogues between humans in real world and virtual figures, penetrating the younger generation. Glory is Back combines documentary style and reality show shooting masters in cooperating new and popular elements into this historical documentary. Third, for animations, we continue to update our most popular self-produced animations. For example, Find My Wife, Xie Wang Zhui Qi, and the children's animation Doll Squad Episode DelSquad has been a remarkable success not only in China but also in various overseas countries. On January 25, 2021, DelSquad was aired in the U.S. and became the first original Chinese animation that was launched in the U.S. channel of Nickelodeon. According to the data, Dell Squad was well received by the keys overseas. For example, during the broadcasting period in Australia and the Philippines, the average rating of Dell Squad topped their case channels, surpassing some famous IPs such as the PiperP. For the first quarter of 2021, Our key drummers will include my dear garden, my heroic husband, a little dilemma, breath of destiny, spirit, good life, and the vocation of love, etc. among which Spirit Realm was aired on 9th January and widely followed by its best. Vocation of Love was aired on 25th January, which is the first light comedy produced by the Langford Video Platform to celebrate the Chinese New Year. For a variety of shows, Living was launched on 16 January and is called 9.2 in Doubar. Our blockbuster title, Young Swiss You Season 3, was released yesterday. Others to be launched in the first quarter include Sage Boom, Baojia Wutai, Be With You, Meimei You Gezai, and I Taught the Spring About You. for admissions. The key programs include for etc. You may have noticed that there was a resurgence of COVID-19 in a lot of places in China since December. Although our users returned to normal life and work, large groups gathering and across region travel for business were still largely limited. This new outbreak also caused some impact on our offline production work. We will follow the strict quarantine requirements and try our best to meet the schedule of our content launch. Technology. During the quarter, we continued to implement more precise and efficient user growth strategies. By using proprietary algorithms and technology, we can more effectively match content and users in various scenarios. Two technology details worth highlighting this quarter include, one, personalization We enhance the user satisfaction. We are present in multiple scenarios, such as in IT app homepage and the channel page. As a result, the number of users who watch the content recommended by IT app homepage doubled year on year in Q4 to user interaction We took the lead in initiating the screen bullet with no supplier feature. The feature essentially blocks the early disclosure of storylines by the user. In less than a month since its launch, the part of the supplier was reduced by about 30%. Meanwhile, we continue to assist our content production by the intelligent technology. Two developments worth highlighting this quarter includes, one, IMF delivery standard adoption. We took the lead in adopting the IMF delivery standard in China, applying this standard with collaborate with domestic production companies to standardize the process of post-production network delivery, sample submission for censorship, and production by online platform. Additionally, it can unify our delivery standards with the international mainstream OTT platforms such as Netflix and HBO. Currently, we have adopted the standard in our self-produced dramas, and we expect it can double our delivery efficiency. Two ITs provide proprietary intelligent film and television production systems. This provides an intelligent script dismantling which can identify the themes, characters, and other elements from the scripts. This analysis can achieve a 95% accuracy rate. Furthermore, the efficiency is greatly improved by more than 20 times versus the manual work. For example, dismantling of a 200,000-character script can be completed within minutes. The system has been used in many self-produced dramas, such as Good Luck, Out of the Dream, Crash, and My Treasure. During the quarter, we maintain our leading position in TV time spent on the traffic. We believe that Larger screen is an important feature trend in the long-form video industry. Compared with developed markets like the United States, China's TV user time, traffic, and monetization has greater growth potential. We entered into a formal agreement with BMW China in December. The agreement allowed us to create connected car services on BMW's luxury model with updated film and drama content and with an AI-driven interactive experience. In terms of VR, we stick to our strategy that allows us to capitalize our content through various approaches On content, ITS VR full-season interactive movie, Virus Crisis, was launched in November. Another movie, The Minister of Kunlun, Kunlun Miku, will be launched in Q1. We are also advancing the offline operations that utilize our VR content, following the opening of our flagship VR full-speeding cinema in Shanghai. Cinema stores are being delivered or are under trail operations in Beijing, Shenzhen, Ningbo, Suzhou, et cetera. You may have also noticed that our VR devices subsidiary. which mainly focused on VR hardware, recently completed a zero-speed financing round of more than RMB 100 million. This is China's largest financing in VR arena since the end of 2019. This round of netting will be used for research and development of the TBR technologies, algorithms, new products, and construction of a more robust content ecosystem. 2020 conclusion and 2021 outlook. 2020 has been unusual. a challenging year for us as well as other players in the industry. On one hand, Mr. Seltzer becomes industry benchmark for self-produced content and generated both strong reputation and ROI. This validated the success of the vertical content Seltzer mode. On the other hand, COVID-19 pulled pulled forward quite a lot of users' consumption of long-form videos in the first quarter and the lack of content, especially the scarcity of movies in the first nine months caused a great volatility in all subscriber numbers. However, as we began to aggressively launch more content in the second half of the first quarter, our subscribers' retention rate started to improve steadily. In 2021, more than 50 in-house studios were entered for full production. These studios focused on diversified content categories that cater to the viewing demand of different user cohorts. except the original length of our platform, as well as diversification of our content will be largely improved. This will undoubtedly promote the sustainable development of our membership business. At the same time, we strive to make breaks soon in movies especially, or in no movies, despite the recent resurgence of COVID-19 in multiple regions in China. We will try to our best to cope with the interruptions to our shooting schedule. We believe that with the positive large-scale promotion of vaccines later this year, the pandemic will be well contained and our business can restart the growth in them. With that, And I'll turn it over to Xiaodong, who will talk about our financials.
spk13: Morning, everyone. Let me reveal our key financial highlights for December quarter. For the first quarter, total revenue reached RMB 7.5 billion. Membership business continued to be our largest business pillar, accounting for 51% of our total revenue. Our advertising business remains stabilized both on a year-over-year and a Q-over-Q basis, despite the weak seasonality. Our cost of revenues decreased 14% year-over-year, mainly due to the 10% year-over-year decline of the content cost. SG&A expenses decreased 6% year-over-year. As a result, our operating loss margin narrowed to 18% from 34% in the same period last year. As of December 31, 2020, the company had a cash, cash equivalents, restrict cash, and short-term investments of RMB 14.3 billion We close our U.S. dollar 800 million and convertible senior notes offering and public follow-on offering of 40 million ADS at a price to public of U.S. dollar 17.5 per ADS on December 21st, 2020. The underwriters excised their option in full to purchase additional U.S. dollar 100 million aggregated principal amount of the notes and their option in part to purchase 4.6 million additional ADSs, which closed on January 8, 2021. For details on our financial date, our CV, and the follow-up offering, please refer to our press release on our website. For the first quarter of 2021, we expect total revenues to be between RMB 7.07 billion and RMB 7.53 billion, 8% to 2% decrease year-over-year. This forecast reflects IGE's current and preliminary views subject to change. I will now open the floor for Q&A.
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spk08: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and with your name to be announced. If you wish to cancel a request, please press the pound or hash key. Please state your questions in Chinese first, then translate your questions to English. To give opportunity to others, please limit to one question each time. Your first question comes from Thomas Cheung from Jefferies. Please ask a question.
spk02: 早上好,谢谢管理层接受我的提问。 我的问题是关于我们未来长期一段时间的 membership 的一个增长的。 刚刚管理层也提到了,我们在内容方面也多了很多的不同的 studio 在记作内容。 And we also see that these data points, our pain subs, have improved. I would like to ask, how do we see the growth of the pain subs membership in the future? And can we reiterate our long-term target? Thanks, management, for taking my questions. I have a question regarding the membership revenue. Management has just talked about the number of studios in 2021 will be more than 2020 producing diversified content, as well as some data points showing the recovery in terms of the paying subs. Can management talk about how we should envision the medium to long-term pain subs trend? And on the other hand, how we should think about the output outlook in the coming years? Thank you.
spk10: Okay, let me answer this question. Last year's first quarter was the highest number of members in history. The data released last year's first quarter was not the highest, because the number in the middle of the first quarter was the highest. Later, due to the lack of content, the number of members decreased. The reason for the lack of content is, first, because of the movie, because of the epidemic, the original movie was not released, so we could not get the original movie. Second, due to the impact of the epidemic, the impact of the review, the delay of the broadcast, The third reason is that the variety shows have been stopped by advertisers, which has led to delays and other effects, such as animation production, etc. These are the main reasons why the number of members has dropped. However, this situation has been improved. This year, there will be a large number of self-produced content broadcast. OK.
spk06: So as you may know, we actually arrived at a peak in terms of our subscriber numbers in the first quarter last year. However, because of several reasons, for example, our first reason is our COVID-19 pandemic, their lack of theatrical movies supply in most of the time last year. So this will actually impact our film supply in our platform as well. The second reason is we actually got negatively impacted by our drama supply delay. And also there are some censorship impact for our drama category. Third reason is that our advertisers' budgets have also negatively impacted our variety show supply. There is also some reason for our animation So all these reasons actually lead to quite significant volatility for our subscriber numbers last year. However, we have seen a very significant improvement for this situation coming into this year. We have actually seen a very good improvement in terms of both our self-produced content broadcasting, and also the licensed content supply. And also, as you have already observed, during the Spring Festival, during our Chinese New Year, we have seen very strong performance for the theoretical movies. That will actually suggest that we will also see quite good performance for the films category in our platform as well. So, um, overall, uh, we think a very good improvement, um, for the subscribers growth trend, uh, up to now.
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spk06: Uh, we, I need to add on a point. Uh, we, uh, uh, we, Although we see a very healthy growth trend for subscribers, we also have some uncertainty for the subscribers' growing trend. We need to remind investors to keep our mind.
spk10: We expect it to grow, but not in large numbers. The first reason is that the price of Android devices has increased to the same price as iOS. The second reason is that we will reduce some promotions.
spk06: We expect a growth for our Apple. However, it won't add to a very big magnitude because specifically for our pricing adjustment, we just raised the pricing on the Android devices to the same level with the iOS Android. So that will actually lead to not a very big overall improvement for our overall.
spk02: Thank you.
spk06: Thank you.
spk02: Thank you.
spk08: Once again, please state your questions in Chinese first, then translate your questions to English. Your next question comes from Eddie Leong from Bank of America, Maryland. Please ask the question.
spk01: Good morning, guys. 新年好。 我们要注意一下,这个是第一个问题。 另外一个问题是,我记得之前你们也讲过在一个大屏幕的一个distribution,一个分发, 也看见去年你们也推出了一些跟电视厂商的一个合作。 所以等我一问,现在大概我们从用户或是一个市场来讲, So I have two quick questions. The first one is a follow-up on our first quarter. Wondering if there is any outlook or points to note about the content cost in the first quarter given more content being released. And then the second question is about the so-called big screen strategy. I mentioned that before. We noticed that there has been more users assessing video content via smart TVs. So wondering whether there has been any change in the time spent or users on TV versus mobile and PC, and whether there will be any implication on our production strategy. Thank you.
spk10: OK, I will turn over to Xiaodong for your question for the counting call.
spk06: And for TV side, we have already observed that internet connected TV and have already arrived at the similar or even slightly higher traffic share than the mobile devices. Mobile devices include the phones plus tablets. So our TV side, we have already contributed more than 40% of our user traffic. So the combined user traffic share of the TV side and the mobile side have already been 90%.
spk13: Morning. I think while we talk about releasing more heat content or blockbuster content, the keyword here is not more, but heat or blockbuster. So as we discussed before, I think if we talk about, like, say, total content cost investment for membership business, the entire investment, I think, will be about the same level. The work we are going to do is to increase the quality of the content and not the number or the quantity of the content for now. But you're right. To some extent, if we are talking about, like, say, some new drivers of the content cost, you might have observed some slightly content cost increase. For example, we are going to expand slightly in oversea areas to enhance the foundation of our future growth. I think when we talk about the additional or new business scope or areas, you will only by then observe some content cost increase. Otherwise, if you talk about like our core business, we remain, as we discussed before, the outlook, the content cost will be well controlled. Thank you.
spk01: Thank you. Thank you.
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spk08: Your next question comes from Yiwen Zhang from Citi. Please ask a question.
spk07: For example, after 2018, there are no similar reports. On the contrary, there are some content that is still OK. Can you tell us about this trend that affects our content production and members? This is the first part of the question. The second part is the issue of playing the cards. Because we have seen that we will have some calls with our friends in the theater. And then recently we saw that in the variety show section, for example, Wu Ha, we will also have some calls with our friends. So thank you very much for taking my question. So the first part is on the user preference change of drama series and its implication on WhatsApp production capabilities and a sub-ad. In the past year, we may have one broadcaster in one year, but now we have several large titles in a year. I believe that users show a more diversified content preference and also different content format of preference as well. This is the first part. And the second part is on the content broadcasting strategy. Noted in the past, we sometimes would swap drama series with other video guides Now we also swap content on the variety show. Can you talk about what drives this? Thank you.
spk10: In recent years, there has been no such thing as a huge stock market. There are many reasons for this. This includes the fact that the government's review of the stock market is more strict. It also includes other aspects of the industry. For example, people are now using more entertainment. In addition to the decline in consumption during the pandemic in 2020, In 2017, 2018, and 2019, film consumption was increasing. I'm talking about film consumption in the cinema industry. The consumption of short films is increasing, and so on. So, multi-layered entertainment consumption will affect the appearance of long-film content. But this may be more from the perception, from the data, from the data of the mainland region. The number of content published in recent years is actually almost the same. The number of shows in the industry is around 6 to 10. It's been like this for many years. The demand for shows and movies is high. In terms of the data, if you don't watch this one, you watch that one. The number of shows is always very high. The volume of blockbusters is not much different from the previous years. It maintains a stable state. This is the case with the first series. In the future, we may continue to make some innovations under the new environment. For example, the sequel that has been released in recent days will have a very large volume and may become one of the blockbusters of this year.
spk06: Okay. So as you have mentioned, Yanxi Gongyue is actually, was actually a phenomenal success, not only in China, but also in various overseas countries. You have mentioned that there are fewer blockbusters in recent years. I would say this is actually in a more perception sense. So that might be attributable attributable to two reasons. One is the tightened regulation or tightened censorship. Second is that we have observed there are more and more entertainment consumption measures For example, if you observe over the past years since 17, 17, 18, and 19, we have observed higher theatrical movie consumption, and also we have seen less the popularity of the short-form video. However, I would say it's more from a perception way that you have viewed that there are fewer broadcasters. However, from the data point perspective, not only for the numbers of the titles, numbers of the broadcasters, or the user traffic for the top TV dramas or variety shows, we have actually seen very stable numbers for the so-called broadcasters. So if you see for the overall industry per year, we have around 6 to 10 TV dramas that we can call top blockbuster TV dramas. So we observed that our users have actually an elastic demand for the TV dramas. So this is actually a very strong, actually a very stabilized demand. And also, we have doing very numbers of innovation in terms of our content. For example, you have observed that we recently launched . This is actually a very creative format of the TV dramas, and it has generated a very strong user traffic.
spk10: The rules of the variety shows are different from dramas. The content of the variety shows is more like a sequel. For example, we just broadcasted , which is an original show. But its traffic is increasing every season. The traffic of the seventh season we just broadcasted
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spk06: And also for the variety shows, as you have observed, our CHIPA talk is already within its seventh consecutive year of running. However, we observed the improving traffic for this new season. It's actually seen consecutively improving traffic for all seasons of our CHIPA talk. This actually validates the success of our IPE operation for the variety show.
spk10: Regarding the second question, IPE and Tencent Video, as well as other video platforms, such as Youku, or Mango, the content of the project, or the content of the joint investment, are all case-by-case. OK.
spk06: For your question about the biotransaction or the alliance production, it actually needs to be, say, case by case. For example, for some licensed drama shows which are mainly broadcasting on the TV stations, those mostly will be broadcasting in multiple platforms. Then, for example, also for the variety shows, for Wuhan, that was produced by an independent studio, which is actually co-invested by both IQ and Tencent.
spk10: The principle for whether we want to be the self, I mean, only broadcasted by our platform, only two reasons.
spk06: One is the self-produced content. And the second reason is about the pure internet broadcasting content. So for all our platforms, there will be like some of this kind of content will be actually only broadcasted in one platform. Thank you.
spk07: Thank you.
spk08: Your next question comes from Alexia from . Please ask your question.
spk09: Thank you for your question. I would like to ask about the cost control. We can see that OPEC has a very good control of the private sector, and it also has a decline year-on-year. I don't know how we should think about such a trend in 2021. Will there be such a trend? Thank you, Benjamin, for taking my question. So I'd like to talk about the cost control side. You did very well in Q420, and we're seeing a real decrease in OPEX. How should we think about the trend in 2021? Thank you.
spk13: This is Xiaodong. I think in general, definitely we can believe And the trend will continue in the next few years. When we talk about like a cost expense, I think the two main elements are the content cost and some expenses. When we talk about the content cost, as I just said, if you look at the core business, not only are the percentage of revenue, but even the dollar amount, I think you will see a very healthy growth trend in the next few years. The only driver we are increase the content cost, as we just mentioned, there will be only two other drivers that could possibly increase the content cost in the next few years. One is the category of the content. We are talking about, like, say, entering into some new areas, like actually original movies. And the second one is what we talk about, like expansion to the overseas regions. I think these are the only two drivers that could raise the content cost in the next few years. But from time to time you might observe some, like, fluctuation of the content cost because of, like, the efficiency of the environment, something like that. And besides the content cost, I think the only major items left is some, like, the marketing expenses, including the content promotion, some, like, say, branding or family apps promotion, something like that. Definitely I think you will observe economic scare in the next few years. So gradually, those costs or expenses, the percentage of revenue, you will have a very healthy trend in the next few years. Thank you.
spk09: Got it. Thank you.
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spk08: We've got time for one last question. And your final question? It comes from Zhixing Liu from UBS. Please ask a question.
spk12: Thank you for accepting my question. First of all, I wish you a happy new year. I would like to know how the development of Suike is going now. How do we look at the content of the video content that corresponds to Suike from this strategy? How important is it to the long video business? Thank you, management, for taking my question. What is the latest progress of our Suike app? What is the strategic importance of Suike's mid-form video for our core long-form video business? Thank you.
spk10: Hello. Suike has been in this business model for more than two years. The length of the video itself is short and long, but the maximum number of videos played is usually a few minutes, which is a video of five or six minutes to ten minutes. The content is very extensive, including all kinds of interesting things, such as Slime. It's a kind of high-quality material, a kind of mud that can pinch out all kinds of shapes. And then, for example, what kind of douji, douquixuan. For example, of course, the film industry, the stars are also important communities. It's about using video as a medium for people with all kinds of interests and hobbies to watch videos, post videos, and communicate. This positioning has been very clearly determined. Happy New Year. As you may know, 3K is already in its second year of operation. We have determined its position. It's actually a video-based interest community.
spk06: So it's a comprehensive video community which contains short video content, medium video content, and long video content. However, the most viewed content is the short video content which usually lasts for five to six minutes or to ten minutes something. It has a very comprehensive content categories, for example, they have some interest-based content, for example, slime, shilaimu. And also, of course, it includes a lot of popular TV drama, variety show content. In terms of the user traffic for Suike, It has some volatility over the past year. However, we believe if we execute our strategy correct, we can see a quite healthy trend for the traffic for this year.
spk10: Let me explain briefly. I will use Bilibili as an example. In fact, Bilibili has developed into a 2D community. Last year, it was trying to expand its users not only pay attention to the content and topics of R2C, but also pay attention to other interests. For Suike, it starts from the interest community outside of R2C, and then develops more interest communities. This is the route. In addition, regarding Okay, just to add on one point, so take Bilibili for example.
spk06: As you may know, Bilibili has done a good job over the past year. They tried to penetrate. So they originated from ACG content, but they tried to penetrate into more user cohorts. And so this actually for Suike is actually in a contrast way. So we originated from a more, I mean, mass user interest, but we try to penetrate into more vertical content category or like interest communities. And also, we want to add some elaboration for our pricing adjustment. I will turn over to Xianghua Yang, our Senior Vice President of our Membership Panel.
spk11: Hello, everyone. I would like to share with you some changes after last November's challenge. After the challenge, we adjusted the price of Android to the same price of Apple. Okay. I want to elaborate the impact from the pricing adjustment we did last November. So specifically, we raised the pricing on the non-iOS devices to the same level on the iOS devices.
spk06: So our observation is that after the pricing adjustment, our orders on the iOS devices are actually improved. However, there are some next-win parts for our non-iOS orders on the non-iOS devices. However, overall, our pool is actually improved. And also, as you may know, we did some pricing guarantee program for the existing users on the non-iOS devices. We observed that for this kind of users, the next month retention rate is actually improved. And also, for some new added users, new added subscribers, their first month retention rate is also improved.
spk11: So, overall, the impact from the pricing adjustment
spk06: program has shown better, actually was better than our expectation. And we believe the impact is very temporary and very minimal. However, this pricing adjustment will have a very positive impact for our R pool and also the long-term subscriber growth. Thank you.
spk08: Thank you. I would now like to hand the conference back to management for closing remarks. Please continue.
spk06: So, okay, this is the end to our earnings call. We just keep in touch after the results. Happy New Year for 2021. Thank you. Thank you.
spk08: Ladies and gentlemen, we have reached the end of our conference call. Thank you for participating.
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