Huayu started as a substitute director

Chapter 314 Derivation of Advertising Profit Model
The Yutu Group held a meeting, and Yutu Technology also needed to be reformed. This reform had only three objectives. The first was to change Yutu Technology to Chang'e Technology.

The logo is the image of "Chang'e", which is a copy of Liu Tianxian's image, but without the rabbit, so it can be distinguished.

The second is to create the Chang'e long video platform, that is, all the TV series and movies on Bilibili will be transplanted to Chang'e Video and drive traffic to Chang'e Video.

Bilibili focuses on short videos, live broadcasts and two-dimensional animations. Users produce their own content instead of relying on Yutu.

These two platforms are very money-burning. Taking the small broken station as an example, not only did it not make any money last year, it suffered a loss of 4 million.

This is the result of doing nothing, no promotion, no paying for film and television copyright fees, and still using TV dramas to attract traffic and earn advertising fees.

And there is no promotion or marketing. If there is promotion, it will be a greater loss.

The small broken station suffers losses in many aspects. One is the share of profits from content creators, which will increase, and the other is the high operating costs.

This includes labor costs, technology costs, data analysis, customer service costs, maintenance costs, licensing costs and many more.

Maintenance fees refer to the costs of ensuring platform stability and security; licensing costs are the authorized use of third-party software.

In addition, data centers, bandwidth and games are the main expenses, otherwise the losses will be even more serious, possibly exceeding 100 million.

Losses are inevitable. Any Internet company will suffer losses when it starts up. Tencent lost money for three years, and Alibaba lost money for ten years.

Fang Hong had already prepared for losses, otherwise he would not have developed games first and then the video platform.

Because traffic needs to be monetized through games, miHoYo also needs to promote its products through video platforms, as well as films and TV series.

The third is to explore the short video track.

Short videos will be the trend of the future. This year, Kuaishou and Tencent have already been incubating short videos.

Although Tencent gave up later, Kuaishou succeeded.

"Hello, principal."

"Hello."

"."

In the rest area of ​​the office, Fang Hong shook hands with seven or eight people, who were his founding team of Chang'e Technology.

What Chang'e Technology lacks now is talent, high-end talent. Fang Hong has no experience or ability in this area, he just knows what the future will be like.

Who knows how the platform is built, how it is operated, and how it develops?
So even though he seems to be doing nothing, he is recruiting talents from everywhere based on his memory, including technical talents and management talents.

In addition to Zhang Nan, he also poached Zhang Lidong, who is now the deputy general manager and director of the advertising center of the Beijing Times.

Zhang Lidong later became the second-in-command of ByteDance, and was poached by Zhang Yiming.

Fang Hong recruited him with just one sentence: "Content distribution will move from the era of pictures and texts to the era of videos. Do you want to go against the trend?"

Just talk nonsense. Zhang Yiming is also talking nonsense. Jack Ma’s poaching of Joe Tsai is also nonsense.

Before joining Alibaba, Joseph Tsai was already a senior executive in a foreign company, a president-level figure.

Talented people don't work for money, but for realm. They are already financially free and have abilities. Do you think they are short of money?
What they lack is the ability to achieve a higher level.

So it is not very useful to talk to them about interests. You should still talk about ideals and development. If they think there is a way forward, they will follow you.

This is complicated to explain, and Fang Hong doesn’t understand it anyway. He only knows that it’s right to elevate his own ambitions and aim to create a great company.

Any startup that wants to grow big will poach talent.

In the past, Internet companies such as BAT poached talents from American companies. At that time, China's Internet was in its infancy and there was no talent at all.

Now the new Internet industry is poaching talents from abroad as well as from BAT in China, especially Baidu.

If you are short of technical talent, it is a good idea to recruit from Baidu, and you will always find the right one.

Many of ByteDance’s most talented people were poached from Baidu, and the same is true for other Internet companies.

It is not easy to poach people from Alibaba and Tencent, but it is very easy to poach people from Baidu. Anyone with a little bit of ambition will not stay in those crappy companies.

Fang Hong is only discovering future talents, or talents that have already shown their abilities. He wants to discover and cultivate them himself, which requires costs and trial and error.

The time cost is simply too much to wait!
The initial organizational structure of Chang'e Digital Technology: Zhang Nan, operations officer; Zhang Lidong, president; Hua Wei, head of human resources; Yang Zhenyuan and Hong Dingkun, vice presidents of technology, and Yin Xin, vice president.

Zhang Lidong is responsible for advertising commercialization.

Yang Zhenyuan and Hong Dingkun were poached from Baidu and are responsible for recommendation algorithms and engines, as well as technical research and development. The two have different focuses.

The former is a search engine, and the latter is responsible for cutting-edge technology.

In addition, Yinxin is responsible for server-side research and development, software and hardware architecture, and system maintenance.

This is the initial team of Chang'e Technology, and it is still expanding. It plans to expand to 10,000 employees, or coders, within the year.

"Sit down, everyone. The company is just starting out and we need your help. Let's just chat casually today, no need to be so serious." Fang Hong gestured, then pulled out a writing whiteboard.

Everyone was seated, and the discussion was not as serious as at a meeting. They were just drinking tea and chatting on the sofas about the organizational structure and future development.

If you need to express your thoughts, write them on the whiteboard.

"In the future, short videos will replace pictures and texts, which will change the way people get information. People will not only get information from pictures and texts, but more from videos."

Fang Hong wrote these words on the whiteboard.

The font is casual and elegant, and quite ornamental. He has always written well. "Video platforms have high costs and are difficult to make a profit. How does Mr. Fang envision making a profit in the future? Will it rely on games?" Zhang Lidong said.

No matter how great a company is, it cannot grow if it suffers persistent losses. Sustained losses will inevitably hinder its operations, and it must find ways to make profits.

Moreover, the bandwidth cost and data cost of video are too high. It is not like a picture with just a few words.

The storage and computing requirements for video are very high.

"Traffic distribution, obtaining conversion rate through advertisement click-through rate, unit price of a click, and user label after conversion. CPCCPPM." Fang Hong expressed his theory as he wrote.

Zhang Lidong, Zhang Nan and others opened their mouths slightly, looking at the whiteboard filled with professional terms such as "number of users, click-through rate, conversion rate, unit price, CPM, CPC" and so on.

I didn't quite understand it. I didn't expect that the principal, a filmmaker, actually knew all this.

They didn't quite understand what they saw, but they knew that this was a complete traffic advertising profit model that the principal had derived for them.

How to monetize traffic and how the company can operate for a long time in the future will depend on this theoretical support.

This Douyin monetization theory was no longer a secret, and it still seems quite advanced and fresh now.

Zhang Nan graduated from a second-tier university and did not have that much knowledge. She was still in the growth stage, so she did not understand much.

Zhang Lidong is not an Internet operator at all, he is in the print media business.

But the reason why they are so successful is that they rely on their experience in print media and the logic and ideas of advertising traffic distribution that they provided to ByteDance.

Now Fang Hong just took it in advance and spoke in very general terms without any details.

However, Fang Hong is not afraid of others copying him. This is not something that can be achieved by simply writing a few words on a whiteboard. It requires not only technical cooperation but also theoretical support.

There are many types of distribution, including traffic distribution, algorithm distribution, social distribution, manual distribution, paid distribution, etc., which are very complicated.

When real theoretical things are combined with technology, many things will change.

This symposium was for Fang Hong to convey his ideas so that they could familiarize themselves with them in advance. As for development, it would depend on those present, and of course he would also have to make corrections.

After all, he knows what the product should look like and can be said to be the best product experience officer.

As for the organizational structure, it will definitely be designed by these professionals, and future development will follow Fang Hong’s strategy.

In terms of funding sources, "Honor of Kings" will allocate 2.4 million US dollars every month for development, which is million US dollars a year.

That means about 16 billion will be burned this year.

But it is far from enough. There are not many staff members now, only two or three thousand. If we want to expand it to tens of thousands or hundreds of thousands of people, the administrative costs will rise sharply.

The salaries of programmers are not low.

Take the long video platform iQiyi as an example, it burns billions every year.

They all buy new film and television copyrights, all kinds of them, just to seize the market, and they have the capital behind them to support them.

Chang'e Video does not buy those copyrights, but only buys old movies and TV series. Those are cheap and you can buy a lot for a few million. They are all sold in packages.

New films and TV shows will be provided by Yutu at a fair price, which means that they will be provided to Chang'e Video without making any profit or loss. Any profits from advertising will be distributed to Yutu according to the rules.

In addition, we will work with Yutu to support the online drama market, invest in online drama shooting, help them develop, and buy traffic.

Fill content in a variety of ways.

Of course, the focus is still on developing small and broken sites, which have high user stickiness. After all, users create the content themselves. Those who like to watch will love to watch it, and those who don’t like to watch will also love to watch it.

The small broken station will first suffer a loss of 10 billion this year, and then slowly build up the ecosystem, and then promote marketing.

With long videos being stripped away, traffic is bound to decline a lot. Without traffic, those UP hosts won’t make money, and without money, they will have no motivation to create content, so they need to keep it stable.

We expect to suffer losses again next year and plan for long-term losses.

It doesn’t cost much to explore short videos at this stage.

Only 20 million dollars was allocated because the gaming department also has costs to bear, such as developing mobile games, Fortnite, and game engines.

The latter two were 300 million yuan given by Fang Hong at the beginning, but it was not enough, mainly because "Fortnite" entered the deep development stage and the money was spent.

And hosting competitions is also very expensive.

However, right now, "Heroes of Glory" is not at its peak revenue period, so it is struggling.

Fang Hong held the Yutu meeting and the Chang'e meeting for a full half month. During this half month, there were various meetings every day.

The main thing is to convey his ideas, his goals, and to straighten out the organizational structure.

We'll have to wait and see what happens next. Of course, he'll still face struggles, since he's new here.
On this day, Monday, March 3, Fang Hong was invited to Beijing Film Academy to communicate with students.

This was what he had promised years ago, to share his success story with students. He called it communication, but in fact he was just showing off.

As for Fang Honglai's communication, Beijing Film Academy notified him one week in advance and the students also communicated with each other.

Almost everyone who pays attention to the school knows that people like Nazha, Zhou Dongyu, Zhang Yishan, Yang Zi, Yang Caiyu, and Wu Jinyan are still in school.

Some are excited, some are admiring, and some are melancholy, like Yang Zi.

She had offended the principal before, that was in 09, when she had just entered Beijing Film Academy, and now she is about to graduate.

(End of this chapter)