The latest release of Sohu's financial report shows that Sohu’s total revenue in 2014 was US$1.7 billion, which is an increase of 19% compared to 2013. This is the total income of Sohu Group exceeded 10 billion yuan for the first time. Among them, Sohu’s video revenue was US$51 million, an increase of 64% from the same period in 2013. However, due to the high cost of video services and the huge promotion costs of game platforms, the net loss according to US GAAP is US$20 million.
Zhang Chaoyang, chairman of the Sohu board of directors, said that although Sogou continued to maintain a strong growth, the burning of video services lowered the overall profitability. “At present, the cost of copyright for video services is very high, with some high-quality repertoires ranging from 1 million to 1.5 million per episode, and the cost of each drama is as high as 10 million to 20 million. Although the video industry can reduce the cost of this part through changing drama, It's still a hard cost for the video industry."
In the past 2014, the competition for video websites reached an unprecedented level of fierce competition. Although the regulators detailed the policies of overseas dramas, they did not affect the ever-rising prices of overseas dramas. In the case of Korean TV dramas that have a huge amount of play, the copyright price of many Korean dramas that were hot last year has exceeded US$120,000 per episode, and prices are still rising. The overall copyright fees for popular domestic variety videos also exceed 100 million yuan.
Zhang Chaoyang said: "When we ask Sohu when it is profitable, it is equal to asking the entire video industry for profit. In 2014, Sohu Video was the least expensive of several video sites, but it was the fastest growing. Sohu Video had to come out with a new one. In 2015, Sohu will no longer be fiercely competing for external copyright purchases. “We will not sell Sohu video, but we will not exclude capital-level cooperation. â€
In addition, on the issue of recent layoffs in Sohu, Zhang Chaoyang said: “Sohu employees should be able to feel comfortable for the Spring Festival, and the layoffs will come to an end.†Zhang Chaoyang revealed that from August to September 2014, Sohu’s employees had a scale of 2,000. Among them, the number of layoffs for Changyou is as high as 1,000.
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