iQIYI Inc (IQ) 2019 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to iQIYI's First Quarter 2019 Earnings Conference Call.

女士們、先生們，感謝大家的耐心等待，歡迎參加愛奇藝2019年第一季財報電話會議。

Well at this time all participants are in a listen only mode.

此時所有參與者都處於只聽模式。

Today's call will include a question and answer session.

今天的電話會議將包括問答環節。

(Operator Instructions) I must advise you that this conference is being recorded today, Friday, 17th of May 2019.

（操作員說明）我必須告知您，本次會議將於今天（2019 年 5 月 17 日星期五）進行錄製。

I'd now like to hand the conference over to your first speaker today, Ms. Dahlia Wei, Investor Relations Director.

現在我想將會議交給今天的第一位發言者，投資者關係總監 Dahlia Wei 女士。

Thank you.

謝謝。

Please go ahead.

請繼續。

Thank you, operator.

謝謝你，接線生。

Hello, everyone, and thank you all for joining iQIYI's First Quarter 2019 Earnings Conference Call.

大家好，感謝大家參加愛奇藝2019年第一季財報電話會議。

The company's results were released earlier today and are available on the company's Investor Relations website at ir.iqiyi.com.

該公司的業績於今天稍早發布，可在該公司的投資者關係網站 ir.iqiyi.com 上查閱。

On the call today are Dr. Yu Gong, our Founder, Director and CEO; and Mr. Xiaodong Wang, our CFO.

今天參加電話會議的是我們的創辦人、董事兼執行長龔宇博士；以及我們的財務長王曉東先生。

Dr. 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.

龔博士將簡要概述公司的業務運作和亮點，隨後由曉東介紹財務狀況和指導。

After their prepared remarks, we will hold a Q&A session.

在他們準備好發言後，我們將舉行問答環節。

Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。

Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from current expectations.

前瞻性陳述受到風險和不確定性的影響，可能導致實際結果與目前預期有重大差異。

Potential risks and uncertainties include but are not limited to those outlined in our public filings with SEC.

潛在風險和不確定性包括但不限於我們向 SEC 公開提交的文件中概述的風險和不確定性。

iQIYI does not undertake any obligation to update any forward-looking statements except as required under applicable law.

除適用法律要求外，愛奇藝不承擔更新任何前瞻性聲明的義務。

With that, I will now turn the call over to Dr. Gong.

現在我就把電話轉給龔醫生。

Please go ahead.

請繼續。

Hello, everyone, and thank you for joining us for our first quarter 2019 earnings call.

大家好，感謝您參加我們的 2019 年第一季財報電話會議。

We achieved another solid quarter of results.

我們又取得了穩健的季度業績。

Total revenues were RMB 7.0 billion, up 43% year-over-year.

總收入為人民幣70億元，較去年同期成長43%。

Total subscribing members reached 96.8 million as at end of March.

截至 3 月底，訂閱會員總數達到 9,680 萬人。

This number does not include any sports subscribers and represents a 58% growth from a year ago.

這個數字不包括任何體育訂閱用戶，比一年前增加了 58%。

We continued to strengthen our platform, attract new users and increase user stickiness.

我們持續強化平台，吸引新用戶，增加用戶黏性。

During the first quarter, average DAU of mobile apps and total user time spent both achieved double-digit growth year-over-year.

第一季度，行動應用程式平均 DAU 和用戶總時長較去年同期均達到兩位數成長。

iQIYI continued to rank #1 among online video platforms in China in terms of mobile MAU, mobile DAU and the total time spent according to third-party tracking data of iResearch and QuestMobile.

根據艾瑞諮詢和QuestMobile第三方追蹤數據，愛奇藝在行動月活躍用戶、行動日活躍用戶和總時長方面繼續位居中國線上視訊平台第一。

Let me start my review with our membership business.

讓我從我們的會員業務開始回顧。

During the first quarter, total revenues for our membership business increased by 64% to RMB 3.4 billion.

第一季度，會員業務總收入成長64%至34億元人民幣。

Total subscribers reached 96.8 million at quarter end, representing a net addition of 9.4 million from last quarter.

截至季末，用戶總數達到 9,680 萬，較上季淨增 940 萬。

This was mainly attributable to our premium content and targeted marketing campaigns.

這主要歸功於我們的優質內容和有針對性的行銷活動。

In terms of premium content, we released several high-quality original dramas during the quarter, such as The Legend of Hao Lan, The Golden Eyes, The Legends, all of which quickly drove subscribers growth.

在優質內容方面，本季我們推出了多部優質原創劇，如《昊藍傳奇》、《黃金瞳》、《傳奇》等，均快速帶動了用戶成長。

Licensed dramas such as The Story of Minglan, All Is Well and I Will Never Let You Go also contributed to subscribers conversion as we granted subscribers early access to watch.

《明蘭傳》、《都挺好》、《我不放你走》等授權劇集也有助於訂閱者轉化，因為我們為訂閱者提供了優先觀看權。

In addition, our variety shows such as Idol Producer 2, our self-produced young inspirational variety show; and Wife's Romantic Travel Season 2, a licensed reality show, we offer extra episodes, voting privileges and other value-added services to members which helped further to add subscriber growth.

另外，我們的綜藝節目，如我們自製的青春勵志綜藝節目《偶像練習生2》；以及授權真人秀《妻子的浪漫旅行第二季》，我們為會員提供額外劇集、投票特權和其他增值服務，這有助於進一步增加訂戶成長。

On the marketing side, we took advantage of winter vacation and Chinese New Year holiday, when many young people returned from big cities to their hometowns, and rolled out targeted marketing campaigns to increase user penetration into lower-tier cities and older age groups.

在行銷方面，我們利用寒假和春節假期，許多年輕人從大城市回到家鄉，有針對性地進行行銷活動，以提高用戶對低線城市和老年族群的滲透。

Moving to our advertising business.

轉向我們的廣告業務。

During the first quarter, ad revenues remained largely flat compared to a year ago.

第一季度，廣告收入與去年同期基本持平。

Looking ahead, we maintain a cautious outlook on advertising due to the soft macroeconomic environment in China and the slower-than-expected recovery of our in-feed advertising.

展望未來，由於中國宏觀經濟環境疲軟以及資訊流廣告的復甦慢於預期，我們對廣告業務保持審慎展望。

We believe our premium content and innovative ad solutions will continue to serve as a key driver of future performance for our advertising business.

我們相信，我們的優質內容和創新廣告解決方案將繼續成為我們廣告業務未來業績的關鍵驅動力。

During the first quarter, our highly popular self-produced variety show continued to build upon the solid foundation for our advertising business.

一季度，廣受歡迎的自製綜藝繼續為廣告業務奠定了堅實的基礎。

For example, Idol Producer 2 came in first among online variety show rankings of Baidu and Weibo.

例如，《偶像練習生2》在百度和微博的網路綜藝排行榜上名列第一。

As a result, ad revenues generated from the show reached a historical high for all self-produced variety shows on our platform.

該節目的廣告收入創平台所有自製綜藝節目的歷史新高。

At the same time, we are also introducing new innovative ad solutions such as immersive marketing, which helps convert the show's highly supportive fans into customers of our advertisers.

同時，我們也推出了新的創新廣告解決方案，例如沉浸式行銷，這有助於將節目的大力支持粉絲轉化為廣告商的客戶。

This demonstrates the value we bring to enhancing brand awareness and increasing advertising ROI.

這證明了我們為提高品牌知名度和增加廣告投資報酬率所帶來的價值。

As I mentioned on our last earnings call, we are working to improve advertising monetization of our original dramas in addition to their role in driving subscription growth.

正如我在上次財報電話會議上提到的，除了推動訂閱成長的作用之外，我們還致力於提高原創電視劇的廣告變現能力。

During the first quarter, our original dramas The Legend of Hao Lan, The Golden Eyes and The Legends all ranked ahead of industry peers in terms of popularity and traffic according to third-party statistics from Enlightent, Chinese name Yunhe.

根據啟迪（雲鶴）第三方統計，第一季度，我們的原創劇《昊藍傳奇》、《黃金瞳》和《傳奇》的熱度和流量均領先於業界同行。

This helped to increase ad revenue from our original content to a higher percentage of total ad revenue.

這有助於將我們原創內容的廣告收入提高到廣告總收入中的比例更高。

During the first quarter, the other businesses continued to gain momentum with revenues growing 143% year-over-year.

第一季度，其他業務持續保持成長勢頭，營收年增143%。

This demonstrates the success we have had in diversifying our revenue streams and in building multiple engines for the company.

這表明我們在實現收入來源多元化和為公司打造多個引擎方面取得了成功。

The growth was broad-based, and to a large extent, driven by our gaming business, which performed better than it's expected.

這種成長是廣泛的，並且在很大程度上是由我們的遊戲業務推動的，該業務的表現優於預期。

Now now our content strategy, quality and innovation form the core of our content production criteria.

現在，我們的內容策略、品質和創新構成了我們內容製作標準的核心。

We remain committed to incorporating Chinese cultural values into our content and pay great attention to detail.

我們仍然致力於將中國文化價值觀融入我們的內容中，並非常注重細節。

Our content library is getting enriched every day as we continually deliver high-quality content covering youth, fashion, suspense, realistic and historic themes among others.

我們的內容庫日益豐富，不斷提供涵蓋青春、時尚、懸疑、現實、歷史等主題的優質內容。

Entering Q2, we have released some original content such as The New Legend of White Snake, a remake of the classic drama based on a well-known Chinese folktale; The Thunder, an anti-drug police and detective series; and I am CZR, a singer songwriter music reality show.

進入第二季度，我們發布了一些原創內容，例如根據中國著名民間故事改編的經典戲劇《新白娘子傳奇》； 《雷霆》，一部緝毒警察與偵探影集；我是CZR，一檔創作歌手音樂真人秀節目。

In particular, our original drama series, The Thunder, has not only been well received by all users but also highly acknowledged by government officials.

尤其是我們的原創電視劇《雷霆》，不僅受到了廣大用戶的好評，也得到了政府官員的高度認可。

And it become the first original series aired during prime time on drama channel of CCTV.

成為中央電視台電視劇頻道首部黃金時段播出的原創劇集。

Furthermore, it is expected to hit international market through RED BY HBO, which acquired the Southeast Asia licensing rights of the show.

此外，預計將透過RED BY HBO獲得該劇的東南亞授權權，進軍國際市場。

For the rest of the year, our content pipeline remains very strong, as many of you may have discovered at our iQIYI World Conference last week.

在今年剩下的時間裡，我們的內容管道仍然非常強勁，正如你們許多人在上週的愛奇藝世界大會上可能已經發現的那樣。

In addition to the upcoming slate of high-quality drama series and variety shows, we are also making efforts to tap into original theatrical movies through iQIYI original film plan.

除了即將推出的優質劇集和綜藝節目外，我們還透過愛奇藝原創電影計劃，努力進軍原創院線電影。

For the first time in the industry, we officially announced a standard named the Interactive Video Guideline along with our Interactive Video Platform.

我們在業界首次正式宣布了名為「互動式視訊指南」的標準以及我們的互動式視訊平台。

The standard and authoring tools were designed to empower our company partners to produce more interactive drama or variety shows with lower cost and less time.

標準和創作工具旨在幫助我們的公司合作夥伴以更低的成本和更少的時間製作更多互動戲劇或綜藝節目。

We are constantly enhancing our IP-centered ecosystem.

我們不斷增強以知識產權為中心的生態系統。

As a leading content distribution platform and IP powerhouse, we have incubated various types of content in the form of literature, light novels, cartoons and comics as well as dramas, movies, variety shows, animation and even online games.

作為領先的內容分發平台和IP巨頭，我們孵化了文學、輕小說、動漫、電視劇、電影、綜藝、動漫甚至網路遊戲等多種類型的內容。

This allows us to fully leverage the value of our IP-based productions and monetizing them through diversified channels.

這使我們能夠充分利用IP產品的價值，並透過多元化的管道將其貨幣化。

For example, through Project Yunteng, we released 12 drama and movie titles adapted from literature IP last year.

例如，去年我們透過雲騰計畫推出了12部文學IP改編的電視劇和電影。

And we expect to adapt roughly about another 80 literature titles into video content this year.

我們預計今年將大約另外 80 種文學作品改編成影片內容。

Our self-produced variety show Idol Producer not only allowed us to expand our business territory to talent agency but also led to the creation of IP adjacent products with more than 200 SKUs.

自製綜藝節目《偶像練習生》不僅讓我們將商業版圖拓展到經紀公司，也催生了超過200個SKU的IP鄰接產品。

Another more recent example is our game business.

另一個最近的例子是我們的遊戲業務。

Our subsidiary Skymoons launched a 3D turn-based mobile game The Croods, which is based on a famous IP licensed from DreamWorks Animation's 2013 popular animated feature film The Croods.

子公司天象互動推出了一款3D回合製手遊《瘋狂原始人》，該遊戲基於夢工廠動畫2013年熱門動畫電影《瘋狂原始人》的著名IP授權。

The game has performed exceptionally well since it was launched in February, exceeding our expectation.

遊戲自2月上線以來，表現異常出色，超出了我們的預期。

This is another good showcase of our ability to adapt IP into online games.

這也是我們IP改編網路遊戲能力的另一個很好的體現。

And lastly, I'd like to finish my discussion with technology.

最後，我想用科技來結束我的討論。

As a technology-based entertainment company, our business development relies on the continued innovation of both technology and products.

作為一家科技娛樂公司，我們的業務發展依賴於技術和產品的持續創新。

Recently, on the 5G front, we began collaborations with various carriers such as China Unicom to explore the commercial application of 5G technology to Internet media.

最近，在5G方面，我們開始與中國聯通等多家營運商合作，探索5G技術在網路媒體的商業應用。

On March 18, we launched our 8K VR visual experience center at China Unicom's 5G Innovation Showroom in Beijing.

3月18日，我們在北京中國聯通5G創新展廳推出8K VR視覺體驗中心。

In addition, we launched an innovative service, Qisubo, which integrates CDN technology with 5G Mobile Edge Computing.

此外，我們還推出了創新服務“企速博”，將CDN技術與5G行動邊緣運算結合。

It leverages ample bandwidth and minimal latency of 5G to effectively ensure high frame rates when watching videos and a greater interactive experience.

它利用5G充足的頻寬和極低的延遲，有效保證觀看影片時的高幀率和更好的互動體驗。

In the future, our Qisubo service can be used in hotels, airports, high-speed trains, universities, shopping malls and other locations, which will allow users to enjoy a smoother experience when watching our extensive selection of high-quality video content.

未來，我們的奇速博服務可以在飯店、機場、高鐵、大學、商場等場所使用，讓用戶在觀看我們海量的優質影片內容時享受更流暢的體驗。

As the commercialization of 5G technology rolls out, we will continue to expand our usage scenarios and ensure premium entertainment experience for our users.

隨著5G技術商用的逐步推進，我們將持續拓展使用場景，為使用者提供優質的娛樂體驗。

To sum up, we had a strong start to the year of 2019 with a set of solid results during the first quarter especially in our membership business.

總而言之，我們在 2019 年有了一個良好的開端，在第一季取得了一系列穩健的業績，尤其是在我們的會員業務方面。

As the subscriber base continues to scale, benefiting from China growing GDP which exceeded USD 9,000 in 2018, we believe Chinese online entertainment industry has entered a new growth phase with enormous opportunities for the years to come.

隨著用戶群不斷擴大，受益於2018年中國GDP超過9,000美元的成長，我們相信中國線上娛樂產業已進入新的成長階段，未來幾年將面臨巨大機會。

We are at the forefront of the right industry at the right time.

我們在正確的時間處於正確行業的前沿。

And we will continue to leverage our platform advantage, advance our technology innovation and attract top talents in order to capture the tremendous growth potentials ahead.

我們將持續發揮平台優勢，推動技術創新，吸引頂尖人才，把握未來巨大的成長潛力。

We remain committed to our vision of becoming a technology-based entertainment giant and driving sustainable long-term value for our shareholders.

我們仍然致力於實現成為科技型娛樂巨頭並為股東帶來可持續的長期價值的願景。

With that, I will now pass the call to Xiaodong to go over the financials.

說完，我現在就把電話轉給曉東，讓他了解一下財務狀況。

Morning, everyone.

大家早安。

Let me go through our financial highlights.

讓我回顧一下我們的財務亮點。

For the first quarter of the year 2019, iQIYI total revenues were RMB 7 billion, up 43% year-over-year.

2019年第一季，愛奇藝總營收為70億元人民幣，較去年同期成長43%。

The increase was primarily driven by the strong growth of our membership services, thanks to our premium content as well as our various operational initiatives.

這一成長主要是由我們的會員服務的強勁成長所推動的，這要歸功於我們的優質內容以及我們的各種營運舉措。

Membership service revenue was RMB 3.4 billion, up 64% year-over-year.

會員服務收入34億元，較去年成長64%。

This was driven by the strong growth in the number of subscribers which reached 96.8 million at the end of the first quarter.

這是由訂戶數量強勁增長推動的，截至第一季末訂戶數量達到 9,680 萬。

Online advertising service revenue was RMB 2.1 billion, flat year-over-year due to macro softness and the slower-than-expected recovery of our in-feed advertising.

由於宏觀經濟疲軟以及資訊流廣告復甦慢於預期，線上廣告服務收入為 21 億元，比去年同期持平。

Content distribution revenue was RMB 442.6 million, up 66% year-over-year.

內容分發收入為人民幣4.426億元，年增66%。

This increase was driven by a number of premium content titles we distributed.

這一增長是由我們分發的許多優質內容所推動的。

Other revenues were RMB 982.5 billion, up 143% year-over-year.

其他收入為人民幣9,825億元，較去年成長143%。

The increase was driven by strong performance across various business lines especially the robust growth of our game business after the acquisition of Skymoons, which launched several successful games during the first quarter.

這一成長得益於各業務線的強勁表現，尤其是收購天象互動後遊戲業務的強勁增長，天象互動在第一季推出了多款成功的遊戲。

Moving to the cost of revenues.

轉向收入成本。

Our cost of revenue was RMB 7.3 billion, up 50% year-over-year.

我們的收入成本為人民幣73億元，年增50%。

The increase was primarily driven by the higher content costs as well as other cost items.

這一增長主要是由於內容成本以及其他成本項目的增加。

Content costs were RMB 5.3 billion, up 38% year-over-year.

內容成本為人民幣53億元，較去年成長38%。

Turning to the operating expenses.

轉向營運費用。

SG&A expenses were RMB 1.1 billion, up 62% year-over-year primarily due to the increased share-based compensation expenses and the higher marketing spending on games after the consolidation of Skymoons.

銷售管理費用為 11 億元，年增 62%，主要是由於天象互動合併後股權激勵費用增加以及遊戲行銷支出增加。

Our R&D expenses were RMB 598.1 million, up 54% year-over-year.

研發費用為人民幣5.981億元，年增54%。

The increase was primarily due to our continued investment in R&D personnel.

這一增長主要是由於我們對研發人員的持續投入。

Operating loss was RMB 2 billion compared with the operating loss of RMB 1.1 billion in the same period last year.

經營虧損為人民幣20億元，去年同期營運虧損為人民幣11億元。

Operating loss margin was 29% compared to the operating loss margin of 22% in the same period of last year.

經營虧損率為29%，去年同期經營虧損率為22%。

Total other income was RMB 211.1 million compared with total other income of RMB 666.2 million during the same period last year.

其他收入總額為人民幣211.1百萬元，而去年同期其他收入總額為人民幣666.2百萬元。

The year-over-year variance was mainly due to the fair value gain we recognized in the first quarter last year arising from our private company equity investments, lower foreign exchange gains we recognized in the first quarter of 2019 due to the exchange rate fluctuation as well as increased interest expenses associated with our financing activities.

同比差異主要是由於我們在去年第一季確認的私人公司股權投資產生的公允價值收益，以及由於匯率波動而在2019年第一季確認的匯兌收益減少所致。以及與我們的融資活動相關的利息支出增加。

Loss before income taxes was RMB 1.8 billion compared with a loss of RMB 396.2 million in the same period last year.

所得稅前虧損為18億元，去年同期為虧損3.962億元。

Income tax expenses was RMB 7.4 million compared to the income tax expense of RMB 0.5 million in the same period in year 2018.

所得稅費用為人民幣740萬元，而2018年同期所得稅費用為人民幣50萬元。

Net loss attributable to iQIYI was RMB 1.8 billion compared with a loss of RMB 395.7 million during the same period of year 2018.

愛奇藝應佔淨虧損為人民幣18億元，而2018年同期則為虧損人民幣3.957億元。

Diluted net loss attributable to iQIYI per ADS was RMB 2.52.

每份 ADS 歸屬於愛奇藝的攤薄淨虧損為 2.52 元。

As of March 31, 2019, the company had cash, cash equivalents, restricted cash and short-term investments of RMB 17.9 billion.

截至2019年3月31日，本公司擁有現金、現金等價物、限制性現金及短期投資179億元。

In March 2019, we closed the offering of USD 1.2 billion in aggregate principal amount of convertible senior notes.

2019 年 3 月，我們完成了本金總額為 12 億美元的可轉換優先票據的發行。

Turning to the second quarter 2019 guidance.

轉向 2019 年第二季指引。

We expect total revenues to be between RMB 6.91 billion and RMB 7.29 billion representing an increase of 12% to 18% year-over-year.

我們預計總收入將在人民幣 69.1 億元至 72.9 億元之間，年增 12%至 18%。

This forecast reflects iQIYI's current and preliminary view, subject to change.

該預測反映了愛奇藝目前的初步觀點，可能會改變。

This concludes our prepared remarks.

我們準備好的演講到此結束。

I will now turn the call to the operator and open the Q&A.

我現在將呼叫轉給接線員並打開問答。

(Operator Instructions) Your first question comes from the line of Ella Ji from China Renaissance.

（操作員說明） 您的第一個問題來自華興資本的Ella Ji。

My first question is regarding your content cost in the first quarter.

我的第一個問題是關於第一季的內容成本。

It was a nice surprise.

這是一個很好的驚喜。

It's down almost 20% sequentially.

環比下降了近 20%。

So can you talk about your content cost trend?

那麼您能談談您的內容成本趨勢嗎？

Is this something one-off?

這是一次性的事嗎？

Or shall we expect to see your content cost continue to trend down in the coming quarters?

或者我們應該看到您的內容成本在未來幾季持續下降？

And then also relating to the content, this year is -- it's quite an important year.

然後也與內容相關，今年是非常重要的一年。

There are a lot of anniversaries for our political events.

我們的政治事件有很多周年紀念日。

So relating to that, can you just give us an update of the regulation approval?

就此而言，您能否向我們介紹一下法規批准的最新情況？

Is it -- is there any change that you are seeing?

您看到有什麼改變嗎？

And how shall we think about the impact on your revenue and cost, respectively?

我們該如何看待這分別對您的收入和成本的影響？

(foreign language)

（外語）

[Interpreted] So for your question, the major reason for the content cost coming down in this quarter is primarily due to delay of some -- certain of our content.

[解讀]對於你的問題，本季內容成本下降的主要原因主要是由於我們某些內容的延遲。

The delay is related to several reasons.

延遲與多種原因有關。

One could be the policy changes and regulatory censorship.

其中之一可能是政策變化和監管審查。

But more I think in addition there's something related to the process of our content production.

但我更認為還有一些與我們的內容製作過程有關的東西。

And talking about regulation side, I think that overall this year will be relatively stable compared to the level of last year.

而說到監管方面，我認為今年整體來說會比去年的水準相對穩定。

But entering into Q2 and Q3, there will be some anniversaries of political events, so Q2 and Q3 will be a little bit stricter than before.

但進入Q2、Q3，會有一些政治事件的紀念日，所以Q2、Q3會比之前嚴格一些。

Thank you, Ella.

謝謝你，艾拉。

Your next question comes from the line of Alicia Yap from Citigroup.

您的下一個問題來自花旗集團的 Alicia Yap。

I have a question on your second quarter guidance.

我對你們第二季的指導有疑問。

If the subscription remain solid, it would suggest that the advertising revenue will face quite meaningful year-over-year and sequential decline?

如果訂閱量保持穩定，是否意味著廣告收入將面臨相當大的年比和季減？

Is that the correct assumption?

這是正確的假設嗎？

And could you help us understand the dynamics and the shift of the landscape?

您能幫助我們了解景觀的動態和變化嗎？

So what are you seeing now from the ad demand versus 3 months ago in February when you report 4Q result?

那麼，當您報告第四季度結果時，您現在看到的廣告需求與 3 個月前的 2 月相比如何？

Was that a change of the advertiser tone to be even more cautious than you are seeing in the beginning of the year?

廣告商的語氣是否發生了變化，變得比年初更加謹慎？

This is Xiaodong.

這是曉東。

Yes, you are right.

是的你是對的。

We are more cautious about the advertising revenue in the second quarter, as I explained before.

正如我之前所解釋的，我們對第二季的廣告收入更加謹慎。

We can expect in-feed ad recoveries would be done in like 2 or 3 weeks last year.

我們預計去年的資訊流廣告恢復將在 2 到 3 週內完成。

But unfortunately, it seems it will take longer time to get it to the normal level, so which means we will have some challenge on the ad side and really big challenge on the ad revenue side.

但不幸的是，似乎需要更長的時間才能達到正常水平，因此這意味著我們在廣告方面將面臨一些挑戰，並且在廣告收入方面面臨非常大的挑戰。

And with respect to the membership service, I think we can still make like, say, a bit of a long-term positive trend of the membership business.

至於會員服務，我認為我們仍然可以做出會員業務的長期積極趨勢。

Certainly, as Dr. Gong just introduced, due to some delay of the content, we have some impact on the subscriber business also as well as the online advertising service.

當然，正如剛才龔博士介紹的那樣，由於內容的一些延遲，我們對訂閱業務以及網路廣告服務也產生了一些影響。

But in general speaking, we still have confidence on the membership service.

但整體來說，我們對會員服務還是有信心的。

Your next question comes from the line of Binnie Wong from HSBC.

您的下一個問題來自匯豐銀行的 Binnie Wong。

(foreign language) I have 2 questions here.

（外語）我這裡有兩個問題。

One is that in terms of your strong total subscriber growth here, in the past quarter, industry subs growth has been going very good.

一是，就上個季度強勁的總訂戶成長而言，產業訂戶成長一直非常好。

And now this quarter, it seems that the competitors are seeing faster pace of growth.

現在這個季度，競爭對手似乎看到了更快的成長速度。

How do you see the competitive landscape going forward?

您如何看待未來的競爭格局？

And how do you see that you still have been gaining growing the market share in your total sub despite that probably towards like the end of the year, we'll even have a better, stronger pipeline; but then this quarter, despite not very strong yet, but we still have a very, very good growth in our sub growth?

您如何看待您在整個子系統中的市場份額仍在不斷增長，儘管可能到今年年底，我們甚至會有更好、更強大的管道；但是這個季度，儘管還不是很強勁，但是我們的子成長仍然有非常非常好的成長？

What strategy you think we have been doing much better than our competitor this quarter?

您認為我們本季比競爭對手做得更好的策略是什麼？

And then second is that what is the sense in terms of second half in terms of advertising growth that you think second half besides it's an easy comp in our advertising revenue.

第二個問題是，就下半年的廣告成長而言，你認為下半年除了我們的廣告收入很容易成長之外，還有什麼意義呢？

Do you still see potential better drivers in our company in advertising?

您仍然認為我們公司在廣告方面有潛在的更好的驅動力嗎？

Or maybe the industry, how do you see has been turning better to give us confidence into the rest of the year.

或者也許這個行業，你認為已經變得更好，讓我們對今年剩下的時間充滿信心。

(foreign language)

（外語）

I'll take the second question.

我來回答第二個問題。

[Interpreted] Okay.

[解釋]好的。

For the subscriber growth, yes, you are correct.

對於訂閱者的成長，是的，你是對的。

We outperformed our peers in terms of subscriber growth in the first quarter.

在第一季的用戶成長方面，我們的表現優於同業。

I think that's mostly attributable to a very strong original content we offered in the first quarter, especially some series of -- drama series we launched and also some variety shows we produced originally such as Idol Producer.

我認為這主要歸功於我們在第一季提供的非常強大的原創內容，特別是我們推出的一些系列劇以及我們原創製作的一些綜藝節目，例如《偶像練習生》。

They all contributed to the strong growth.

他們都為強勁成長做出了貢獻。

And I'm quite confident that this trend will continue into the rest of year because our pipeline, as you mentioned, is quite strong in the second half.

我非常有信心這種趨勢將持續到今年剩餘時間，因為正如您所提到的，我們的管道在下半年非常強勁。

So our content -- on the content side, we are quite confident.

所以我們的內容——在內容方面，我們非常有信心。

But secondly, also there is something related to scheduling the content, how to balance the mix of what kind of content to be aired and also benchmarking to what our peers or other companies are offering on that platform.

但其次，還有一些與安排內容、如何平衡要播放的內容的組合以及對我們的同行或其他公司在該平台上提供的內容進行基準測試相關的問題。

So it's the overall strategy to scheduling the content launch schedule.

所以這是安排內容發佈時間表的整體策略。

But overall, I think we are quite confident.

但總的來說，我認為我們還是很有信心的。

And something I wouldn't elaborate is we also have some operational initiatives and marketing effort on advertising line.

我不想詳細說明的是，我們在廣告領域也有一些營運措施和行銷工作。

This is Xiaodong.

這是曉東。

I'll answer your second question.

我來回答你的第二個問題。

Actually, one of the very important reasons why we see a very weak performance on the ad business is relatively we have a high base last year.

事實上，我們看到廣告業務表現非常疲軟的一個很重要的原因就是去年我們的基數相對較高。

So entering into the third quarter and the fourth quarter, there wouldn't be the same issue.

所以進入第三季和第四季，就不會有同樣的問題了。

It's more like, to some extent, more apple-to-apple comparison for the ad year-over-year growth.

在某種程度上，這更像是廣告同比增長的同類比較。

So I believe you won't see that kind of like a deterioration on the year-over-year growth coming to the second half of the year.

因此，我相信今年下半年您不會看到同比增長惡化的情況。

But however, as I just said, we'll remain very cautious on the forecast of the entire advertising business in the next few quarters or even next, well, 2 years because of the relatively weak macro environment.

但是，正如我剛才所說，由於宏觀環境相對疲軟，我們對未來幾季甚至未來兩年的整個廣告業務的預測仍然非常謹慎。

Thank you.

謝謝。

Your next question comes from the line of Piyush Mubayi from Goldman Sachs.

您的下一個問題來自高盛的 Piyush Mubayi。

I have 2 related questions with advertising.

我有 2 個與廣告相關的問題。

The first is do you think in the longer term, your advertising business and your subscription business can run simultaneously.

第一個是你認為從長遠來看，你的廣告業務和你的訂閱業務可以同時運作嗎？

Or do you think that success in the subscription business would mean that the advertising business would be a very different business from the sort of numbers we saw in 2018?

或者您認為訂閱業務的成功是否意味著廣告業務將與我們在 2018 年看到的數字截然不同？

The second is if you could dissect the advertising business between the performance brand advertising as well as the account for major verticals that you've seen and how each of those verticals are performing, that would be great.

第二個是，如果您可以剖析效果品牌廣告之間的廣告業務以及您所看到的主要垂直行業的帳戶以及每個垂直行業的表現，那就太好了。

Can you repeat the second question?

你能重複第二個問題嗎？

We kind of lost you on the second part.

我們在第二部分有點失去了你。

Could you dissect the advertising business performance in the first quarter, what you've seen so far that has led you to a more bearish view on the advertising business in the second quarter?

您能否剖析第一季的廣告業務表現，到目前為止您所看到的是什麼導致您對第二季的廣告業務持更加悲觀的看法？

And the general cautious commentary around advertising for the next 1 year, could you break it down between the different components and drivers of advertising business?

關於未來一年廣告的普遍謹慎評論，您能否將其分解為廣告業務的不同組成部分和驅動因素？

(foreign language)

（外語）

[Interpreted] To answer your question, I think we are -- we have 3 major revenue pillars for our company.

[解釋]為了回答你的問題，我認為我們公司有 3 個主要收入支柱。

The first one is membership business which performed quite well in the first quarter.

一是會員業務，第一季表現較好。

And we continue to see the paying habit is forming for Chinese users, and their willingness to pay is getting better than before.

我們繼續看到中國用戶的支付習慣正在形成，他們的支付意願比以前更好。

And second revenue source is advertising, as you asked.

正如您所問的，第二個收入來源是廣告。

I think there are 2 factors impacting our revenue -- advertising revenue.

我認為有兩個因素影響我們的收入—廣告收入。

One is as we mentioned, there's some content delay in this quarter.

一是正如我們所提到的，本季有一些內容延遲。

And also, there'll be some further delays probably in Q2 and Q3 as well that will definitely impact our brand advertising.

此外，第二季和第三季可能還會有一些進一步的延遲，這肯定會影響我們的品牌廣告。

And also another is, as everybody knows, there's some softness in our macro environment.

眾所周知，另一個問題是我們的宏觀環境有些疲軟。

As a result, certain advertising verticals, they lowered their advertising budget, and that's another impact.

結果，在某些廣告垂直領域，他們降低了廣告預算，這是另一個影響。

And in the advertising business, we also have in-feed advertising, and we did some cleanup starting later half of last year.

在廣告業務方面，我們也有資訊流廣告，我們從去年下半年開始做了一些清理工作。

So that's another drag on the revenue side.

這是收入方面的另一個拖累。

And in addition, because of the in-feed ad inventory side, the overall inventory is coming up from all of the industry.

此外，由於資訊流廣告庫存方面，整個行業的整體庫存都在上升。

But on the other hand of demand, it's not so upbeat.

但另一方面，需求卻不那麼樂觀。

As a result, the CPM level is on a downward trend.

因此，CPM 水準呈下降趨勢。

But I believe in the second half, as in Q2, Q3, I think the industry will eventually be warming up, and CPM can -- returning trend to a normal level.

但我相信下半年，就像第二季、第三季一樣，我認為產業最終會回暖，CPM 可以將趨勢恢復到正常水平。

And I also want to mention the third driver for our business which is other business.

我還想提到我們業務的第三個驅動力，即其他業務。

Other business contain a lot of IP derivative revenues including game and other IP-related revenues, which can be potentially a long-term driver for us.

其他業務包含大量IP衍生收入，包括遊戲和其他IP相關收入，這可能是我們的長期驅動力。

(foreign language)

（外語）

[Interpreted] I also want to add some commentary on our business.

[解讀]我也想對我們的業務補充一些評論。

[Interpreted] For our membership business, I think seasonality wise Q3 is the strongest demand from our users and followed by Q4, Q1 and Q2, Q2 being the weakest.

[解讀]對於我們的會員業務，我認為從季節性來看，第三季度是我們用戶需求最強的，其次是第四季度、第一季和第二季度，第二季度是最弱的。

And also, there is another factor which is supply of content.

另外，還有一個因素，就是內容的供給。

The content was determined by content procurement, content production as well as the schedule of regulatory censorship of the content.

內容由內容採購、內容製作以及內容監管審查的時間表決定。

So that schedule may not perfectly match, doesn't match the pattern of the user need.

因此該時間表可能不完全匹配，也不符合使用者需求的模式。

And also, for our advertising business, there's also seasonality pattern which is a little bit different than the membership.

而且，對於我們的廣告業務來說，還有季節性模式，這與會員資格略有不同。

Typically, Q2 and Q3 is stronger quarter in the year and Q4, Q1 -- probably Q1 is the weakest.

通常，第二季和第三季是一年中最強的季度，而第四季、第一季——可能第一季是最弱的。

Okay.

好的。

Piyush, if you want more details about advertising service, we can talk later during our conference.

Piyush，如果您想了解有關廣告服務的更多詳細信息，我們可以稍後在會議期間討論。

Thank you.

謝謝。

Your next question comes from the line of Ribery Gu from Crédit Suisse.

您的下一個問題來自瑞士信貸銀行的 Ribery Gu。

I have a follow-up question on the subscription growth.

我有一個關於訂閱成長的後續問題。

As the subscriber has already reached around 100 million level, I want to -- I just want to understand the next step for growth strategy for our subscription.

由於訂閱者已經達到大約 1 億的水平，我想——我只是想了解我們訂閱的下一步成長策略。

I understand that our major focus will still be the content.

我知道我們的主要重點仍然是內容。

But at the same time, will the management also focus on like the upgrades for the subscription model or anything like the further cooperation like we did with JD before?

但同時，管理階層是否也會關注像訂閱模式的升級或像我們之前與京東那樣的進一步合作？

(foreign language)

（外語）

[Interpreted] Yes, you are correct that the exclusive content is the most important driver in our subscription growth especially the original high-quality content.

【解讀】是的，您說得對，獨家內容是我們訂閱成長最重要的驅動力，尤其是原創優質內容。

Because the licensed content, most of that is not exclusive, so the exclusive content really mainly comes from our original pipeline especially drama series and, to a less extent, variety shows and movies but mostly drama series.

因為授權內容大部分都不是獨家的，所以獨家內容實際上主要來自我們的原創管道，尤其是電視劇，還有少量的綜藝節目和電影，但主要是電視劇。

And in addition, yes, we have some operational initiatives like a joint membership with certain partners like JD and some others Internet services.

此外，是的，我們還有一些營運舉措，例如與京東等某些合作夥伴和其他一些網路服務公司建立聯合會員資格。

And we also do some targeted marketing and promotion.

我們也做一些有針對性的行銷和推廣。

But compared to content, those are not so meaningful drivers.

但與內容相比，這些並不是那麼有意義的驅動因素。

(foreign language)

（外語）

[Interpreted] I also want to add that compared to Netflix, our model is a bit different because we have both free users and paying users.

[解讀]我還想補充一點，與Netflix相比，我們的模式有點不同，因為我們既有免費用戶，也有付費用戶。

And now our effort is mainly focused on converting free users into paying users.

現在我們的工作主要集中在將免費用戶轉換為付費用戶。

And now on an average basis, our paying users pay approximately 8 months during a certain -- a 12-month period.

現在，我們的付費用戶平均在特定的 12 個月期間內支付約 8 個月的費用。

And compared to several years ago, that number is only 4 months.

而與幾年前相比，這個數字僅為 4 個月。

And so we will continue to offer more and more high-quality content to drive those users to become paying users, and they're paying a longer period of time.

所以我們會繼續提供越來越多的優質內容來推動這些用戶成為付費用戶，而且他們付費的時間會更長。

So as a result, at each time we reported the quarter-end number, that number will continue to grow.

因此，每次我們報告季度末數字時，該數字都會繼續增長。

Thank you.

謝謝。

Your next question comes from the line of Karen Chan from Jefferies.

您的下一個問題來自 Jefferies 的 Karen Chan。

Dr. Gong, Xiaodong and Dahlia, my first question is related to the paying subscribers.

龔博士、曉東和Dahlia，我的第一個問題是關於付費用戶的。

So given some of the scheduled delay in our dramas, how should we think about the full year paying subscriber target?

那麼，考慮到我們的電視劇有一些預定的延遲，我們應該如何考慮全年付費訂戶目標？

And secondly, on content cost, can you provide us a rough breakdown between licensed and self-produced content this quarter?

其次，關於內容成本，您能否向我們提供本季授權內容和自製內容的粗略細分？

And how should we think about a full year content cost budget?

我們應該如何考慮全年內容成本預算？

And any more color on how licensed content procurement costs has been trending in the industry, that would be great.

如果能更了解該行業許可內容採購成本的趨勢，那就太好了。

Thank you very much.

非常感謝。

(foreign language)

（外語）

[Interpreted] The first question, yes, our target does not change.

【解讀】第一個問題，是的，我們的目標沒有改變。

We still remain the net addition target with that earlier in the year.

我們仍維持年初的淨增目標。

I think we disclosed before the percentage and all mix of content cost and mix between original content versus licensed content.

我認為我們之前披露了內容成本的百分比和所有組合以及原始內容與許可內容之間的組合。

I think the percentage in this year remains about the same because there we won't change the number like in 1 or 2 quarters.

我認為今年的百分比保持不變，因為我們不會像一兩個季度那樣改變數字。

As I said before, it will be a long-term target, long-term task.

正如我之前所說，這將是一個長期目標、長期任務。

So basically, it's still between 10% to 20%.

所以基本上還是在10%到20%之間。

And if we are talking about online, let's say, from JD perspective, [of all kind of spend] perspective, I can tell you the number is a little bit bigger than [the kind of surveys].

如果我們談論在線，那麼從京東的角度來看，[各種支出]的角度，我可以告訴你這個數字比[那種調查]要大一些。

Thank you.

謝謝。

Your next question comes from the line of Tian Hou from T.H. Capital.

您的下一個問題來自 T.H. 天後的台詞。首都。

Yeah, thank you for taking the question.

是的，謝謝你提出這個問題。

So last earning calls, I remember you guys gave the guidance for the paying members for the full year.

在上次的財報電話會議上，我記得你們為全年的付費會員提供了指導。

I wonder if there's a new guidance for the paying members the full year basis.

我想知道是否有針對全年付費會員的新指導。

The second one is regarding the content cost.

第二個是關於內容成本。

So what's the trend of the content cost for the full year?

那麼全年的內容成本走勢如何呢？

That's the second question.

這是第二個問題。

(foreign language)

（外語）

[Interpreted] Our full year guidance for the membership growth doesn't change.

[解讀]我們對會員成長的全年指導不會改變。

Maybe because of the content delay I just mentioned earlier, this target become challenging, but we would like to maintain this target for the full year growth.

也許因為我剛才提到的內容延遲，這個目標變得具有挑戰性，但我們希望全年成長能保持這個目標。

Yes.

是的。

As I said before, this year, content cost our target tends to between 70% to 80% of revenue and seeing that it will remain the same.

正如我之前所說，今年我們的目標是內容成本佔收入的 70% 到 80%，而這一比例將保持不變。

Your next question comes from the line of Yanyan Xiao from Citic Securities.

您的下一個問題來自中信證券肖艷艷。

My question is about a drop in recent drama (foreign language).

我的問題是關於最近戲劇（外語）的下降。

So can you share us more details about this drama and like the performing numbers right now or the projection numbers?

那麼您能否與我們分享有關這部劇的更多詳細信息，例如現在的表演人數或放映人數？

And also how does the numbers compared to previously hit show like the (foreign language), like the (foreign language)?

與之前的熱門歌曲相比，這些數字如何顯示（外語），就像（外語）？

And how does this drama will influence your second quarter results?

這部戲劇將如何影響你們第二季的業績？

(foreign language)

（外語）

[Interpreted] Yes.

[解釋] 是的。

The Thunder is a very good show and very good-quality drama series.

《雷霆》是一部非常好的劇，也是非常優質的劇集。

It's a 48-episode long series, and now it's in the 20th episode now.

這是一部48集的長劇，現在已經是第20集了。

I think according to our AI system, we have a forecast system, that we forecast that this show airing and the viewership behavior numbers will be better than In the Name of the People.

我認為根據我們的AI系統，我們有一個預測系統，我們預測這個節目的播出和收視行為數字會比《人民的名義》更好。

But compared to the Yanxi Palace that might not be at that level because that's the most important show, and performing show in the history of the video platform.

但與《延禧攻略》相比，可能還達不到那個水平，因為那是影音平台史上最重要的演出和表演節目。

This is Xiaodong.

這是曉東。

If you are talking about the impact on the revenue side, I can tell you, actually as I explained no single drama titles will have like same material impact on the revenue side because for most of the drama series, if it's the original content, its titles have more impact on long run because most of the revenue contribution from the membership service which will not have a significant difference with in a quarter.

如果你談論的是對收入方面的影響，我可以告訴你，實際上正如我所解釋的那樣，沒有任何一部電視劇會對收入方面產生同樣的實質性影響，因為對於大多數電視劇來說，如果是原創內容，它的從長遠來看，頭銜的影響更大，因為大部分收入貢獻來自會員服務，與季度內不會有顯著差異。

Thank you.

謝謝。

(Operator Instructions) Your next question comes from the line of Elinor Leung from CLSA.

（操作員指示） 您的下一個問題來自里昂證券的 Elinor Leung。

Hi, thank you for taking my question.

你好，謝謝你回答我的問題。

Can you talk a little bit more regarding the content regulation and what type of content has to be delayed?

您能否多談談內容監管以及哪些類型的內容必須延遲？

And also how long will be the delay?

還有會延遲多久？

Is there any risk that we have to write off this content in the future?

我們將來是否有必須註銷這些內容的風險？

And have we changed our content strategy in order to cope with the new regulatory environment?

我們是否改變了內容策略以因應新的監管環境？

Okay.

好的。

This is Xiaodong.

這是曉東。

Actually, we talked about regulation before, as I explained to your guys, and actually, there's very, very seldom case which we'll actually like we kill our content or our titles.

事實上，我們之前討論過監管問題，正如我向你們解釋的那樣，實際上，我們實際上很少會希望刪除我們的內容或標題。

Most of the time, it's simply delayed because of longer processing time, with a longer time to schedule [or have approval from authority].

大多數時候，只是因為處理時間較長、安排時間[或獲得當局批准]時間較長而被延遲。

So basically, I don't think that there will be any risk of, let's say, content or title which we're required to write off certain content from book.

所以基本上，我認為不會有任何風險，例如我們需要從書中註銷某些內容的內容或標題。

So basically, it will take us longer time and more efforts to get approval, so I think it's not regarding to a certain category of the content of which like the content is forbidden or whatever restricted from the authority, more thorough censor process.

所以基本上，我們需要更長的時間和更多的努力才能獲得批准，所以我認為這不是針對某一類內容，例如禁止的內容或任何受到權威機構限制的內容，更徹底的審查過程。

Your next question comes from the line of James Lee from Mizuho Securities.

您的下一個問題來自瑞穗證券的 James Lee。

And maybe one more clarification on the regulatory side.

也許在監管方面還需要進一步澄清。

Is your assumption to -- are you planning -- based on your assumption, are you planning to launch any new drama series in 2Q and 3Q?

根據您的假設，您是否計劃在第二季和第三季推出任何新劇集？

Just curious what you're thinking there given the line of sight you can see on the regulatory side.

只是好奇，考慮到監管方面的視線，你在想什麼。

And on the same front, are you expecting to add any subscribers in 2Q and 3Q?

同樣，您是否預計在第二季和第三季增加訂閱者？

And is it fair to assume, if you launch fewer content out there, we will also see the churn rate to go up as well?

可以公平地假設，如果您發布的內容較少，我們也會看到流失率也會上升嗎？

I think in the short term, probably like, say, in 1 quarter or several months, you'd want to see some impact on the -- in releasing the content we produced or in the purchase.

我認為在短期內，可能例如在一個季度或幾個月內，您希望看到對發布我們製作的內容或購買的內容產生一些影響。

But generally speaking, we do believe we will do the job right, so gradually, you will see less and less impact in the long run.

但總的來說，我們確實相信我們會做好這項工作，所以從長遠來看，你會看到影響越來越小。

Maybe probably third quarter, fourth quarter, there will be some impact.

也許第三季、第四季會有一些影響。

But we don't see like the significant impact on this side.

但我們認為這方面不會有重大影響。

Thank you.

謝謝。

Our last question comes from the line of Wendy Huang from Macquarie.

我們的最後一個問題來自麥格理的 Wendy Huang。

(foreign language) I will just briefly translate.

（外語）我簡單翻譯一下。

First is a follow-up on the accounting treatment on those delayed TV drama.

首先是對延期播出電視劇的會計處理進行跟進。

If those TV drama never get broadcasted in the end, how will you actually deal with this from the accounting perspective, where you need to actually write it off?

如果那些電視劇最終沒有播出，你從會計的角度實際上會如何處理，需要實際核銷？

And also, what's your content procurement plan this year, i.e., how should we actually expect the content cost increase in 2020?

另外，你們今年的內容採購計畫是什麼，也就是我們實際上應該如何預期2020年內容成本的成長？

Lastly, what's your plan to actually beef up your in-house production capability?

最後，您有什麼計劃來實際增強您的內部生產能力？

How many number of the in-house studios do you have?

你們有幾個內部工作室？

Do you have any plan to acquire new good studios from market?

您有計劃從市場上收購新的優質工作室嗎？

This is Xiaodong.

這是曉東。

I will answer your first 2 questions and let Dr. Gong comment on the third one.

我回答你的前兩個問題，第三個問題請龔博士評論。

And so first, I'll just explain that it never happened before, and we seriously doubt it will happen in the near future like certain content cannot get the approval and unreleased forever, something like that, it never happened before.

首先，我要解釋一下，這種情況以前從未發生過，我們嚴重懷疑這種情況會在不久的將來發生，例如某些內容無法獲得批准並永遠未發布，類似的事情，以前從未發生過。

And we do believe it would not happen in the near future.

我們確實相信這在不久的將來不會發生。

And even let's hypothetically we assume that something happened, something bad happened, most of the content are licensed content in our scope.

即使我們假設發生了一些事情，發生了一些不好的事情，大多數內容都是我們範圍內的授權內容。

So for licensed content, if it cannot go through the whole broadcast, we do not to pay for it.

所以對於授權內容，如果不能全程播放，我們就不會付費。

So basically, there is nothing we might write off.

所以基本上，我們沒有什麼可以註銷的。

So for original content, that is only a very small percentage of the total content for now.

所以對於原創內容來說，目前只佔總內容的一小部分。

And even that, and I seriously doubt that there will be likely any big impact on the book because for most of the original content, it's a bit more likely you understand the guidance before you launch the program for original content, the risk will be even less than licensed content because we choose wisely what kind of type of content we should produce and the way we communicate it with the authority upfront.

即便如此，我嚴重懷疑這可能會對這本書產生任何重大影響，因為對於大多數原創內容來說，在啟動原創內容計劃之前，您更有可能理解指導，風險甚至會更大少於許可內容，因為我們明智地選擇我們應該製作什麼類型的內容以及我們預先與當局溝通的方式。

That's how it works basically.

基本上就是這樣運作的。

And now I will ask Dr. Gong to answer your third question.

現在請宮博士回答你的第三個問題。

(foreign language)

（外語）

[Interpreted] We have 2 types of original content.

[解讀]我們有兩種類型的原創內容。

The first one is internal studios which the content comes from in-house.

第一個是內部工作室，內容來自內部。

We actually find directors and actors that are actually ourselves and also certain element to our external production team.

我們實際上找到的導演和演員實際上是我們自己，也是我們外部製作團隊的某些元素。

This is mostly applied to our variety show category like Idol Producer and those variety shows.

這主要適用於我們的綜藝節目類如《偶像練習生》和那些綜藝節目。

And for drama series, some earlier studios, the pattern is they pick the script play and establish the project.

而對於電視劇來說，一些早期的工作室，模式是挑選劇本並立項。

Then they outsource the production process to external partners.

然後他們將生產過程外包給外部合作夥伴。

But some newly established new studios, they have their own production capability, and they will be producing on their own original content.

但是一些新成立的新工作室，他們有自己的製作能力，他們會製作自己的原創內容。

And those content we will gradually come up in later half of this year.

這些內容我們會在今年下半年逐步拿出來。

Thank you.

謝謝。

Thank you.

謝謝。

That's all the time we have for questions today.

這就是我們今天提問的全部時間。

I'll now hand the conference back to today's presenters for the closing remarks.

現在我將把會議交還給今天的主持人做閉幕詞。

Please continue.

請繼續。

Thank you all for participating in today's call.

感謝大家參加今天的電話會議。

If you have any additional questions, please feel free to contact us.

如果您還有任何其他問題，請隨時與我們聯絡。

Thank you.

謝謝。

Thank you.

謝謝。

Thank you.

謝謝。

Ladies and gentlemen, that does conclude our conference for today.

女士們、先生們，今天的會議到此結束。

Thank you for participating.

感謝您的參與。

You may all disconnect.

你們都可以斷開連線。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[本文字記錄中標記為[已翻譯]的部分是由現場通話中的口譯員朗讀的。]