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Viewers like you: How PBS is adapting to the streaming age

The public broadcaster has had considerable success on YouTube and other digital platforms. Now, it is looking to revamp pledging.

Viewers like you: How PBS is adapting to the streaming age

PBS has begun to talk to ad-supported video services, including some that distribute programming via free 24/7 channels, to help it compete in the streaming age.

Image: PBS

If there were a playbook for the streaming wars, it might read something like this: Take your most valuable assets, slap a plus behind your most recognizable brand name, and start counting the money.

For PBS, things aren't quite that easy. While the public broadcaster has made some inroads in streaming, it has been slower to embrace digital business models than some of its commercial competitors. But that could change in the coming months. PBS is in discussions to bring its app to additional platforms, including a new crop of ad-supported video services, and has plans to turn smart TVs into donation machines that could ultimately make the old-fashioned pledge drive obsolete.

For much of its existence, PBS and its 300-plus member stations have enjoyed an elevated profile in the media landscape. Cable companies, for instance, have been forced to distribute PBS alongside commercial broadcasters like Fox, ABC and CBS, ensuring that PBS NewsHour, PBS Kids programming and shows like "Antiques Roadshow" were always just a channel or two away from "American Idol," "Survivor" and "Good Morning America."

Fast forward to the streaming age, and PBS suddenly competes with Netflix, Hulu and HBO Max, whose viewers have no idea what broadcast call signs like KCET or WGBH even stand for. That's why in 2019, coinciding with its 50th birthday, PBS unveiled a rebranding that was made with digital in mind. The broadcaster's logo was optimized for different screen sizes, and local stations were encouraged to incorporate PBS into their own brands.

PBS Chief Digital and Marketing Officer Ira Rubenstein estimated that to date, around 70% of its member stations have adopted the new brand identity, with some even undergoing a complete rebranding. "KLRU in Austin is now Austin PBS," he said. "UNC TV is now PBS North Carolina."

The brand refresh has helped to raise PBS' profile and made it easier for consumers to associate a PBS show they may stream on YouTube or Facebook with their local station. It has coincided with an expansion across digital platforms. Dedicated PBS apps are now available on five of the major smart TV platforms; deals with additional platforms are in the works and could be announced within weeks.

PBS has also begun to talk to ad-supported video services, including some that distribute programming via free 24/7 channels. The industry has seen a lot of growth for these kinds of channels, with consumers embracing them as free replacements for the kind of curated lean-back experience offered by the basic cable grid. "It's an ongoing discussion," Rubenstein said. "But I hope that we'll have some announcements in the next three to six months."

Since PBS doesn't carry traditional advertising, any presence on these ad-supported services would primarily be about fulfilling the broadcaster's mission of informing the public. That's also how PBS has been using YouTube, where it has seen its audience grow significantly in recent months. Take PBS NewsHour, for example. The daily news program grew its digital audience by 80% year-over-year, to the tune of 53 million viewers in January. On YouTube alone, PBS NewsHour streamed 101 million videos last month, with total watch time growing by 239% year-over-year.

However, eyeballs alone don't pay the rent. Around 50% of the PBS budget is being paid by local stations, which rely on donations from individual viewers for a good chunk of their respective budgets. Back in the old days, that's where the pledge drive came in. Getting those viewers to open up their wallets is a lot harder when they jump back and forth between YouTube, social media and a bunch of streaming subscriptions every night.

That's why PBS introduced one-click donations on Amazon's Fire TV platform last fall. Fire TV users can now donate to their local station right from within the PBS app, using the credit card details that Amazon already has on file, and even join to become a sustaining member. The simplicity of this approach seems to be a hit with consumers, with Rubenstein pointing out that it has had a higher conversion rate than any other donation page for local PBS stations. "There's a very strong future for this," he said. "My vision is that we expand that one click to every platform."

This process may take some time. Accepting donations comes with legal strings attached, and routing them to the right affiliate adds extra complexity. "None of these platforms are taking donations yet," Rubenstein said. "We're really breaking new ground."

However, Rubenstein argued that the results could be transformative for public media. "Digital fundraising on these platforms can become the most powerful way stations fundraise," he said.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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