Shulou(Shulou.com)06/01 Report--

Not long ago, Yingke, the first live broadcast stock of Hong Kong stocks, released its financial results for the first half of 2019, and the data results were not satisfactory. Investors who heard the wind seemed to have lost patience in the face of Yingke's first loss, with shares falling 4.39% on Aug. 27. It finally closed at 1.09 yuan per share, and even fell to 1 yuan per share on the 28th.

From "Hong Kong Stock Live first share" to "Yuanxian share", Yingke's cliff decline, compared with Douyu, Huya, Zanthoxylum bungeanum, YY and other peers like a fish in water, Yingke can not help saying that it is like a mistake.

On July 12, 2018, Yingke was successfully listed in Hong Kong under the stock symbol "03700". According to Yingke founder Feng Yousheng, "3" is the three-year process from the beginning of Yingke to listing, while "7" refers to Tencent. Tencent's stock symbol is "00700". At the beginning of its listing, the market capitalization and income of Internet industry leader Tencent are far lower than those of Yingke at the time of listing. Yingke is like a 3-year-old Tencent, which can be seen Fengyousheng's expectations of Yingke.

However, contrary to one's wishes, more than a year after listing, Yingke's financial results in 2019 were a far cry from the original dream of founder Feng Yousheng.

The scenery is gone: Yingke falls again and again

There is no shortage of opportunities in the online live broadcast, but many fledgling young people have been quietly cut off. NetEase peppermint, the famous national live broadcast, all died in the cold winter of the live broadcast. At a time when the cold has not faded this year, the live broadcast of the panda born with the golden key has gone far away, not only in a hurry, but also in a hurry. There is also Yingke, who started with a live broadcast of ordinary people, has not had a good time after several twists and turns.

On September 16, 2019, Yingke, the first live broadcast of Hong Kong stocks, reported results for the first half of the year ending June 30, which disappointed investors who were hoping to make a lot of money from the online live broadcast industry. Compared with the prime time of that year, Yingke's loss was staggering. Yingke's total revenue was about 1.486 billion yuan, down 34.9% from the same period last year. The operating profit of the main business was 66.49 million yuan, down 114.2% from the same period last year, and the net loss during the period was 27.55 million yuan, down 102.9% from the same period last year.

The reason for the huge loss, the answer given by Yingke is: "it is mainly due to a substantial increase in R & D costs for innovative products." Although Yingke accounts for the majority of its expenditure, its R & D expenses increased by 70 million yuan compared with the same period last year, to only 153 million yuan, while revenue directly decreased by 800 million yuan. The gap between the two is obviously a little big. The expenditure on R & D expenses alone can not fill the pit of Yingke's huge losses, and the real reason for Yingke's losses is still hidden in the financial report.

Strategic R & D expenditure is the core that can not be lacked for good follow-up development of major live streaming platforms. It is a rule on rivers and lakes that a good horse is equipped with a saddle and a hero carries a good sword. However, Yingke's declining performance year after year is a fact in front of Feng Yousheng. From 4.33 billion yuan in 2016, 3.94 billion yuan in 2017 to 3.86 billion yuan in 2018, the cliff drop in the first half of 2019 is a heavy blow to Yingke.

In the cold winter of this live broadcast, there is no icing on the cake, only worse. According to iResearch, the monthly number of independent devices in Yingke was only 11.3 million as of July this year, a sharp decrease from the 13.9 million surveyed in the same period last year.

Yingke's live broadcast output mainly depends on Yingke APP. According to the data released by Yingke, the average number of monthly active users of its products is 29.53 million, compared with 25.82 million in the same period last year, an increase of 14.4% over the same period last year. If you look at the data alone, the number of users has obviously increased, but it should be taken into account that the statistics for the same period last year are only based on an application software of Yingke Live. The number of 29.53 million users in the latest data is calculated from all of its company's products.

More serious than Yingke's declining revenue is the decline in its gross profit margin. Yingke's gross profit margin fell from 37.76% in 2016 to 33.81% in 2018. Yingke, which was able to achieve revenue in the previous quarter, turned from profit to loss for the first time in the first half of this year. In the face of Yingke's losses, the capital market was not tolerant of it. Yingke's share price fell to 8.2%, and even fell to 1 yuan per share in intraday trading on August 28. Equity funds financed also reduced their holdings by about 400 million shares, accounting for about 20% of the total equity.

A single income structure seems to have become a common problem in the live broadcast industry, and the trend that live income determines life and death has not been alleviated. In 2017, Yingke began its star-making plan to create its own IP, but it still treats the symptoms rather than the root of the problem, and most of its income still depends on rewards. In those days, when Yingke was in its heyday, Yingke was once popular in live broadcasting with the slogan "you are ugly, you sleep first, I am beautiful and I will live". Now, in the face of the online live broadcast that has become entrenched, the live broadcast of Yingke's show seems to have lost everyone.

The thorny live broadcast market

Like other Internet industries, online live broadcasting, which once made investors fight for money day by day, has gradually calmed down after a thousand broadcast wars with swords and swords. however, the efforts of the major online live broadcast platforms in their own home are never stopping, and the incremental era has been transformed into an era of stock, and the battle for the number of users on the live broadcast platform has become intensified.

According to the report given by Ai Media Consulting, Yingke occupies the third place in the number of monthly active users of Q2 China's mainstream entertainment content live broadcast platform in 2019, but its MAU is only about 10 million, which is a far cry from the YY of 26 million and 24 million in Zanthoxylum bungeanum.

In addition, Ai Media expects that the number of online live broadcast users in China will exceed 500 million in 2019. At the same time, its data show that the annual growth rate of online live broadcast users has been declining year by year, from 28.4% in 2017 to 9.9% in 2019. It is estimated that it will only reach 4.6% in 2020, the live broadcast dividend has disappeared, the major live broadcast platforms continue to look for the next economic growth point.

In this battle, some people have high morale, some have lost their future, and some have left the scene sadly, while Yingke, as the "first live broadcast stock in Hong Kong", is in a rather embarrassed position in the financial report, and how to realize what founder Feng Yousheng said, "something better than IPO is our dream ahead." Yingke from the first share to the unitary share, the impact of its main business on the way to realize its dream can be said to affect the whole body.

It is difficult to support revenue on its own.

Yingke was born in 2015, and its positioning was clear from the very beginning. To become synonymous with the live broadcast industry, Yingke broke into the online live broadcast world by relying on the beauty technology bought at a cost of 2 million yuan. Yingke has indeed achieved his position in the online live broadcast, and he still has the courage to stay in the live broadcast industry after the thousand broadcast war.

But Cheng Ye Xiao he lost Xiao he, Yingke started his career by live broadcast, and now Yingke is also in prison because of live broadcast. Yingke's live broadcast business accounts for almost all of its revenue. Within four years from its establishment in 2015 to its successful listing in 2018, the revenue of Yingke Live Business accounted for 94.6%, 99.8%, 99.4% and 96.59% respectively, which decreased slightly in recent years, but it is still the backbone of Yingke's revenue.

Yingke's revenue in the first half of 2019 is mainly divided into three parts: live broadcast, advertising and others. Among them, live streaming accounts for 95% of the revenue, while advertising accounts for only 4.7%. The data given in the financial report show that in the first half of this year, Yingke's advertising revenue increased by 47.1% compared with the same period last year, and its revenue profit reached 70 million yuan, but the live broadcast revenue, which is the main revenue of Yingke, fell sharply from 2.2 billion yuan to only 1.41 billion yuan, down 36.7 percent from the same period last year. The revenue of the advertising business is a drop in the bucket for Yingke as a whole.

Yingke analyzed in the financial report that due to the slow growth of the industry, the revenue benefit of Yingke Live has also slowed down. However, compared with Huya and Douyu TV, which accounted for 95.6% and 91.2% of the revenue respectively, their second-quarter results showed that Huya's live broadcast revenue increased by 93.6% year-on-year, with revenue of 2.0105 billion yuan, while Douyu grew by 133.2% year-on-year, with revenue of 1.873 billion yuan.

Tiger and Douyu mostly push e-sports 's game live streaming content, and the user stickiness is much higher than that of other live streaming platforms, and they are also involved in pan-entertainment, which accounts for 54.5% of Huya TV's income and 35% of Douyu's income. Just with the live show Yingke facing many obstacles, the dividend of the online live broadcast industry has reached the ceiling, and the industry has long been caught in an open and secret struggle for stock, with old rivals such as Zanthoxylum bungeanum and YY who have already fought hundreds of rounds, and now more and more new forces such as Kuaishou and Douyin that want to enter the live broadcast and stir up a piece of the pie.

The gully of expenditure is difficult to fill.

On July 12, 2018, when Yingke was listed on the market, Feng Yousheng said in a speech on the same day: "starting a business is close to death, and the listing is natural." After several twists and turns, several rumors of backdoor listing of Yingke finally achieved the first step, which for Feng Yousheng is only "an ordinary and happy day in the entrepreneurial process."

At that time, Yingke had a market capitalization of HK $10.7 billion, and everyone on the online live broadcast of HK $10.7 billion knew that everyone knew for a while, but just over a year later, Yingke released its first-half results on September 16, 2019. Yingke, which has continuously made profits, has changed from profit to loss. Together with the market capitalization, it also fell to HK $2.232 billion. The era of relying solely on appearance is gone, and Yingke and many other live streaming platforms are well aware of this, and Yingke has long been aware of it.

As competition in the live broadcast industry has continued to intensify since 2019, the Group has actively responded and made every effort to develop an interactive entertainment and social product matrix to establish an endogenous traffic system. Among them, in terms of interactive entertainment product matrix, based on the mature products, business and operation models accumulated since its inception, as well as a deep understanding of the market and users, the Group has gradually launched refined operational products for market segments and vertical user groups at the video and audio levels, including audio interactive entertainment products, sonic bubble, middle-aged and elderly video interactive entertainment products, pomelo, etc. Through the exploration of the market and the continuous optimization of the products, we have accumulated rich experience in the innovation of interactive entertainment products and formed a more mature mode of continuous research and development. In terms of social product matrix, the Group has conducted product validation and actively sought market opportunities. "

This is how Yingke explained the planning and expectations of his current product matrix in his financial report in the first half of 2019. We can see that in the financial report of Yingke in the first half of the year, compared with the sharp decline in live broadcast revenue, Yingke's R & D expenditure does not scale back. Yingke's R & D expenditure was 153 million yuan, 85.2 million yuan in 2018, an increase of 80% over the same period last year. In addition, sales and promotion expenditure increased by 23.6% to 321 million yuan compared with 259 million yuan in the same period last year.

Research and development of 1.5G

Yingke's R & D spending is mainly spent on technologies such as 5G and artificial intelligence, which is related to Yingke's focus on the next generation of interactive Yule scenarios. With the advent of 5G technology, the live broadcast platform has seen another possibility. Now 4G network is unable to do other interactions and more content of the live broadcast platform, which is a new opportunity with the development of high communication transmission of 5G technology. Unlike the stutter that will appear in the 4G network, 5G technology can spread the network content more quickly, and there will be new changes in the relative network picture quality, which is undoubtedly the best news for the live broadcast platform.

Feng Yousheng once said: "without the blessing and standing of BAT, we had the last laugh in the fiercest Thousand Broadcasting War with our constantly improving product and technological innovation capabilities." The development of core technology is an important part of Yingke's desire to play an important role in the live broadcast industry. Yingke experimented with ultra-low latency chorus technology, 5G HD VR live broadcast, and accelerated the better combination of 5G technology and its own live broadcast business.

The research and development of new technology is in line with the requirements of the times, but it should be noted that the current application of 5G technology is only carried out in a very small number of cities. The research that invests 5G technology to spend money now is a big burden for Yingke, whose live broadcast revenue has dropped by 800 million.

two。 Water test of product matrix

Relying solely on the live broadcast business will not last long, and Feng Yousheng and many of the giants of the live broadcast industry are obviously aware of this. Yingke is vertically developing the domain content that it is good at, striving for the loss of core users, and developing new domain users.

Yingke subdivides the market in the most popular field at present, subdivides the core traffic user group, and launches "interesting headlines" that focus on the sinking market; version of the short video application "seed video"; it also launched the song live broadcast product "Old pomelo Live", which is specially aimed at the elderly users in the Blue Ocean, and developed voice dating platforms such as "not on" and "Sound Bubble" in the face of young people who are willing to pay. In addition, there is a two-dimensional interest community "StarStar" aimed at the popular two-dimensional culture, and "22", an open mobile map dating product.

"Live broadcast is now our main business line with good cash flow, with good cash flow and profits, but the profits should be invested in a steady stream of new research and development and future growth." With this concept in mind, Feng Yousheng and his team developed a series of products above, hoping to breed large-scale products to achieve one or two popular products and enhance users' sense of viscosity and payment. then in the product matrix to form the complementarity of products, the circulation of traffic and the regeneration of new traffic, to build a complete pan-entertainment ecology.

But for now, these products launched by Yingke do not have the ability to realize cash successfully, and the ability to attract traffic is not as smooth as expected. According to iResearch, there are only about 40,000 independent devices per month as of May 2019. Among the seed videos with better data, according to official data, by mid-February, the number of registered users had exceeded 20 million, the DAU had reached about 2 million, and users had watched for 100 minutes on APP.

Yingke launches related products according to sub-areas, striving to win over every level of user base, but each additional APP means an extra output of capital cost. At present, the launch of the product matrix has not been able to generate revenue for Yingke, but the expenditure on sales and promotion has increased to 321 million yuan, an increase of 23.6%, which is attributed to Yingke's loss in the financial report. And seed videos with better data in the product matrix have a lot of APP content, which is not a good thing for a software that wants to develop for a long time.

First of all, the supervision of the policy is strict, in recent years under the se, vulgar, rotten software have been removed from the shelves to rectify, and then the reputation of the products on the shelves will be greatly reduced. Secondly, rely on the superficial cover content to attract users, and can not achieve the effect of want to retain users, it is difficult to produce core users, user stickiness is not enough, let alone want to further achieve the effect of realization. In addition, the seed video is aimed at the products launched by Yingke in the sinking market, the lack of control over its content does not bring a good promotion effect, and "the sword takes the wrong edge" will often be counterproductive.

3. Acquisition volume

In addition to re-building the matrix of its own products, Yingke also bought Jimu, a niche social product, for $85 million. For Yingke, who wants to develop a product matrix, it will save more time to develop a social-focused software that is based on the original product matrix.

However, the outside world is not optimistic about Yingke's wholly-owned acquisition of Jimu. On the one hand, its main business is the social interaction of strangers, the social entertainment of vertical 90-00 youth cultural groups, the portrait of users, and the recommendation of relevant social groups according to the interests of users. It is well known that there are already established products such as Momo, Exploration and Soul in the social networking industry of strangers, and it is hard to say whether Jimu can stand out among these old rivers and lakes. And in terms of stranger social interaction, compared with acquaintance social interaction, its content is mixed, advertising marketing, se vulgar feelings and other easy to scratch the edge, as well as the traffic ceiling of stranger social communication has gradually peaked.

On the other hand, in terms of the current volume of Jumu itself, it is really too small. It is currently accepted by many young people who are post-1995, with limited basic users, and it is difficult to develop users of other ages. At present, the number of daily active users of Jimu is only about 800000, and the number of independent equipment per month is only about 480000, which can not play the effect that Yingke expects for drainage. For Yingke, it is still unknown whether it will be able to get its money back when it spends a high price of US $85 million on the acquisition of Jigou.

In contrast to the sharp drop in revenue, spending is like a behemoth dragging Yingke into an endless quagmire. Even though Yingke still has a good cash flow, in the face of its own lack of profitability and the fact that the dividends of the online live broadcast industry have been separated, consider how to maximize the recovery of expenditure costs. It has become an unavoidable problem for Yingke.

It is difficult to find a way out for Yingke.

When Yingke was in its infancy, it caused a storm with ordinary people's live broadcasting, and it is precisely because of this that in game live broadcasting, compared with anchor platforms such as Huya and Douyu, which have specific live content and are more attractive to fixed fans, Yingke has no specific content. This leads to the lack of user stickiness and the loss of traffic. At the same time, Yingke has to face the high pressure of Zanthoxylum bungeanum, YY and other major forces, the show live broadcast platform is rampant, the situation of live broadcast + is also a struggle, Yingke live broadcast output business alternative products are too strong, no special advantages.

In addition to peer pressure, Yingke also faces traffic competition from short videos such as Kuaishou and Douyin. The content quality of LVB output is no easier to control than short videos, and most of the LVB content is fragmented, so it is difficult to maintain continuity. On the other hand, short videos have the advantage of being able to watch repeatedly, and the edited streamlined content can better guarantee the quality. There are also short videos compared with live streaming, its promotion to specific groups of people is more accurate, Douyin is currently trying to launch a 15-minute long video, the impact on live streaming platforms must look directly.

And now the relevant policy out of tai, the control of live content is much stricter than in the early days, many live platforms can not escape the fate of being removed from the shelves, Yingke has been removed many times. From the 2016 "Yingke" list was taken off the shelves and quietly renamed "Yingke" to return to the software store, to now the "Hong Kong stock first live port" also seems to be doomed because of content control.

Finally, the arrival of 5G gives the Internet online live broadcast industry unlimited hope, Yingke in technological research and development is an inevitable choice, but the lack of large group capital support Yingke can make progress on this costly road? And the desire for 5G is not only Yingke, but also Zanthoxylum bungeanum's related research on 5G technology continues, the technological competition is fierce, and the formation of core technology still has a long way to go.

It is only a little more than a year since Yingke was listed on the market and now it is only a little more than a year. As soon as it entered the jianghu years, many live broadcast platforms such as Yingke, which happened to take advantage of the live broadcast tuyere, how to re-create dividends and find a way out at the level where online live streaming traffic has gradually become stable. The next follow-up development of Yingke is no longer the future of a single family, but the way out for Yingke.

(official account of Liu Kuang / tr. by Phil Newell) ID:liukuang110

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