Shulou(Shulou.com)11/24 Report--

On November 21, Beijing time, Douyu released his financial report for the third quarter of 2022.

According to the financial report, Douyu's total revenue in the third quarter was 1.798 billion yuan. The gross profit is 251 million yuan, corresponding to 14.0% gross profit. Under non-American general accounting standards, Douyu's net profit was 25.7 million yuan, a significant increase compared with the same period last year. The quarterly average MAU of Douyu's mobile phone is 57.1 million, and the number of users remains stable.

The outstanding performance of Douyu's Q3 financial report has attracted the attention of the market. We should know that since the beginning of this year, due to the Fed's interest rate hike, overseas inflation, global stock index downturn, recurrent epidemic and other factors, China's science and technology Internet as a whole is facing greater pressure. By the end of September 2022, the total market capitalization of China's listed Internet companies was 8.8 trillion yuan, down 19.3 percent from the previous month, the lowest quarterly value since Q1 in 2019, according to a report by the China Institute of Information and Communication. In the context of the uncertain macro environment, Douyu can still achieve a double increase in revenue and profits, which is not easy. This also makes people wonder what are the factors that drive Douyu's business performance to continue to climb.

It is worth noting that after the release of the Q3 results, Chen Shaojie, founder of Douyu and CEO, responded to the performance:

In the complex macro environment, on the one hand, we stabilize the scale of users through continuous content investment and service innovation, on the other hand, we improve the quality of revenue, strengthen cost control, and achieve the basic stability of the company's overall business.

From Chen Shaojie's statement, combined with Douyu's efforts in dealing with macro challenges over the past half a year, we can roughly get a glimpse of the secret that this company can move forward against the trend.

Intensive cultivation, cost reduction and efficiency under the background of the peak of Internet traffic dividend and the trend of cold winter in the industry, the past extensive money-burning business model is no longer suitable for the vast majority of Internet enterprises, and what is in front of everyone is a way to reduce cost and increase efficiency. The inevitable road of intensive cultivation. It is necessary to better excavate and innovate on the existing resources and improve operational efficiency in order to resist the cold winter.

For Douyu, the first step is to reduce the cost. The live broadcast industry has always been a high-cost and high-input track. Huge copyright purchases, head VJ contracts, high bandwidth costs, and online and offline content marketing are all big expenses, so reducing costs is a challenge.

And Douyu dealt with the challenge well. According to the financial report, the income and cost of Q3 Douyu was 1.547 billion yuan, down 25.2% from the same period last year. Specifically, the revenue sharing fee and content cost was 1.3196 billion yuan, down 28.3% from the same period last year, and the bandwidth cost was 135 million yuan, down 17.4% from the same period last year.

The secret of successful cost reduction lies in Douyu's exploration of different forms of content and more meticulous operation. For example, in terms of content copyright that costs a lot of money, Douyu no longer buys it blindly, but vigorously develops homemade content. For example, in terms of self-made events, Douyu has launched a total of 90 own-brand e-sports events, including professional events such as "Douyu Arena of Valor Masters" and "2022 Douyu Game for Peace Autumn Masters season 5", as well as events initiated by lead anchors, such as "2022 LBL Autumn match" initiated by League of Legends anchor Doinb and "Lucky Cup" initiated by Arena of Valor anchor Gemini. These homemade events have brought more attention to the platform and anchors, and the results are excellent.

In terms of homemade variety, Douyu released more than a dozen programs in the third quarter, such as "Speed of Light Escape-Xianfeng team Special", "Best player", "Hunan bangbangbang", "running Bar Anchor 6", "Northern Shaanxi Family" and other popular programs, including "run Bar Anchor 6".

Of course, for some important content, Douyu will also buy copyright, but at the same time will take into account the flow contribution of content, income contribution and other factors, selective purchase.

On the one hand, it has played a good effect in reducing costs, on the other hand, it also highlights the second step of Douyu's intensive cultivation: "efficiency", that is, to improve the efficiency and effectiveness of the operation.

"efficiency" is not only reflected in the selectivity of copyright purchase, but also reflected in Douyu's fineness in the operation of self-made content. For example, in self-made events, Douyu pays more attention to the richness and interaction of the content. They further subdivide the content audience to create content for different groups, such as "Arena of Valor Enterprise League S2" for corporate users, "Star picking Cup" and "College match" for college students. There is even the "goddess race across the line of fire" and "forever robbing the goddess race" for female players, with a variety of refined content, covering a wider range of users. It also greatly improves the activity of Douyu's game community.

In terms of interaction, taking self-made variety as an example, Douyu creatively made use of the real-time and interaction of live variety to add interactive links that users can participate across the screen, such as game props and the right to choose between teammates / opponents, which not only increased the interest of the content, but also realized the innovation of revenue means.

In addition, in the third quarter, Douyu and Tencent Cloud platform jointly created a "cloud game" scene model based on cloud game technology, which built a virtual and real e-sports event venue, so that viewers can immerse themselves in the "virtual world", break time and space to watch events, interact and socialize, and achieve "thousands of people on the same screen" and live room gifts to reward 3D special effects, but also greatly enhance the interactive properties of the content. Fully mobilize the enthusiasm and activity of the audience.

Driven by this series of intensive farming strategies, Douyu achieved a quarterly average MAU of 57.1 million on mobile in the third quarter, up 2.5 per cent from the previous quarter. It can be seen that in the field of live broadcasting and content, the intensive management strategy may actually be more effective than the extensive copyright purchase. The important thing is that it can help enterprises enter a more benign stage of development.

Business model + technological innovation, Douyu's revenue "open source" initial results if the previous intensive cultivation is compared to "cutting expenditure", then for Douyu, steadily through the industry cycle, the more important thing is "open source". That is to make the source of revenue richer and more yuan.

So how exactly did Douyu do it? They explored more cash models in the third quarter, the most important of which is the upgrading and innovation of the membership system.

In the third quarter, Douyu upgraded his rights and interests as a "drill powder member". "drill Powder member" was launched by Douyu at the beginning of the year. After its launch, Douyu has been constantly enriching the value-added rights and interests of members, so as to enhance the willingness of user members to pay. In the third quarter, Douyu further brought the exclusive space "fan home" for fans and anchors for "diamond fans", providing users with anchors' fan cards with a record space to grow up with the anchors.

This function not only further enhances the interaction and stickiness between fans and anchors, but also becomes a new way to promote fans to pay, and brings more potential users to "diamond fans".

In addition to expanding the sources of member income, Douyu has also actively explored users' willingness and initiative to pay for content in the past quarter, and one of the most effective ways to play is to cooperate deeply with game manufacturers. For example, in the third quarter, Douyu and Arena of Valor officially cooperated to launch the "KPL match Battle order" platform interactive play during the KPL summer competition for the first time, as well as the "eight Wild Treasure Pavilion" activities they launched in cooperation with Moonlight Blade, allowing anchors to explain the game props use, optimal configuration and use strategies, and "bring goods" for game props, exteriors and other products. This greatly enhances the enthusiasm of users to pay in the process of participating in activities, and this high-quality interactive activity also increases the platform stickiness of users.

In addition, the "cloud watching game" mentioned earlier is also another attempt by Douyu to expand the source of revenue through technological innovation. At present, the "Cloud watching Game" scene has been applied to "CS:GO EPL S16" events and "2022 CS:GO Major" events. In virtual and real venues, users can upgrade a variety of games in virtual venues by participating in on-screen interaction, gift reward, or direct payment in virtual venues, such as upgrading character skills and sending 3D effects. On the other hand, the virtual images and special effects of paying viewers can be displayed in the live broadcast, which greatly stimulates the enthusiasm of users to pay to participate and promotes the revenue of live broadcast of the event.

In addition, anchors can also flexibly switch virtual venue images and live streaming of events or adjust shots in the console, and engage in close interaction or content co-creation with fans on the content of OB events. These interactions make it more interesting for users to watch live broadcasts, and also make it possible for Douyu to explore more commercial ways around the new model of "watching games in the cloud". For example, he can add advertising sponsorship such as customization of theme venues and 3D props in the museum in the future.

According to the financial report, of Douyu's total revenue of 1.798 billion yuan in the third quarter, live broadcast revenue was 1.705 billion yuan, and advertising and other income was 93.3 million yuan. It is believed that with Douyu's continuous investment in content quality and continuous exploration in business model innovation, Douyu will greatly increase the proportion of advertising and other income while the steady development of live broadcast revenue, so that its overall income structure is more stable and diversified, the use of model and technology of double innovation, greatly enhance their ability to make money.

Conclusion with the in-depth development of the Internet industry, the era of rapid development of capital endorsement in the past will never return, and the foundation for enterprises to settle down will eventually return to whether the core business model is reasonable or not. on the most essential issues such as whether business ability and profitability are strong.

As a leader in the domestic game live broadcast industry, Douyu stabilizes the basic disk of the core business on the one hand, actively explores new growth points on the other, and creates a diversified content ecological platform around the game. Through the financial report, we can see that Douyu has achieved very good results in the key capabilities mentioned above. In the second half of the development of the Internet, we will see a long-term and healthy development, different Douyu.

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