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

2022 is still an extraordinary year for the new economy and Internet industry. Many tuyeres burst, many enterprises fell, and the big factories standing at the top of the food chain did not have a good time before. Because there are too many changes and too much turbulence this year, sorting out the dynamics of these industry giants in time at the end of the year may help us understand the current situation of the whole industry and grasp the future trend of the market.

For this reason, the Value Institute specially launched the "2022 Annual Review" series to review the year-round trends of Internet giants. Today's protagonist is the "Internet Money Printing Machine" ByteDance, which has been extremely active throughout the year with constant movements and troubles.

At the recent all-staff meeting, Liang Rubo, CEO of ByteDance, delivered a speech:

"This year, the company's revenue growth slowed down, product DAU is growing but the growth rate is lower than the target set at the beginning of the year, we will continue to promote the organization's 'fat and thinning'. "

The key point in Liang Rubo's words is very clear: byte 2022 performance failed to meet expectations, personnel optimization, cost reduction and efficiency will not stop. Although the growth trajectory of bytes is perfectly staggered with Tencent, Ali and other big factories, their winter rhythm is still the same when the overall Internet environment is cold.

There is no doubt that 2022 is not a very good memory for ByteDance. Revenue is still highly dependent on advertising business, especially chatter single platform; B-end business progress is not big, cloud computing strength is still far behind Ali, Tencent, Huawei, etc.; a large number of new and old businesses, products have been shut down, delay to find the next explosion...

But on the other hand, bytes also did not stop beating, in social, e-commerce, meta-universe, medical and other tracks frequently drop, investment activities have not stopped.

In front of the thick fog, the byte seemed to be waiting for the beam of light that pierced the darkness.

(Photo from ByteDance (ByteDance) official website) Revenue falls short of expectations, a large number of projects abort, byte jump difficult For this year's performance level, ByteDance does not reveal much information now. However, combined with Liang Rubo's statement, previous years 'income and net profit and the revenue target exposed by the media at the beginning of the year, the loss is almost certain.

Revenue from ByteDance rose 80 per cent to $61.7 billion in the previous fiscal year, while net losses expanded nearly 87 per cent to $84.9 billion. ByteDance, the Wall Street Journal reported earlier this year, still posted a 54% year-on-year increase to nearly $18.3 billion in the first quarter of this year, with losses unresolved.

According to the expenditure structure of ByteDance over the years, sales and marketing expenses, general administrative expenses and R & D expenses account for a large proportion, which has always been the main cause of losses. The crux behind this points to the increasing number of businesses and products with ByteDance, as well as the longer and longer battle lines.

Every time a new service or new product is launched, a supporting team needs to be set up, and then a large amount of resources are invested to promote it, which constantly increases the cost pressure of bytes. Under Liang Rubo's efforts to reduce fat and slim down strategy, reducing investment and abolishing redundant projects have become the key work of byte this year.

The first to be taken by senior management is the marginal business and products that are not highly related to the main business of the group and whose income is unstable, such as investment and real estate.

Among them, the securities business has been abandoned most completely. On January 19, the investment department of ByteDance (Byte) was abolished as a whole; in the late next month, Byte sold its Dolphin Stock and Wenxing Online products to Hualin Securities at a price of 20 million yuan, completely withdrawing from the securities market.

Secondly, even in the content, social, e-commerce and other fields that they are good at, bytes have undergone radical reforms without any nostalgia.

For example, the content community "Knowledge Zone," which was launched less than eight months ago, officially died on December 7; in September, the trend e-commerce App chatter box was shut down; soda music was fully preheated when it was launched in March, and the grass-growing App that was exploded for internal testing in July was praised, and now there are few publicity resources available.

Finally, for those businesses and products that are unwilling to give up in the short term, it is inevitable to streamline staff and cut resources. Games and education are the two businesses that bear the brunt of policy and peer impact.

Let's first look at the situation of vigorous education. Reports show that by the third quarter of this year, the size of the byte education business team had shrunk by nearly 80% from its peak, leaving only about 1000 employees. In June this year, some media reported that bytes aimed at the education department to carry out large-scale layoffs again, involving vigorous intelligence, intelligent learning, lifelong education and career development, education public welfare four sectors of the vast majority of teams, many business line layoffs as high as 80%-90%, basically equivalent to uprooting.

Although byte still retains the spark of educational business, few projects are actually under way. From the rest of the project distribution, byte has abandoned hardware efforts and returned to focus on vocational education and youth knowledge products. Hsueh-lang and Kai-yan, who have good prospects for development, have become the last hope of the whole village.

On the game side, the situation was not optimistic either. Also in June, Byte removed Studio 101 in Shanghai, the center of the gaming industry, which had launched Byte's first self-developed mobile game,"The Moon in the Heart of Flowers and Mountains." The exit of Studio 101 also means that bytes give up the old strategy of rapid iterative new tour and self-research.

However, in byte view, reducing investment does not mean giving up completely, but only indicating that the game business needs reform. In mid-December, the Byte Games division carried out a new round of organizational restructuring, merging the two business lines of domestic distribution and overseas distribution, and establishing ONE Publishing Studio, a global distribution studio, to improve administrative efficiency.

Of course, games or education are destined to play marginal roles for a long time. Fattening and slimming internal organizations and cutting operating costs will certainly help control the rate of losses and allow more time for these businesses to grow. But when it comes to making money, we can only focus on one app-chatter.

The hope of the whole village, where has the commercialization of chatter gone? As we all know, in the early days of its establishment, the name ByteDance (Byte) was not widely recognized, and today's headline has been synonymous with the Internet upstart. It was not until the Group's business continued to expand that the giant logo of Today's Headline on the roof of Beijing headquarters was retired and hung with the big signboard of ByteDance.

It may be said that the change of the company's external propaganda caliber, propaganda materials and headquarters logo has always reflected the strategic change of ByteDance. Then by 2022, the trend of chattering replacing bytes will become more obvious.

On May 6 this year, ByteDance (Hong Kong) Co., Ltd. announced its name change to Shaking Group (Hong Kong) Co., Ltd.; shortly thereafter, Beijing ByteDance Technology Co., Ltd. was also found to have changed its name to Beijing Shaking Information Service Co., Ltd. After the news came out, the voice of chatter independent listing is also rising day by day.

There are signs that chatter is becoming increasingly important to ByteDance. On the other hand, the annual performance growth of bytes is less than expected, and chattering is bound to be carried out.

Advertising and e-commerce are the main means of commercialization of chatter. These two markets will face great challenges in 2022.

In the advertising revenue territory of chattering, open-screen advertising, brand information flow advertising and bidding information flow advertising support almost all revenue, among which the latter two kinds of advertising account for a higher proportion. According to media estimates, in 2020 and 2021, the advertising revenue of chattering bidding information flow has increased significantly by more than 60%, and last year's advertising revenue of brand information flow has directly doubled.

Although the Short Video platform is still popular with advertisers, the DAU of chatter, daily usage time and other data can still be played, but the real economic recession and the general environment of traffic dividend decline are irreversible. The Internet advertising market has come to its toughest days, and the era of high growth has been unable to replicate.

QuestMobile's report pointed out that China's Internet advertising market in the first half of this year was about 290.36 billion yuan, down 2.3% year-on-year, and is expected to rebound slightly in the second half of this year. Among them, Short Video platform advertising revenue accounted for about 39.9%, compared with the same period last year only a slight increase of 0.9%.

(Photo from QuestMobile) Another business chatter e-commerce on the tuyere, new and old problems are also a lot.

The old problems are still familiar formulas: the proportion of self-operated GMV is too low, out of stock, lack of supply chain, lack of supporting warehousing logistics measures; as for the new problems, the most prominent ones are the rotation of top-stream anchor, and the value of chatter traffic is questioned.

Old and new brother make a friend, Oriental selection at the end of the year has been shaking into the Tao, more or less for the chatter is a kind of harm. In the second quarter, although Liu Genghong, who became popular, also went to the road of live broadcasting with goods, the realization effect was not ideal. Finally, he established the direct broadcasting room of "ViVi fat oil click off" on Taobao to prepare for entering the market.

In view of this, chatter this year also made a lot of changes, actively strengthen short board, repair loopholes.

At the beginning of the year, Shaking put forward the goal of letting all the top 2000 brands in Tmall sales enter Shaking Mall. At present, the completion rate has been above 90%, and the brand overlap degree of Shaking E-commerce and Taobao E-commerce also exceeds 80%. In order to retain the big anchor and support the new anchor, chatter also multi-traffic distribution rules for long-term dynamic adjustment, and for the goods entering the home page to provide more exposure.

By the end of the year, through measures such as adding graphic content and setting up shelf e-commerce scenes, the e-commerce territory of chattering is constantly expanding. However, e-commerce alone cannot meet the demand for bytes. In order to make money, bytes still put too much pressure on chatter, adding more and more, revising, upgrading, stuffing more functions and pages, which also makes chatter more and more bloated.

However, it is still difficult to bring substantial profits from new businesses such as local life, city-wide wine travel and take-out, which are highly anticipated by chatter. Among them, the local life business with the most promising development prospect still needs to shake the sound and burn money to maintain expansion, and faces the encirclement and interception of opponents such as Meituan and Hungry.

More and more links with goods, more and more complex functions of chatter has caused dissatisfaction among some users. It is not healthy for the long-term development of the group to put all the burden of revenue on the chattering body. Byte really needs to think about finding a new engine to lighten the burden on TikTok's shoulders.

Unfinished ambition: meta-universe, offline and sea who can share the pressure of chattering in the future? The past year has also been very anxious to find answers.

Although byte announced its entry into the B-side last year, focusing on developing cloud computing projects, there were not many resources left for the B-side this year. Volcano Engine announced in July this year that it would replace its brand slogan with "New Power for Growth on the Cloud" and launch basic products focusing on six industries: finance, automobile, consumption, entertainment, medical care and communication media.

Another B-end-oriented heavy product flying book, at present does not regard commercialization as the main task, but also actively explore customers, expand influence. In the end, the advantage of bytes is still at the C end, dealing with users. In the context of controlling investment, reducing costs and increasing efficiency, byte gradually concentrated its limited resources on several of the hottest tracks this year: meta-universe, offline and sailing.

Needless to say, Tik Tok plays a very important role. TikTok Shop is available in more and more countries, and the team size of the North American office has been expanding. However, Tik Tok has also been cautious about live broadcasting, which is best at chattering, and has not spread widely in overseas markets.

As for the meta-universe business, following the acquisition of VR hardware company PICO last year, byte launched a number of meta-universe social products and virtual human products this year, and placed its own forces in the three sub-tracks of hardware, games and social interaction, which are the hottest concepts in the meta-universe.

The social App Party Island launched in January provides a series of functions such as virtual image and online immersive social interaction, which is regarded as an important product for competing products such as Baidu Xilang. PICO hardware research and development has also continued, with shipments targeted for the year raised to 1.8 million units, second only to Meta's Oculus in global market share.

On the offline side, the acquisition of a large amount of money in the United States and the second-hand car brokerage business prepared by the explosion at the beginning of the year, are entrusted with the ambition of ByteDance (ByteDance) to enter the offline scene.

In September this year, ByteDance (ByteDance) wholly owned Beijing Meizhongyi Medical Management (Group) Co., Ltd. through its Xiaohe Health Related Co., Ltd. and Xiaohe Health Technology (Beijing) Co., Ltd., the equity transfer plan cost nearly 10 billion yuan. Founded in 2006, Meizhongyi and currently have 7 women and children hospitals, two comprehensive outpatient centers and 5 maternity centers. It is a private chain medical institution focusing on medium and high-end positioning.

However, these three businesses are still facing great challenges. In order for them to support a new growth curve, bytes need to solve the core problems: for example, PICO has hardware but lacks content, Tik Tok's e-commerce business how to do a good job in supply chain management, online traffic how to assist offline medical business.

In fact, some linkages between new and old businesses have been quietly taking place. QuestMobile's report has pointed out that young women in high-line cities account for a high proportion of users of Byte's apps, such as chatter, watermelon videos and today's headlines. Take chattering as an example, female users account for more than 50%, of which 51% are young and middle-aged women aged 19-40. This part of users overlaps with the main users of the United States and China.

It can be seen that the acquisition of bytes is absolutely targeted, and the linkage between medical business and other businesses will certainly increase. This year's hard days are really hard, but after surviving, the potential of bytes is still worth looking forward to.

The growth dilemma written in the last ByteDance is also directly reflected in the valuation of the primary market.

In September, ByteDance announced that it would use up to $3 billion in cash to buy back shares at a price of up to $177 a share and expand the pool of employee reserve options. At this buyback price, the overall valuation of ByteDance is around $300 billion. The expansion of the option pool and the repurchase of shares are tantamount to implying that employees are prepared to be unable to go public for a longer time.

Although ByteDance is still the world's most valued and most anticipated super unicorn in the world's well-known lists. However, compared with his peak valuation, the shrinkage has been quite obvious.

It is said that the valuation myth of the Internet industry has been shattered, and the dream of option wealth has reached midnight, but the outside world still hopes that ByteDance, the wealth-making machine, will retain a glimmer of hope for the industry. However, reality is far crueler than dreams, and today's ByteDance is really hard to return to its peak.

Of course, bytes never stop beating. Internally, the fine-tuning of organizational structure and fat removal and slimming are still continuing; externally, they are actively looking for commercialization paths to improve liquidity. Although the golden age of the Internet industry has been difficult to reproduce, but at full power bytes, still have not given up hope of catching up.

This article comes from Weixin Official Accounts: Value Research Institute (ID: jiazhiyanjiusuo), author: Hernanderz

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