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

On March 20, Beijing time, Douyu released unaudited financial reports for the fourth quarter and the whole year of 2022.

According to the financial report, Douyu's total revenue in 2022 was 7.108 billion yuan, with an adjusted net loss of 7.6 million yuan, compared with 439.3 million yuan in the same period in 2021. In terms of gross profit, Douyu recorded a gross profit of 990 million yuan last year, with a gross profit margin of 13.9%, an increase from 11.9% in the same period in 2021.

Specifically, in the fourth quarter, Douyu's total revenue was 1.681 billion yuan, with a net profit of 41.8 million yuan, compared with 25.7 million yuan in the previous quarter, compared with a net loss of 193.2 million yuan in the same period in 2021. The adjusted net loss was 4.3 million yuan in the same period in 2021, compared with 150.7 million yuan in the same period in 2021.

At the same time, Douyu's gross profit in the fourth quarter of 2022 was 186 million yuan, with a gross profit margin of 11.1%, compared with 10.5% in the same period last year.

Generally speaking, Douyu's net profit in the fourth quarter of 2022 improved significantly compared with the same period last year and month-on-month, and the gross profit margin also increased, while the overall net loss for the whole of 2022 also narrowed significantly compared with the same period last year, and the gross profit margin also increased significantly.

It can be seen that Douyu's profitability is greatly improved, and a number of key financial performance has also been significantly improved and optimized.

As Douyu founder and CEO Chen Shaojie said after the release of the financial report, in the face of the complex and changeable macro environment, Douyu "maintained the basic stability of the company's overall business through a variety of operational strategies, such as optimizing revenue activities, adjusting copyright strategies and increasing investment in homemade content."

This is the true portrayal of Douyu in the past year, and it also hints at the secret that the company can go against the trend in the face of uncertain environment.

Reduce cost and increase efficiency, pragmatic operation of Internet traffic dividend peaked, the industry tends to winter, extensive business model is no longer suitable for most Internet enterprises. "reducing cost and increasing efficiency" has become a common demand of enterprises in the post-epidemic era, which is also one of the main themes of Douyu in the past year.

The first step to reduce cost and increase efficiency is to reduce the cost of operation, and then to improve the efficiency of operation, which requires enterprises to return to their duty, find their own core competitiveness, honestly around the core competence of mining and innovation, and optimize management. These are all things that Douyu has been doing in the past year.

For example, in terms of cost reduction, for Internet content companies, a huge amount of copyright purchase has always been the bulk of the cost. Over the past year, Douyu abandoned the strategy of blindly buying copyright in his early years and changed to "selective purchase of copyright", that is, "fully evaluate the flow and realizable value of the copyright of each event, and finally determine whether to buy the copyright and the purchase price."

Under this strategy, Douyu made great efforts to develop self-made content on the one hand. 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 famous Mountain Cup season 5", as well as leading lead anchormen's events, 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 achieved good results after they were launched. For example, the viewing time of the live room during the LBL event increased by 323% compared with the VJ's daily data, and the average number of daily viewing users increased by 140%. During Arena of Valor's Lucky Cup, the number of viewers in the live room increased by about 77% compared with his daily number, and the number of new followers increased by 34.5%.

There is also PGC home-made variety, Douyu in the fourth quarter also continued to make efforts at the level of interactive play, launched "the Speed of Light escape-PEL starlight special", "run Bar Anchor 7", "the coronation of the Wild King 3", "Radio Battle Array Conference" and "Wave Concert" and other home-made variety shows, and added a variety of interactive games in the program. There are many popular programs, such as "run Anchor 7" and so on, which verify Douyu's achievements in self-made content.

As mentioned earlier, the "selective purchase" of copyright is not a non-purchase, but a careful selection of factors such as content flow contribution, revenue contribution and so on. For example, in the fourth quarter, Douyu broadcast the Arena of Valor World Champions Cup (KIC) live. On the basis of the traditional live broadcast of the event, exclusive watching functions such as "my Home team" and "Anchor call" were added, so that the audience of the event and the live broadcast content could have an emotional connection in the form of cross-screen interaction.

According to incomplete statistics, compared with the same period of the Challenger Cup, the number of viewers in the live broadcast room increased by 127%, the peak heat of the live broadcast room increased by 47.8%, and the total number of on-screen comments increased by 70.9%. The new presentation form enhances the sense of participation of users and further expands the influence of the event.

In addition, it is worth mentioning that Douyu also won the direct broadcast rights of League of Legends LPL events in January this year, and League of Legends is one of Douyu's core game content, which shows that their vision in copyright is becoming more and more accurate.

According to the data of this financial report, Douyu's income sharing and content costs fell to 1.271 billion yuan in the fourth quarter, down 31.2 percent from the same period last year. Sales and marketing expenses and R & D costs also decreased by 45.9 percent and 39.2 percent, respectively. It can be seen that under the promotion of a series of operational measures, Douyu's cost reduction strategy has achieved immediate results.

In fact, the prudent purchase of copyright content is not only conducive to reducing costs, but also beneficial to the improvement of operational efficiency. Because better quality, more in line with their core competitiveness of the content, often means a higher return on investment.

In terms of efficiency, Douyu, in addition to selectively buying copyrights, has strengthened the operational refinement of self-made content in the past year, carrying out intensive cultivation of content and users.

For example, in self-made competitions, Douyu pays more attention to the richness of content and the subdivision of audience groups, creating content aimed at different groups, such as "Arena of Valor Enterprise League S2" for enterprise users. "pick up the Star Cup" for college students, "University match", and even the "Crossing the Fire Line Goddess Competition" and "Infernal Goddess Competition" for female players, all kinds of fine content. It not only covers a wider range of users, but also greatly improves the activity of Douyu's game community.

Taking the selection season of Douyu e-sports school team as an example, under the background that the organization of offline events in some provinces and cities has been seriously affected, it has still attracted 2756 teams from 11 provinces and more than 200 universities across the country to participate in the competition. it has become the largest campus e-sports competition in China, and has a strong appeal and influence in the university group.

In terms of interaction, Douyu also creatively makes use of the real-time and interaction of live variety shows to add interactive links that users can participate across the screen, such as game props and the choice of teammates / opponents, which not only increases the interest of the content, but also realizes the innovation of revenue means.

Under the continuous effect of a series of practical business strategies aimed at reducing cost and increasing efficiency, Douyu's mobile MAU further rose to 57.4 million in the fourth quarter of 2022, while paying users were the same as in the third quarter, stable at 5.6 million. All these mean that Douyu is entering a more benign and sustainable development stage.

Business exploration and innovation, Douyu seeks a more stable long-term growth point. According to Goldman Sachs' statistics and forecasts on the income scale of major enterprises in China's live broadcast industry from 2017 to 2024, we can see that China's live broadcast industry has experienced an early era of barbaric growth. now it is basically leveling off, with the slow deceleration of month-on-month growth, the revenue from the live content business itself is reaching the ceiling. We need to seek more long-term and stable new growth points to form a leap in production and management.

For Douyu, they also did a lot of exploration of new models of commercialization in 2022. For example, they launched "Diamond Powder members" last year and constantly enriched the value-added rights of their members, bringing an exclusive space for fans and anchors to "fan homes" for fans and anchors in the third quarter. to provide users with anchors' fan cards with a record space to grow up with the anchors.

On the basis of this game, in the fourth quarter, Douyu continued to optimize the companionship and interactive experience between anchors and users in the membership system, newly launched members' sound effects and privileged gifts, and created diamond powder league, diamond powder gift privilege Buff activities, etc., to promote the growth of membership renewal rates for users in this quarter.

According to statistics, the daily peak of the number of Douyu drilling powder stations opened in the fourth quarter reached 145000. During the quarter, the average daily opening number increased by 7.6% compared with the previous quarter, and the renewal rate increased by 8.1% over the previous quarter.

At the same time, in the fourth quarter, Douyu also extended the membership service of a single zone to more game zones, and in deep cooperation with game manufacturers, launched game prop user activities such as League of Legends's small shop. Through the platform to complete the platform interactive play method to exchange points, and then use the corresponding points to exchange game props and platform benefits and other ways, two-way promote Douyu and game manufacturers' user growth and business transformation.

‎ cited Douyu's online League of Legends store in the fourth quarter as an example. During the sale of props, the number of daily active users in Douyu League of Legends mobile games area increased by 27% compared with the inactive period. It can be seen that the traction effect of commercial cooperation on the growth of ecological users of League of Legends mobile games is very obvious.

For example, Douyu also cooperated with Arena of Valor officials to launch the "KPL match Battle order" platform interactive play during the KPL summer game 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.

According to the financial report, Douyu's live broadcast revenue reached 1.5967 billion yuan and advertising and other revenue reached 84.3 million yuan out of a total revenue of 1.6811 billion yuan in the fourth quarter of last year. Among them, the proportion of advertising and other revenue in total revenue has remained stable both year-on-year and month-on-month.

It is believed that with Douyu's continuous investment in content quality and continuous exploration in business model innovation, Douyu will gradually increase the proportion of advertising and other income while live broadcast revenue is developing steadily. make its overall income structure more stable and diversified, and slowly find its own new growth curve.

Conclusion Douyu is not only the leader of the domestic game live broadcast industry, but also the leader of the Internet content industry to seek breakthroughs and innovation in the second half. Through the financial report, we can see the "long-term activist" Douyu, who is exploring new growth points while stabilizing the basic plate of the core business of live broadcasting. As Chen Shaojie said:

"We will deepen the growth logic of the content platform, based on content construction and community interaction as the core, to enhance user stickiness and retention. Through deep ploughing of game content and precipitation of core users, we will explore new growth points while maintaining the leading position of the domestic game live broadcast industry, so as to promote the long-term and healthy development of Douyu."

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