The livestreaming industry is looking for a solution. Is Inke’s transformation effective?

2022-05-15 0 By

Looking back at 2021, it was a roller-coaster year for the Internet industry.Despite some turbulence, the actions of the head players suggest that everyone is actively adjusting their development strategies to focus more on quality growth.Likewise, livestreaming companies are actively seeking change.The industry, which was born in 2015 and exploded in 2016, also stands at a fork in the road of transformation, with head players choosing left or right?In 2018, the live broadcasting industry ushered in its peak era, with Huya, Inke and other companies going public.However, after rapid growth, the growth of the live broadcast industry has slowed down.According to iResearch, the user growth of China’s live game industry is only 4% in 2022, and the industry has begun to enter a new situation of stock competition.And in yesterday (April 7), Tencent’s penguin e-sports direct official xuan delisting.And according to the 21st Century Business report, according to the 2021 annual report released by the industry’s leading players, from profit to loss has become the development trend of the entire industry.Some of the trends are already visible in the earnings reports from the top players.Specific data show that although huya’s annual revenue in 21 was 11.35 billion yuan, a year-on-year growth of 4.0%;Douyu’s annual revenue fell 4.6% year-on-year to 9.17 billion yuan, and the net loss attributable to the company was 620 million yuan.Inke’s annual revenue was 9.18 billion yuan, up 85.4% year on year;The year-over-year revenue growth of Momo also fluctuated, while YY Live, a subsidiary of Baidu, was not listed separately in its 2021 financial report.In terms of year-on-year revenue growth, only Inke achieved significant growth, reflecting to some extent that the live streaming industry will enter a phase of smooth growth.In addition to the competition between vertical platforms, the emergence of Douyin and Kuaishou has taken away part of the traffic, and the rising cost of acquiring customers has brought more pressure to the livestreaming industry.As such, it is important for players to find new sources of growth.Joyous Times, one of the industry’s leaders, has been rapidly expanding overseas, moving live streaming parties and other online events overseas.Zhiwen Group’s two audio social network in Q4 achieved profitability, is a relatively mature application software;Inke is exploring social services, and in its latest financial report listed “dating” as a separate business.As the “first stock of live broadcasting” in Hong Kong, The results of Inke’s strategy of actively exploring new business can be seen in its financial data.Business diversification to share risks, how effective is Inke’s transformation?On March 27, Inke released its 2021 annual results.Inke shares rose more than 10 per cent at the opening on the first trading day after the results were released, and then rose for three days in a row.Judging from the secondary market reaction, investors are more satisfied with the results.According to the earnings report, in 2021, the revenue of Inke’s social services and live streaming services will reach 5.74 billion yuan and 2.56 billion yuan respectively, accounting for 62.6% and 27.9% of the total revenue, while in 2019, the revenue of the company’s social products accounted for only 14%.In addition to the rapid development of the social networking business, The dating business of Inke is also growing steadily, with the revenue reaching 610 million yuan in 2021. The corresponding APP “Yuanyuan” has been ranked in the first echelon of the track.This shows that Inke is getting rid of its dependence on live broadcasting and has successfully transformed from a single product into a matrix product.As one of the earliest companies to enjoy the dividend of live streaming, Inke’s transformation has already laid a foundation.Back in 2018, the company signaled that it wanted to go social.According to the annual financial report of that year, Inke launched an audio social product “Buzak” in that year, and put forward the strategy of “interactive entertainment and social interaction” in its 19-year outlook.Inke said in the earnings statement that the choice of the above strategy is to meet the entertainment needs of users.In other words, expand your user base with a better, more comprehensive service that increases retention.The strategic layout is a major factor in the rise of Inke’s social business in two years.In July 2019, Inke fully acquired jimu, a social networking product, for $85 million.According to kunpeng Business Review, Jmu ranked 13th in the social software list at that time, with less than 700,000 monthly users.That figure didn’t seem to match the amount of the deal, which at the time was viewed negatively.From today’s data, Inke’s move seems to be going well.As mentioned above, social revenue will make up more than 60% of total revenue in 2021.The company also said in its earnings report that its social networking products have entered a mature commercialization stage, which has boosted Inke’s net profit, with its full-year after-tax net profit of about 430 million yuan, up 113.1 percent from about 200 million yuan in the same period last year.It should not be ignored that the demand for social interaction is still increasing.According to media data from Benxi Daily, the market size of China’s mobile social platform reached 116.2 billion yuan in 2020 and exceeded 232.2 billion yuan in 2024, with a compound annual growth rate of 18.9%.In this blue ocean, the proportion of Generation Z users is gradually increasing.According to data from Everyone is a product manager, 83.6% of Gen Z users are socially active, and 70% of Chinese Gen Z users tend to socialize online.Soul, a social platform for Generation Z that filed its IPO prospectus with the SEC, has reached 10 million monthly active users within two years of launching, according to Wikipedia.Although the launch was suspended in the end, it shows how much imagination generation Z has brought to social products.And main “tide”, “cool” style of product orders can be said to be very of contemporary young people’s taste, its online function covers the script to kill multiple forms of entertainment, such as interest classification not only regular items, and eccentricity, and strong interactivity, chat can also send a barrage, these can be very good to attract love secondary yuan Z generation of subculture, etc.According to the earnings report, Inke’s main product had 42.8 million MONTHLY active users in 2021, up 17.4 percent year on year.In this way, it is not difficult to understand that Inke can rapidly develop its social business by virtue of product vision.In addition, due to social signs such as tax evasion by anchors and the phenomenon of tipping exposed by 315, the supervision of online social networking may be stricter in the future, so both live broadcasting and social networking are facing regulatory risks at present.In response to this risk, Inke has taken corresponding measures. Previously, it created an automatic account closure software to crack down on “pig killing plate” on social platforms. On April 6, Inke issued a notice on cracking down on illegal live broadcast content, again emphasizing the company’s response strategy.However, the stricter regulation will still have a certain impact on the online business, coupled with the increasingly fierce competition among peers, Inke also turned some attention to the offline.In July 2021, ROOMUU, the world’s first real-time interactive location bar, opened in Changsha, allowing users to break the “dimensional wall” in reality and make offline friends online.In September of the same year, Super Love, the dating social product of Inke, opened its first offline experience store in Beijing, aiming to break the awkward situation of dating among young people through social activities such as werewolf killing and illustration.According to the financial report, Inke will expand stores in Guangzhou, Shenzhen, Chengdu and other cities in the next step to further promote the implementation of business scenarios and integration.Feng Yousheng, chairman of the company, said that based on a deep understanding of the post-EPIDEMIC era, the company has established the exploration direction of “full-scene social interaction”.Under this policy, Inke has achieved profits for seven consecutive years.Offline development can undoubtedly reduce the cost of acquiring customers, and entering the sinking market can further promote the brand and enhance the popularity of Inke.But at the same time, offline promotion and multi-product matrix will also increase the cost of Inke, and the development of different businesses will inevitably increase expenses and affect its net profit.According to data, Inke spent 2.21 billion yuan on sales and promotion in 2021, up 211.9% year on year.In the future, how to better control expenditure at the cost end and achieve business growth at both online and offline ends is both a challenge and an opportunity for Inke.Conclusion Thomas Kolopoulos, an American scholar, wrote in The Circle Effect that “in the face of the strong rise of the young group, only by understanding the business logic of the post-1995 generation, the main consumer force, and how to get close to this generation of young people, can future businesses succeed.”Whether you admit it or not, the future is the future of the Z era, which is why B, Xiaohongshu, Yingke, Soul and others are still able to achieve user growth.For Inke, diversified business attempts have shown some positive aspects, and how to create greater value in the future may be the key to gain recognition from the capital market.Article source: Hong Kong Stock Research Society, aims to help Chinese investors understand the world, focus on reporting Hong Kong stock enterprises, interested in Hong Kong stock friends pay attention to us