Production | Huxiao Commercial Consumption Group
Author | Huang Qingchun
Title | Visual China
On May 23, when the news of "Station B cancels broadcasting duration indicator display" spread widely on the Internet, CEO Chen Rui did not expect that he would be hot searched on the shelves in this way—— It has been less than a year since the announcement of the revision on June 26 last year to "renege".
As a user, you may feel unhappy; However, the decision made by a listed company is limited by the current environment and the company's stage, which can be seen from the 2024Q1 quarterly financial report of Station B released on the same day.
On May 23, after the Hong Kong stock market was closed, Station B submitted the unaudited financial report of 2024Q1 to the market. The financial report shows that in the quarter of 2024Q1, the revenue of Station B increased by 12% year-on-year to 5.66 billion yuan; The adjusted net loss narrowed by 56% year-on-year to 456 million yuan.
On the positive side, Station B realized an operating cash flow of 638 million yuan in the quarter of 2024Q1, 630 million yuan more than the operating cash flow outflow in the same period of last year, and realized a positive cash flow for three consecutive quarters.
Moreover, in the 2024Q1 quarter, the gross profit of Station B increased by 45% year on year, and the gross profit margin increased for seven consecutive quarters month on quarter, which stabilized the basic profitability of core business, and somehow relieved Chen Rui.
The pessimism lies in that the current market logic has shifted from focusing on extensive growth to focusing on the profitability of the platform. However, Station B still has a loss of up to 456 million yuan in a single quarter, and only half a year is left to fulfill the commitment of "break even in 2024".
Even though the CFO of Station B firmly said in the financial report teleconference that "the gross profit rate of Station B will continue to increase month on month, and we are very confident that if it rises to 30% in the third quarter, we can achieve a break even under non US accounting standards" - but in such a critical time window, Station B went online and there was no platform or product in the world that had verified its function. It pioneered the replacement of playing time with playing volume. What's the picture?
Therefore, it is not that Station B is unwilling to take risks to change the version, but that the management with Chen Rui as the core understands after careful consideration: The current station B cannot afford the chain reaction caused by the risk.
Four businesses, mixed
If the 2024Q1 financial report data shows a bright performance, Station B may be able to bite its teeth and wait - but when the 2024Q1 financial report of Station B is rolled out, the business performance continues the inertia of the past:
Value added services and advertising business increased steadily, while games, IP derivatives and others continued to weaken.
First of all, value-added service business is still the largest source of revenue for Station B. In 2024Q1, the revenue increased by 17% year-on-year to 2.53 billion yuan, and the total number of large members reached 21.9 million in the first quarter, of which more than 80% are annual subscription or automatic renewal members.
Apart from the basic disk of large members, the increment of value-added services is mainly driven by live broadcasting (in 2023, Station B will promote more UP hosts to become anchors through the integration of live broadcasting and video ecology, enriching the content ecology of live broadcasting) and content ecology.
On the creator side, in 2024Q1, the number of UP owners who made money through business orders increased by 51%, and the number of UP owners who made money through goods increased by 105%. This shows that the B station live broadcast has achieved good growth in the B side matching efficiency and C side penetration.
In fact, from the second half of 2023, Station B will continue to improve the priority of live broadcast with goods. However, according to Hu Xiu, Station B has improved its liquidity to some extent through Spark Program (a project to open up data through cooperation with e-commerce platforms) and private distribution (not the focus of commercialization of Station B, but some UP owners have explored the liquidity model), but it lacks differentiated and innovative services in market competition, which has limited impact on overall revenue.
The good news is that in the quarter of 2024Q1, the turnover of 3C and digital goods carried by Station B increased by more than 230% year on year, and the turnover of women's clothing products carried by this year exceeded that of the whole 2023 - which undoubtedly increased the confidence of Station B in e-commerce business.
Therefore, facing the upcoming 618 E-commerce Festival, Station B will adhere to the previous "big open loop" strategy and cooperate with Alibaba, JD, Pinduoduo, Vipshop and other platforms - the management said in the financial report conference call, During 618, Station B received 30% more budget from external e-commerce platforms, "We will strengthen the cooperation in this kind of vertical industry, pull the grass planting on station B, and realize the whole link process of transformation transaction."
Secondly, the advertising business performance of Station B was quite impressive, with a year-on-year growth of 31% to 1.67 billion yuan in 2024Q1, the best year-on-year growth rate since the last three quarters; In addition, the management mentioned that, The effect advertising revenue grew faster, with a year-on-year growth of 50%.
You should know that 2024Q1, as the off-season of the transaction, does not have such big promotion nodes as 618 and the Double 11. However, in the challenging market environment, Station B is not easy to continuously improve its commercialization efficiency and turn high-quality traffic into advertising revenue.
Hu Xiu learned that the management of Station B has made many positive explorations for the advertising business, including adjusting the commercial organizational structure, improving the infrastructure and advertising matching efficiency, upgrading the fireworks list platform, launching the video and live broadcast with goods function, and so on. In the 2024Q1 quarter, the management expanded the dynamic search and other advertising scenarios, launched the new official heating tool "Bihuo Promotion", Help UP and merchants launch mobile terminal self-service; In addition, Station B also opened up the fireworks system and advertising system, and integrated and strengthened the overall delivery tools on the customer side.
Of course, the steep growth curve of advertising is that the advertising base of station B is small, and the advertising loading rate is higher than that of dithering, fast hand, etc. (taking the listed fast hand as an example, the DAU of station B/fast hand is about 1:4; The advertising revenue of Station B/Fasthand is about 1:8.) The platform is still not high.
In terms of game business, the revenue of 2024Q1 is 980 million yuan, which is still weak as a pillar business in the past.
However, in April, Station B launched an exclusive agency game, Wu Hua Mi Xin; It is expected that the strategic game Three Kingdoms: Plan for the World will be released on June 13 (at present, more than 2 million players have pre registered) - with the launch of the above products, the business performance of station B games will also be improved.
In addition, Chen Rui led the latest game business changes on March 5 - all members of Station B said in an internal email that "to promote the development of the game self research business", a "self research game distribution department (first level department)" was established, and Chen Tongpeng was responsible for reporting to CEO Chen Rui; At the same time, the self-developed operation department I, Guangzhou branch and Beijing branch of the original "game distribution center" of Station B will be integrated into the self-developed game distribution department and reported to Chen Tongpeng - although the business structure of this adjustment has not changed much, it is a clear signal from a strategic point of view that Station B will streamline the self-developed research.
As for user ecology, it is Chen Rui's "reassurance" that he is expected to make profits in 2024.
First, user disks continue to expand. In the quarter of 2024Q1, DAU (Daily Active User) of station B increased by 9% year-on-year to 102 million; Station B's MAU (Monthly Active User) is 341 million, an increase of 5 million month on month.
Second, users still maintain high stickiness. In 2024Q1, the average daily use time reached a record high of 105 minutes, Compared with the 95 minutes in 2023Q4, it increased by 10 minutes.
In addition, by the end of the first quarter, 236 million users had passed the entrance examination and become "official members" of Station B, up 15% year on year, and the retention rate in the 12th month was stable at about 80%.
At the same time, with the continuous enrichment of high-quality content supply, In the quarter of 2024Q1, the average daily video playback volume of station B increased by 22% year on year, approaching 5 billion times.
Why did Station B break its promise?
Otherwise, "slapping face" is one of the most popular performance arts for netizens. Compared with the financial report of Station B, netizens' attention is almost all on the discussion of why to cancel the "revision of explicit broadcast duration indicators".
A friend jokingly described this as, "I was ready to lift the table, but I gave up after lifting the leg".
Example of playback minutes icon
According to the official explanation, the reason given by Fang Fang, the community and product leader of Station B, is that the team was too confident when launching the broadcast duration indicator, and did not fully consider the acceptance and understanding of the outside world. "Before Station B, no platform or product in the world was counted by the duration. What can we do? (So) we decided to cancel the revision of the explicit broadcast duration indicator."
This "half off" business status, although gratifying, is the real situation for most Internet platforms to do business innovation—— First, let's shout with great ambition and make a big splash, then think that it is unrealistic to land, and finally give up when the resistance is too big.
Frankly, try a product improvement that subverts the industry consensus with your own efforts, For a listed company like Station B, it certainly needs great courage - just as Chen Rui emphasized at the end of his speech last year: "This is the way Station B has gone in the past 14 years, and the only way to go in the future, so that you are willing to loudly recommend Station B to your friends, and make you feel that the time you spend on Station B is worth it."
As a platform spanning three content production modes of UGC, PGC and PUGC, the largest content production mode of Station B comes from PUGC, which has scale effect and network effect. Compared with community platforms such as dithering and fast hand, it has stronger network effect, and can form cross border network effect based on specific circle layers, Station B has made changes that affect the industry and drive the transmission and resonance of peers, upstream and downstream, such as the prevalence of bullet screen culture.
Source: Visual China
Even though Station B has often been ridiculed and ridiculed by the outside world due to its disordered expansion in the past two years, it has still been able to stand in the spotlight of the Internet for 14 years. Whether it is bright or dull, the underlying logic of market judgment should no longer be limited to flaunting or disdaining, but should see the potential of this community of young people.
Therefore, from the perspective of the platform, if the play volume is the core indicator, The content potential of station B is totally different from that of station B, and the content potential of fast hand to the brand - the video of station B in seconds and that of station B in minutes are two different scenarios in terms of content consumption and user continuity. Its commercial efficiency cannot be bridged only by the incentive plan of station B, and the value of station B's content must be anchored with higher value Separate the quick hand area.
Secondly, even though the play volume is more mainstream and mature in terms of technology realization and user mentality, when the management of Station B realized that the "play duration" can better reflect the video quality, they decided to "change" (the complexity of technology and investment cost of complex interactive behaviors such as de duplication, screening interruption, double speed play, repeat play, multi device viewing, etc. are higher) ——Many friends who care about Station B see that Chen Rui still has the determination and courage to change.
However, reality has proved that the management of Station B underestimated the product resistance to promote such an industry change:
First of all, the amount of play has long been an important indicator of video value, and also a numerical reference for the comparison of UP main videos. This change will affect users' recruitment. After all, there are differences in users' habits, so it is questioned that it is "giving up food for fear of choking" and changes against the trend. In particular, Chen Rui wants to achieve "400 million MAU (monthly active users) in 2023" and "break even in 2024" The two Flags need to run more. How can they slow down?
Secondly, the growth of contributions may bring some fluctuations, and the replacement of playing time for playing volume to some extent deprives some creators of the right to show their videos are welcomed by fans with lower threshold and more simplicity - you know, not every UP owner has systematic shooting, editing and post production capabilities.
Finally, the explicit broadcast volume makes the previous business decision-making reference system face remodeling. Although advertisers can still see the broadcast volume of business orders and other data in the background, it will completely disrupt the advertisers' data evaluation system and scheme reporting reference, and ultimately directly affect the delivery decision. In addition, Station B must quickly update the ROI numerical model and continuously optimize the new standards for response, The above actions will even further compress the liquidity space of the UP owner.
Source: Visual China
The deeper reason is that this change will be immediately transmitted to the commercial performance of Station B:
On the one hand, station B will be more and more constrained by the capital market after its listing, and the priority of making money has been repeatedly raised, while advertising is still an important source of income for station B and UP owners. In order to honor Chen Rui's profit flag in 2024, this risky change will naturally be greatly hindered;
On the other hand, this change is essentially at the expense of the advertiser's most concerned reporting indicator - the amount of play as the premise, while the playing duration and completion rate can only reflect the video quality and popularity, but can not meet the advertising purpose of the advertiser to the maximum extent.
Therefore, Fang Fang said in his response, "After the announcement, he found that the feedback from all aspects was not optimistic, and many people could not understand this indicator.".
However, after the break even in 2024, Chen Rui may review the feasibility of this revision issue again. We might as well wait a little longer.
#I am Huang Qingchun, the deputy leader of Huxiao's business, consumption and mobility group. I focus on many fields, such as entertainment, social networking, video games, and so on. Industry exchanges plus WeChat: 724051399. News leads can also be sent to huangqingchun@huxiu.com
