Two years after being listed, Station B surrendered the second "Annual Transcript". Recently, it released the fourth quarter and full-year performance report of 2019. The company's diversified layout has achieved initial results. The proportion of non-gaming business revenue exceeded the proportion of gaming business revenue for the first time in the fourth quarter, with high investment. And high-exposure methods brought user growth, but the losses increased further.

The financial report shows that the company's fourth quarter 2019 revenue reached 2.01 billion yuan, an increase of 74% year-on-year, exceeding market expectations for seven consecutive quarters; but the fourth quarter net loss was 387.2 million yuan, an increase of 102.9% year-on-year, while The net loss was only RMB 507.8 million. Looking at the whole year, the total revenue of Station B in 2019 was 6.778 billion yuan, an increase of 64% year-on-year; the net loss was 1.304 billion yuan, an increase of 130.80% year-on-year.

The loss dragged down the stock price. After the financial report was released, the stock price of station B once fell by more than 3%. Together with the impact of the epidemic, the stock price of station B has been in a state of decline for many days.

Under the rapid growth, what other worries will station B face?

Will Station B continue its appeal

Chen Rui, Chairman and CEO of Station B, once said that Station B is actually a large fan base, but everyone is not a fan of celebrities and celebrities, but the station B itself.

The Chinese born between 1990 and 2009 are also defined as "Generation Z", which is the most unique user asset of Station B and an irreplaceable chassis. QuestMobile data shows that Station B is one of Gen Z's favorite apps, and Gen Z users account for more than 80%.

In the past, Station B paid great attention to the maintenance of the community atmosphere. In terms of the answering system for members, the membership system of station B has undergone a transition from an invitation system and a staged open system to a answering system. By continuously increasing the entry threshold for members, the sense of belonging and stickiness of the user community is enhanced to a great extent. Those who don't know much about the two-dimensional culture.

Zhang Wuwei, an analyst at Soochow Securities, believes that compared with other video platforms, B has a unique position and characteristics in terms of platform positioning, content and social attributes. In the current situation where the Internet traffic bonus has disappeared, "users + culture" jointly build their important moat.

On the one hand, relying on the two-dimensional culture to start up and form barriers, which caused B station to compete with other video platforms and reduce the intensity of competition; but on the other hand, after listing, it faces performance pressure and needs a stronger means of monetization. Circle, seek diversified development, promote the platform to expand to a larger volume, and get rid of niche tuning and positioning.

From the perspective of the industry pattern, the Chinese video platform market is highly fragmented, including vertical content platforms such as long video, such as iQiyi, Tencent Video, etc., which have weak social attributes; entertainment live streaming platforms, such as Huya and Douyu, The social mode is mainly one-to-many, with certain community attributes; short video platforms, such as vibrato, fast hands, volcanoes, etc., the content length is usually less than one minute, the content is more interesting and lively, and users forward and like , Comments and other ways to interact, with strong social attributes.

Facing the fierce competitive environment, Chen Rui stated in the earnings conference call that user growth is the focus of Station B's work throughout 2020, and increased marketing efforts for users who have not used Station B or heard about Station B. The user growth goal of station B in 2020 is to reach 180 million monthly live, and to reach 220 million monthly live in 2021.

However, this goal faces no small challenge. An industry source close to the B station told China News Weekly that now the B station has broken the circle, and from the original UGC video platform, rapid expansion to include a variety of pan-entertainment platforms such as IP content, PUGC and knowledge payment, low-quality content and UP The main controversy is frequent, a large number of marketing numbers are flooded, the content ecology is destroyed, the community attributes of strong interactive feedback are weakened, and the loyal users who insist on the tone of the original community are gradually lost. The viscosity is slowly decreasing.

As new users continue to flock to the B station, the enthusiasm of the big UP masters to produce original content and the B station community activity has also weakened. The financial report shows that the main contribution of monthly live UP in station B was 2.8 million in this quarter, a net decrease of 300,000 compared with the previous quarter; the monthly average number of interactions reached 2.4 billion, a net decrease of 100 million compared with the previous quarter.

In terms of user data, the MAU (average monthly active users) of station B has been in a state of rapid growth, while the MAU in the fourth quarter of 2019 reached 130.3 million, a month-on-month growth of only 1.88%, and the growth was weak. As of the end of 2019, there were 7.6 million paying members in station B. Although the year-on-year growth reached 111%, the proportion of paying members in the overall monthly activity was still very low, less than 6%. In the same period, iQIYI subscription members were 107 million. In addition, the average spending of paid members of station B has also shown a downward trend in recent quarters. Starting from the fourth quarter, station B no longer separately lists the number of game members.

The above-mentioned industry sources said that the B station that accelerated the expansion of the circle will gradually lose the community cultural tonality, fall into the cruel reality of competing with the larger-scale video platform in the same dimension, and face the risk of losing loyal users. In addition, with the growth of age and the replacement of the times, "Generation Z" is no longer young, the user's mind is more mature, and his interests and hobbies are likely to be transferred to other aspects. Will have to consider how to meet the needs of such users. For the new generation of young people, whether station B will continue to appeal is still unknown.

Diversified layout increases losses

Ten years after its establishment, losses have been accompanied by Station B. The financial report shows that the main business cost of the B station in the fourth quarter reached 1.6099 billion yuan, and the total cost reached 817.9 million yuan, of which the sales expense alone was as high as 413.2 million yuan, an increase of 127% year-on-year. The reason for the expansion of the net loss scale of station B is the continuous increase in operating costs, which is more due to marketing, e-commerce performance and other expenses.

Guo Sheng Securities analyst Xia Jun believes that Station B is more unique than other UGC video communities, more public domain than Kuaishou, more social than Douyin, and younger than Weibo. In the short run, live broadcasts are explosive; in the long run, the scale of advertising realization determines the high degree of commercialization of Station B.

At present, the four major businesses of Station B include mobile games, live broadcast and value-added services, advertising, e-commerce and other businesses. The financial report shows that the total net revenue of Station B in the fourth quarter was 2.0078 billion yuan, of which mobile game revenue was 871.4 million yuan, live broadcast and value-added service revenue was 570.9 million yuan, advertising revenue was 289.6 million yuan, and e-commerce and other business operations Received 275.9 million yuan.

China News Weekly noted that although the game business is still the mainstay of station B's revenue, its share is gradually declining, and even less than 50% in the fourth quarter of 2019. Non-gaming business accounted for more than half of the revenue for the first time, accounting for 57% of total revenue. In the fourth quarter, this revenue increased by 157% year-on-year to 1.14 billion yuan. The proportion of live broadcast and value-added service business and advertising business in total revenue is rising rapidly, and e-commerce and other businesses are also growing steadily.

B stands to increase investment in game live broadcasting. At the end of 2019, Station B announced that it spent 800 million yuan to obtain the exclusive broadcasting rights for the "League of Legends" Global Finals from 2020 to 2022 in China, and subsequently signed the original "Betta" sister Feng Timo. Although the live broadcast business of station B in 2019 increased by 180% year-on-year to 1.63 billion yuan, accounting for 24% of the total revenue, it was not enough for Betta ’s quarterly revenue.

Chen Rui once said that when he missed the timing of the live broadcast and domestic animation layout, too much energy was spent on business and product details, which led to a stretch of strategy and thinking. Today, the live streaming industry is already a red sea. The head streamers of live game streaming are still concentrated on platforms such as Huya and Betta. Station B needs a lot of money and time to catch up with both.

In terms of advertising, Li Ni, vice chairman and chief operating officer of Station B, said in the earnings conference call that the advertising business of Station B maintained an 81% growth in the fourth quarter and achieved 287 million yuan in advertising revenue. Starting from the first quarter of 2020, Station B will adjust and continue to improve the overall advertising strategy, pricing and efficiency to achieve sustainable growth, while continuing to invest in improvements and innovations in algorithm efficiency in technology to improve performance-based advertising, and Increase clickthrough rate.

Nonetheless, the liquidation effect of B station on advertising business is not ideal. In fact, from the perspective of gross profit margin, advertising has always been the most direct and effective source of traffic realization for video sites, but "Genuine Fanju will never add patch ads" is a commitment made by Chen Rui, which guarantees the user's viewing experience, While maintaining the community culture, it also cut off a large amount of hard and wide income from video sites, resulting in the advertising business of station B accounting for the third largest share of total revenue.

The fastest growth was in e-commerce, which increased 241% year-on-year. In the fourth quarter, revenue from e-commerce and other businesses was 276 million yuan. The financial report shows that this is due to increased sales of e-commerce products.

However, the e-commerce business as a new business of Station B is also not smooth. Although the "Member Purchase" platform of Station B sells various products such as souvenirs, peripherals, performances or diffuse exhibition tickets, its audience is relatively small. It is difficult to develop a broader market.

The above-mentioned industry sources told China News Weekly that in addition to game revenue, the explosive growth of other businesses in Station B is due to the fact that the original base is too small. Despite the investment blessings of the two giants, Ali and Tencent, due to the huge investment in community promotion and R & D, the company's sales expenses will continue to exert pressure on profits, and the company will not be able to reverse the short-term loss.

The continued loss also reflects from the side that Station B is walking on the road of "money burning." Such a model is not uncommon. There was a price war between JD.com and Suning before, Didi, Kuaidi, UBER travel wars, a Meituan, hungry takeout battle, and a fast and successful fight by sinking the market. Lots of fun headlines. Except for the innovation of business models and application scenarios, to a large extent, it is inseparable from burning money. However, with tighter regulation, changing capital environment, high marketing expenses, and continuous expansion of losses, the endings that have been dragged down are also increasing, and the lessons learned from the failure of LeTV and Storm expansion are still vivid.

Whether the battle of burning money for domestic video sites can tolerate new players is yet to be verified. (Meng Xin)