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Text / Zhang Hanwen
Source/DataVision (ID: ycsypl)
Stanley Ho once said: “What flows in Chinese blood is gambling [1].”
This gambling sex is processed into a cute doll, and then put into a box, it becomes a blind box, the price is guaranteed at 69 yuan, and there is no upper limit.
The success of Bubble Mart’s business is mostly due to the magnification of people’s gambling ability in the form of blind boxes. Although it unilaterally claims to be an IP operating company, it cannot hide the fact that it relies on blind boxes to make money.
In the latest performance forecast disclosed by Bubble Mart, the company has experienced an unprecedented decline in profits. This year, it may earn 130 million yuan less than the same period last year, which is equivalent to selling more than 9 million blind boxes.
On the other side of the sharp drop in profits, the Bubble Mart fashion play products represented by Molly plummeted by 70% in Xianyu. Looking back at the past when Molly was able to sell tens of thousands of dollars, it can only be said to be purely coincidental.
In this summer, Bubble Mart of Hong Kong stocks and Bubble Mart of Xianyu broke simultaneously.
After Molly, no more Molly
Watching Bubble Mart want to cry without tears, in addition to holding stocks in their hands, there are also scalpers holding Molly.
Needless to say, the stock price has been chopped off the ankle, and the market price of Molly MEGA products, which have been hotly hyped, has also fallen off a cliff in the near future. The price of the hidden Molly, which was sold to 3,000 yuan at its peak, also plummeted by more than 70%.
The MEGA “Watermelon”, which was first released in August 2021 and exceeded 10,000 yuan, is now halved in priceBubble Mart once fantasized that before Molly’s popularity subsided, he would be able to hold the next successor. At the beginning of the listing, the story told to investors is the same – Molly received only 41,000 yuan in 2017, and it soared to 360 million yuan in 2020, an 8,780-fold increase in 4 years.
However, as the tide receded, the next Molly, which investors were eagerly awaiting, failed to appear. This can’t help but make people wonder: Is Molly’s relationship with Bubble Mart a coincidence?
In 2016, Molly was born, and the hidden doll was only 59 yuan, but when it was put into a box, only 69 lucky people out of 10,000 people could have it. As a result, it was fired to 3,000 yuan in the secondary market, and it was hard to find a baby.
At present, the Molly series is still the IP with the largest revenue share for Bubble Mart, accounting for 15.7%. After shouting “I am an IP training company” for a few years, in 2021, Dimoo and SKULLPANDA, the two IPs, are about to equal Molly, with revenue of 567 million yuan and 595 million yuan respectively, accounting for than 12.6% and 13.3%.
However, according to the split financial report data, whether it is Molly, Dimoo or SKULLPANDA, each blind box is as “hard to sell” as when it was first launched.
More than 90% of Bubble Mart’s revenue is contributed by members. In the past two years, although the number of members has doubled and sales expenses have nearly doubled, its revenue has only increased by 78.7%.
This means that the user value of Bubble Mart continues to decline, and members can hardly be called “loyal”.
By the end of 2021, Bubble Mart was named: “Although the blind box is ‘blind’, merchants cannot be ‘blind’, and consumers cannot be ‘blind'” [2].
Disloyal consumers choose to regain their sight, and the idle fish pond is full of worthless Molly in an instant.
With that being said, Bubble Mart failed to make another Molly for sure. Investors in the secondary market also chose to vote with their feet. Its market value has plummeted from the highest point of HK$150 billion, and now there is less than 30 billion.
Once Molly was born, educating the market “what is a blind box”. Now that I think about it, even if the box contained Big Big Wolf at the time, it might have had the same effect.
Shaky base plate
But Bubble Mart didn’t give up trying.
As of the first half of 2020[3], Bubble Mart operated a total of 85 IPs, including 12 self-owned IPs, 22 exclusive IPs and 51 non-exclusive IPs. Accompanying it is that the inventory of Bubble Mart will surge from 230 million yuan to 790 million yuan in 2021, more than doubled. At the same time, inventory turnover days also increased from 78 days to 128 days.
The backlog of inventory is actually a misjudgment of sales, and a large number of new IPs have not been able to achieve the expected sales.
At the performance briefing, the executives of Bubble Mart admitted that Bubble Mart had a corresponding inventory clearance action in the second quarter of this year, “but this will also hurt the IP.”
Wang Ning, the founder of Bubble Mart, once said: “We don’t think that Bubble Mart’s achievements today are just because of the carrier of the blind box. The core element of Bubble Mart’s rapid growth is the IP itself [4].”
Wang Ning’s words should only be half said. Bubble Mart insists that it is an “IP operating company”, but the “core element” and business fundamentals of Bubble Mart’s rapid growth is the label he is eager to remove – the blind box.
In other words, the core of Bubble Mart’s business model lies in the blind box, and the IP inside is secondary.
Wang Ning’s vision is [5] that Bubble Mart will have as many super IPs as Disney and have the ability to continuously incubate IPs. Other high-level executives have also expressed the remarks of “trying to compete with Disney” on different occasions, but recently in public, they no longer mention these words.
But if you want to try out a hit model by “running volume”, I am afraid it is difficult to become a real IP company.
The Disneyland next door, whether there is Linna Belle, it is “the happiest place in the world”, Mickey Mouse, Donald Duck and Marvel superheroes are Disney’s money printing machines, allowing Disney to win more than half a century .
There is always uncertainty in popular models, from the trial and error cost of product development, to the design of the supply chain and inventory, and finally to the formation of exclusive barriers. After all, it cannot be achieved overnight.
Reflected in Bubble Mart, its IP has no content support, which is clearly different from Disney’s and other IPs. Molly without connotation cannot connect emotionally with consumers, so it is easy to be replaced.
In the secondary market in recent years, a consumer product that has an extremely strong emotional connection with consumers is the signature shoes of NBA star Kobe Bryant.
After the unfortunate death of Kobe Bryant in 2020, shoe dealers in the secondary market kept raising the price of Nike’s Kobe sneakers several times, even tens of thousands. Shoes are hard to come by.
By contrast, Molly’s best outcome may be to become a beautifully designed item in the store, the next Bearbrick.
From Stones to Blind Boxes: Liquid Gambles
Molly may also be able to find the answer from another dimension. After all, every generation has their own huanghuali wood.
In the 1980s, in Ruili, a small town on the southwestern frontier of my country, a large amount of jadeite and jade wool entered here thanks to its geographical location and the reform policy [6]. A steady stream of stones were transported into the city, and the trend of gambling stones gradually became popular here.
The original stone carries the dream of the stone gamblers to get rich. With a knife, some people’s dreams will come true, and some will wake up. The myth of the sudden wealth stimulates the stone gamblers in this city, “the next piece must go.”
By 2010, a piece of “crazy wood”[7] appeared in the wood industry, namely Hainan Huanghuali.
In the eight years from 2002 to 2010, the ton price of huanghuali rose from 20,000 yuan to 8 million yuan, an increase of 400 times, successfully outperforming the housing prices in the core area of Beijing.
The high market price of lumber has generated huge profits, and it has also spawned human greed.
Many people go to the place of origin in Vietnam to bet on logs. Once the bet is made, the price can be doubled to dozens of times, which is a new myth of wealth creation. Later, as the price of wood got higher and higher, some people even went to Vietnam to “gamble houses” – to buy old-fashioned wooden houses, hoping for the huanghuali wood in the building materials.
Similar to the psychology of gambling on stones and woods, the original stone of modern young people, the blind box, also reflects the gambling nature of human beings more vividly. Looking back at Bubble Mart’s fortune, the two magic weapons of “gambling” and “hype” have been well used in the blind box business.
In the blind box business, both Bubble Mart, the publisher, and the consumer are betting.
In the four years from 2017 to 2021, Molly’s revenue has more than doubled by 10,000 times. Bubble Mart must bet on the next Molly in order to continue the myth of high growth in the blind box market.
There are opportunities to make a fortune hidden in the trendy games, so that consumers are also gambling. Bet that there will be hidden treasures in the blind box you draw, or that the price of the Bubble Mart tide play you bought will rise, and there will be a day when the market “takes off”. But it’s as difficult and elusive as predicting stock prices.
The second magic weapon for doing a good job in the blind box business is “hype”. However, at present, Bubble Mart’s trendy play (represented by MEGA) generally shows a trend of “no move”. In the eyes of scalpers and dealers, “Bubble Mart’s trendy play is not a profitable product.”
When expectations fall and the price of trendy games returns to the world, its scarcity is naturally untenable.
In fact, Bubble Mart’s MEGA products have been sold on a monthly basis since its inception, and even adding blind box gameplay to the general trend of MEGA has failed to save its price trend in the secondary market.
In the domestic market, there has always been no shortage of targets for hyping scarcity. In addition to jade and jade, there is also mahogany; in addition to wood, there are Tibetan mastiffs. After Tibetan mastiffs, there are sky-high sneakers that have been named by CCTV. After sneakers, there are today’s blind men. Boxes and Chaowan are all vivid examples of hype parties taking advantage of the supply-side information gap to grab huge profits.
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Back to ten years ago, when Wang Ning struggled to get his first investment since he started his business, he compared his relationship with investor Mai Gang to Jay Chou and Wu Zongxian[8]. It is generally said that they do not understand the project of Bubble Mart.
In 2020, Bubble Mart was successfully listed, and the market showed great enthusiasm for this project, which was once unpopular with investors. It was oversubscribed by 356 times, and was soon pushed to the peak of the market value of 150 billion Hong Kong dollars.
Now Bubble Mart’s investors once again vote with their feet to show their attitude. On July 28, the share price of Bubble Mart was reported at HK$19.04 per share, a record low.
The opinions of the two star fund managers also diverged.
In the first half of this year, Zhang Kun still held 6 million shares of Bubble Mart, the tenth largest stock in the E Fund Asia selection. If he hadn’t made a move now, he would have lost more than 50%. The high-quality and strict selection of E Fund managed by Xiao Nan withdrew from the top ten shareholders of Bubble Mart.
The difference between the two choices can represent the huge uncertainty currently existing in Bubble Mart, but it is difficult to see so many “uncertainties” in other leading companies in the consumer industry, such as Haitian Soy Sauce and Kweichow Moutai.
But it can never be denied that each generation has its own huanghuali wood. The post-90s who play in the blind box, don’t laugh at the post-60s “earth” of Maotai.
This article is reproduced from: http://finance.sina.com.cn/tech/csj/2022-08-08/doc-imizirav7260214.shtml
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