Gen Z ditched Soul

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Text/Lv Jingzhi Tao Tao Ma Shuye

Source/burning dimension (ID: chaintruth)

One year after the termination of the listing of US stocks, the social platform Soul “turned to” the listing of Hong Kong stocks.

On the evening of June 30, Soulgate, a software developer of Soul, formally submitted a prospectus to the Hong Kong Stock Exchange. According to the prospectus, Tencent is its largest institutional shareholder, holding 49.9% of the shares and 25.7% of the company’s voting rights. Soul founder Zhang Lu holds 32% of the shares and 65% of the voting rights.

On the 9th of the same month when the prospectus was submitted to the Hong Kong Stock Exchange, Soul submitted a document to the SEC stating that the company decided to withdraw the F-1 registration statement document and no longer issue securities based on the F-1 document. So far, the operation of listing in the United States has been completely terminated.

In this regard, Qing He, an observer in the social field and founder of Mind Matrix, told Ran Finance that the US stock market listing environment has not been very healthy in recent years. As a social app, Sou will encounter some challenges in the review of listing in the US, which may be their termination. The biggest reason to go public.

Talking about the urgent move of Soul to submit a listing application to the Hong Kong Stock Exchange again after only 20 days, Qing He said that it is understandable, “After all, Soul’s user volume and revenue have experienced weak growth, and from The diversification and commercialization that will be attempted in 2020 is also controversial among users and analysts, so it is reasonable for everyone to want to operate capital as soon as possible.”

In fact, it can be seen from the data disclosed by Soul in the prospectus that its revenue growth has indeed slowed down extremely rapidly in 2021.

In 2021, Soul’s annual revenue will be 1.281 billion yuan (RMB, the same if not marked below), a year-on-year increase of 157% compared to 2020. However, the growth rate that seems to have exceeded 150% is quite different from the year-on-year revenue growth of over 600% in 2020.

Behind the narrowing of revenue data is the gradual decline of Soul’s appeal and the status quo of being “abandoned” by old users.

Xiaoyu, an old user who signed up for Soul in 2017, said, “Soul has lost its original ‘high-level professional’ attitude.” According to Xiaoyu’s recollection, the users on Soul in the early years were mainly international students, entrepreneurs and technical practitioners. Everyone mainly shares their daily life and work insights. However, as Soul continues to try to diversify the commercialization, redundant functions have become more and more.

“Soul now can’t show his face, all kinds of voice live broadcasts, even microphones can be realized, and even games such as werewolf killing have been launched.” Xiaoyu said, “Of course I can understand Soul’s intention to expand the scale of users, but such an operation It will make old users feel that it has lost its original appearance. In order to cater to a larger market, it has become a ‘four different’.”

In addition to being criticized by old users, Soul’s commercial exploration does not seem to be going well. In 2021, 94% of Soul’s revenue will consist of value-added services (mainly Soul’s membership recharge). The display advertising business that began to expand in 2020, as well as the business of surrounding malls, accounted for a very small proportion, and the growth was quite slow.

From focusing on “soul socialization” to targeting Gen Z strangers to socialize, to playing the “first share of the metaverse social concept”… There is no doubt that Soul has captured the “soul” of marketing, but it does not seem to retain young people heart of.

New and old users abandon Soul

At the beginning of this year, the post-95 boys who had downloaded Soul for four years and posted thousands of moments (Soul’s title for personal dynamics) uninstalled Soul.

“Now there are more users, but I feel that the quality of users has declined. On the square (similar to WeChat Moments), girls often show off their bodies and boys show off luxury cars. The sense of use is not as good as before.” Buzz told Rancai that he downloaded it 4 years ago. Soul, I just hope to expand the circle of friends and meet more new friends.

Ranjing Finance learned that during the time when he just became a new user of Soul, buzz chatted with almost all active users whose profiles were in Beijing. Not only that, but they will often make appointments to exercise, eat, and play board games together.

Later, Soul launched the group chat party function, which made it more convenient to meet up. Buzz even went fishing in Chaoyang Park with friends he met on Soul.

“But that was a long time ago.” Buzz bluntly said that nowadays, it is difficult to make new friends in Soul. “The current users seem to be all ‘local tycoons and ladies’, and everyone has a Ferrari, which is full of unrealistic feelings and makes it impossible for people to communicate with them.”

At the same time, the increasingly boring square content has also reduced the frequency of buzz posting personal moments.

“I used to publish my daily hobbies such as skiing and playing the piano. Whether it is copywriting or photos, I will publish them after careful preparation. The purpose is to make more like-minded friends by sharing real and interesting life moments.”

But Buzz found that his carefully edited music clips were not viewed more than 100 times. However, when others posted pictures of decorated homes and modified luxury cars, the number of views quickly reached 15K. Some of these pictures are even net pictures with watermarks.

“No one pays attention to the real interest sharing, but the ‘mass’ production of the network map is very popular.” This makes Buzz completely lose the desire to share.

In addition, the various online gifts launched by Soul also made it difficult for buzz to accept. “It feels like the pure social atmosphere is constantly disappearing. After all, friends who can really talk to each other won’t care if you give him gifts.”

In the end, what made buzz determined to uninstall Soul was that no one was chatting on Soul.

“The push message will remind you that ‘so-and-so is looking for you to talk to you’, but when you click on the meeting, you find that it’s just a recommendation from a square.” Too many times, Buzz simply turned off the message push. Later, Buzz found that no one talked to him every time he logged in, and almost all unread messages were system reminders.

Like buzz, there is also He Qun who feels the quality of users on Soul has declined.

As an old user of Soul, He Qun continuously brushed more than a dozen users on the square, and the same pictures and copywriting were used at the moment of release. “Obviously copied and pasted from another platform.” He Qun said bluntly, “It is a social platform, but even the authenticity of users and content cannot be guaranteed, so what is the meaning of social networking?”

He Qun told Rancai that he often logged on Soul in college, hoping to make some new friends besides classmates. But as the time of use is getting longer and longer, the friends I know in Soul have added WeChat one after another.

Especially after work, He Qun didn’t have much free time and lost the motivation to meet more new friends. “I don’t need so many new friends now, and I haven’t logged in for a while, and there’s hardly anyone on Soul to say hello, so I uninstalled it.”

Like groups, there are not a few users who switch from Soul to WeChat, and from strangers to acquaintances. This is also the common problem of the loss of old users faced by strangers’ social products.

While old users continue to lose, the new influx of users is facing the dilemma of “no one to chat”.

Xiao He, who was born in 2002, downloaded Soul when the school was closed at the beginning of the year.

“It was boring at the time, and I wanted to make a friend to play games with.” Although within a few seconds, the system matched a user for Xiao He, and the other party sent a “Hello, do you like to play games?” After greeting, Xiao He quickly replied the name of the game he liked to play. But when Xiao He tried to start a conversation, the other party never replied.

Jiejie, who was born in 2000, also said that the people who matched on Soul disappeared after sending a greeting every time, “It’s like a group of robots sent an automatic reply from the system.”

However, there are not many people who say hello, but there are many people who can speak directly. “After Soul has a voice live broadcast room, many people asked for voice connection to the microphone as soon as they came up, which made me extremely uncomfortable and always felt offended.” In addition, Jiejie admitted that the voice live broadcast room occasionally encountered wipes. The sensitive content makes people not want to chat again at all.

And game functions such as online werewolf killing are even more tasteless for Jiejie. “If I play games, why don’t I just choose a game app with a better experience?”

In this way, the chat response was not positive, and the functions other than chat were difficult to satisfy. Xiao He uninstalled Soul after using it for 2 days. Jiejie’s time was a little longer, and he also left Soul in less than a month.

Soul that has repeatedly hit the wall

Faced with the loss of old users and the dissatisfaction of new users, Soul, which started with the Z generation, has repeatedly hit a wall in the search for commercialization despite the weak user growth.

Before 2020, Soul’s profit model has one and only one – value-added services. The prospectus shows that in 2019, Soul’s value-added service revenue, that is, the total revenue for the year, was 70 million yuan. In 2020, the value-added service revenue reached 485 million yuan, a year-on-year increase of 592.86%.

In 2021, although Soul’s value-added service revenue has reached 1.202 billion yuan, accounting for 93.9% of the total revenue, the year-on-year growth rate will slow down to 147.84%.

Not only that, the proportion of paying users on Soul and the growth rate of the amount consumed by users are also slowing down. The prospectus shows that in 2020, each paying user of Soul will pay 43.5 yuan per month, a year-on-year growth rate of 98.63% over 2019. By 2021, although this figure has become 60.5 yuan, the growth rate will only be 39.08%.

The growth rate of paying users and paid fees is behind the slowdown, or many users think that Soul members are too “chicken ribs”.

Xiao Kong, who was born in 1998, told Ran Caijing that he registered Soul at the end of 2018 and became a member immediately. “Sign up for membership because membership unlocks more profiles of people I’m interested in, creates conversations with them and sees more photos.”

After experiencing it, Xiao Kong said that Soul members did not seem to have a qualitative improvement in the use of the app, and everyone’s activity in the dialog box was very low. “After the one-month membership period ended, I didn’t renew it, and even uninstalled Soul.”

In order to increase the user’s payment amount and payment frequency, Soul began to add other charging items. For example, gift giving and paid emoticons in the dialog box. In addition, Soul has also launched a “good thing” function, where friends can send virtual gifts to each other to express their goodwill to increase their personal charm.

Regrettably, the frequently added projects not only failed to “appreciate” new users, but also were criticized by old users.

Xiaoyu told Ranjing Finance that Soul has an algorithm to “forcefully” increase the gift cost. “If you receive a gift of 2 yuan, the system will determine that the ‘standard’ you receive as a gift is 2 yuan. Next, if you want to give you a gift, you must add it to 4 yuan, and a gift of 2 yuan will be determined by the system that it cannot be given. “

Xiaoyu said frankly that the most intuitive feeling of this approach is that the original simple social purpose has changed. “Before the launch of these functions, Soul was just a platform for daily sharing and making friends. But after the launch of mutual gifts, Soul’s short-term dating and gender social attributes became more obvious, and there were fewer friends who simply shared trivial daily life.”

Alice, an investor who pays attention to the social track, said that enhancing the dating attributes can help Soul increase the user scale, especially the user scale of its main post-95s and sinking markets. However, these users have limited spending power, which also makes it difficult for Soul to try other commercialization avenues.

As Alice said, this may also be the reason why Soul’s advertising business is difficult to “carry the flag”. In 2020 and 2021, Soul’s advertising revenue will be 13 million yuan and 78 million yuan, respectively. Although the year-on-year increase has reached 500%, the proportion of total revenue is only 2.6% and 6.1%.

Product manager Hua Wu told Ranjing Finance that Soul’s relatively poor advertising revenue is closely related to the limited purchasing power of its user group on the one hand. On the other hand, Soul’s choice to start commercializing display advertising in 2020 is itself a “twilight love”.

Hua Wu added that under the constant squeeze of KOL advertising, the overall display advertising market has experienced negative growth, and even the “traffic king” such as Tencent has not performed well in display advertising in recent years. On the premise that Soul does not have a first-mover advantage, he chose display advertising with a ceiling. “This itself is an ill-considered commercialization strategy.”

The commercialization of Soul was not smooth, and the amount of marketing expenses and losses continued to increase.

From 2019 to 2021, Soul’s sales and marketing expenses are 204 million yuan, 621 million yuan and 1.513 billion yuan respectively. At the beginning of 2020, the increase compared with the previous year was 204.41% and 143.64% respectively. According to industry insiders, in 2021, the growth of Soul’s marketing expenses will be basically the same as that of revenue, which indicates that the leverage of its marketing expenses is weak. In other words, even if there are overwhelming advertisements, it may not necessarily be exchanged for users who can generate income for them.

According to the prospectus, from 2019 to 2021, Soul’s losses during the statistical period were 353 million yuan, 579 million yuan and 1.324 billion yuan respectively.

Zou Yi, founder of iiMedia Research, said that the year-on-year loss data may be the biggest challenge for Soul’s listing of Hong Kong stocks. “Unlike US stocks, which place more emphasis on innovation and the future, Hong Kong stocks will be more cautious and pay more attention to profitability in financial indicators.”

Vertical social: can’t go up, can’t come down

“Soul’s survival dilemma may be due to the unclear social positioning.” Qing He said.

At first, “Soul Matching” was used as the propaganda point, and then “Interesting Socialism” was the main focus. Until now, the story of “Metaverse Socialization” has been told… But it has not been able to cover up the essence of Soul’s “dating application”.

“Dating social apps have low barriers to competition, so they are not only more likely to fall into the bottleneck of growth, but also easy to be replaced when new players appear.” Qing He analyzed.

“Because of this, if vertical social applications really want to continue to be ‘small and beautiful’, they must build their own barriers to competition, such as content differentiation, or the advantages of algorithmic technology.” Alice added.

In fact, domestic entrepreneurs’ exploration of vertical social networking has never stopped, and even in 2019, there has been a “surge” vertical social entrepreneurial phenomenon.

On January 15, 2019, the former Kuaicast founders Wang Xin, ByteDance, and Luo Yonghao simultaneously released their respective social apps “Toilet MT”, “Duoshan” and “Chat Bao”.

But the “gushing out” vertical social apps are almost “annihilated”.

Toilet MT mainly focuses on anonymous social networking, but does not have a high-quality operation team. As a result, this social platform with post-90s and post-95s users as its core target group still attracts post-80s men, that is, users who migrated from Kuaibao. Half a month later, the toilet MT “graduated across the board”.

The new way of chatting treasure is subsidies, similar to Qutoutiao; the “good things” section is more analogous, and there is no innovation. After surviving less than two months, this social product also ended in premature death.

Even if it is struggling to the present, the status quo is still struggling. According to Questmobile statistics, Duoshan once reached a peak of more than 24 million monthly active users in September 2019, and in April 2022, a year and a half later, there are only 2.19 million monthly active users left.

Behind the “failed” vertical social networking is the lack of precise positioning and core competitive advantages.

“This is because the multi-flash concept based on ‘acquaintances + young people + short videos’ cannot compete with WeChat in the field of acquaintances, but cannot play Douyin in the field of short videos, and the social attributes of young people are not obvious.” Alice said.

However, even if the user positioning is solved, the surviving vertical social platforms still face the problem of how to effectively commercialize them.

“Elite groups or subcultural groups are always only a small group. If the application functions are not entertaining and popular, it will be difficult for the market scale to support the commercialization of social products.” Qing He said.

Take Blue City Brothers in the LQBT field, which rarely enters the social track, as an example, although its total paying users in 2021 have reached 753,000, an increase of 26.3% from 5.82 million in the same period in 2020. However, its annual revenue growth was only 4.4%, and its net loss reached 309.6 million yuan, an increase of 39.5% from the 220 million yuan net loss in 2020.

Blue City Brothers, which “can’t afford to lose money”, announced on April 30 that it has officially signed a privatization merger agreement with the buyer group, which is expected to be completed in the second half of 2022.

Coincidentally, Tantan, which had repeatedly hit a wall in commercial exploration earlier, was acquired by Momo in 2018 for US$600 million and 2.65 million newly issued ADS shares. Jimu, which cuts into the youth subculture, was also acquired by Inke in 2019 at a price of $85 million.

Although Soul’s commercialization exploration has been criticized by some old users as a “betrayal” of the company’s original intention, it also further reflects the commercialization dilemma of vertical social platforms.

“The product is acquired and the founder cashes out, which may be the fate that many vertical social applications cannot get rid of.” Qing He said bluntly.

But the commercialization of vertical social networking is not all “blocked”.

Zou Yi said that compared to relatively unstable business models such as gift giving, for social applications with younger audiences, the expansion of scenarios such as games, e-commerce, and education may be more conducive to commercial exploration. “In addition, from a technical point of view, VR and AR may also be the future development trend of vertical social interaction.”

Qing He added that algorithms and technologies are only tools for vertical social platforms, and the key lies in the innovation of diversified social scenarios.

“Otherwise, no matter how many vertical social platforms emerge, it will be nothing but ‘old wine in a new bottle’.”

*Buzz, He Qun, Xiao He, Jiejie, Jessica, Xiaoyu, Alice are pseudonyms in the text

This article is reproduced from: http://finance.sina.com.cn/tech/csj/2022-07-06/doc-imizmscv0272972.shtml
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