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Text / Wu Xianzhi
Source: Photon Planet (ID: TMTweb)
“Last month, I went back to my hometown on vacation and spent a few days in Xiangxi Prefecture.”
As if knowing that the storm is coming, on May 23, Su Hua revealed his itinerary for the past month, intentionally or unintentionally, in the thank you video of the Global Hunan Merchants Conference. Later, some media revealed that Su Hua was “taken away to cooperate with the investigation”, and was later refuted by Kuaishou. Su Hua’s WeChat also responded that “do not believe rumors and do not spread rumors.”
A day later, Kuaishou announced the financial report for the first quarter of 2022. At this juncture, verifying the integrity of the financial report may be more important than verifying the integrity of Su Hua-after all, investors are paying for the company’s expectations, not someone.
The market is not unacceptable to companies that have never made a profit, but companies must maintain rapid revenue growth and continuous narrowing of losses, both of which are indispensable.
The financial report shows that in the first quarter of 2022, Kuaishou’s revenue was 21.07 billion yuan, a year-on-year increase of 23.8%. The quarterly revenue shows that Kuaishou’s continuous expansion of the content library is gradually showing the effect, and the promotion of commercialization by the Winter Olympics and the Spring Festival red envelope marketing is still considerable.
Adjusted net profit continued the trend of narrowing for several quarters. The adjusted loss this quarter was 3.72 billion yuan, which was significantly narrower than last year. However, the billion-level loss shows that there are still no signs of profitability in existing business scenarios.
Content library and popularity
Whether “trust e-commerce” or new market wells, all good-sounding concepts must be based on the continuous growth of users, because for commercialization and e-commerce, user growth means higher exposure and more potential consumption.
In the first quarter, Kuaishou’s daily active population reached 346 million, an increase of 17% year-on-year, and the monthly active population was 598 million, a year-on-year increase of 15%. Considering the effects of the Olympics and the Spring Festival in the first quarter, the above growth can only be said to be quite satisfactory.
User growth ensures that Kuaishou’s commercialization and e-commerce can continue to maintain the basic momentum of growth, and the continued user growth depends on Kuaishou’s content quality and content library richness.
A few quarters ago, Kuaishou made a lot of attempts around the above-mentioned issues, sponsoring sports events, purchasing game live broadcast and music copyrights, and making short dramas.
Content is considered by Kuaishou as an important node for building a platform-host-user “trust triangle”. In theory, high-quality content can be used to indirectly enhance user trust, and then convert trust into commercial value in the form of private domains. The logic is established, but in fact trust is more established from the process of transaction, transportation and after-sales.
Kuaishou’s so-called “trust economy” is an “advanced” expression of live KOLs, and building trust does not depend solely on the content of strong intervention and guidance, but whether information and products are symmetrical. In terms of content production, Kuaishou can solve the problem of pure UGC content quality through more PUGC and PGC content.
In a few years, Kuaishou has almost become the gold lord in the live broadcast copyright market of sports events and games. In terms of sports events, we won the copyright of last year’s Olympic Games and this year’s Winter Olympics respectively. Just looking at the quarters in which the events are held, we can find that DAU and MAU in 2021Q3 and 20222Q1 did increase to a certain extent.
In terms of live broadcast copyright, Kuaishou Games recently purchased the ESL CSGO copyright, plus the KEI International Invitational Tournament, Kuaishou Legend Cup and King Glory Team KSG, Kuaishou continues to stir up the game market. Chen Tianhua, vice president of Kuaishou Games and head of the game ecology department, said unabashedly recently that the content of copyrighted events is a key for Kuaishou to open the core user market of e-sports.
However, the key does get a little pricey.
In theory, expanding content creates a better monetization environment. This can be seen from the per capita time of users and per capita service consumption. As of the first quarter, the average duration of Kuaishou users exceeded 120 minutes, a year-on-year increase of 25%. The per capita service income did not remain at 40 yuan, falling back to 32.6 yuan, a year-on-year increase of 13.4%, the worst level in recent quarters.
The increase in time duration shows that the investment in content has indeed captured the attention of users, while the sluggish growth in per capita service revenue shows that although the platform’s business ecology is still growing, it is obvious that there is some lack of stamina. It is not a good thing for Kuaishou, which is still in a state of loss, with only a long time and no per capita service income growth.
Spending money to buy content may allow Kuaishou to suppress radio stations or Douyu and Huya, but it cannot solve the problem of anchor violations, which is also the Achilles’ heel of Kuaishou’s “trust economy”.
Last year, Duowei Mobile revealed that Kuaishou was becoming a circulation place for fake mobile phones, and the trust triangle of platform-host-user collapsed rapidly. According to estimates, as of May 8 last year, the Erlu couple alone had sold 8 models of Duowei, 4 models of candy, 3 models of Tianyu, and 18 models of mobile phones including Coolpad, ZTE, and Sony Ericsson in the live broadcast room. In 45 live broadcasts, Sales are expected to reach 470 million yuan.
A year later, on May 12, at a warehouse in Huangpi District, Wuhan with the words “Sister Fighting Live Broadcasting Base” written on the door, during a surprise law enforcement inspection by the relevant departments, more than 20,000 pieces of clothing suspected of infringing trademark rights were seized on the spot, involving Adidas, Li Ning, Xtep and other brands.
The two major consumer goods, mobile phones and clothing, are still rampant, let alone other consumer goods. It may take a long time to build trust, and it only takes a bad snail to break it.
Decentralization allows anchors to play an important monetization role, and in fact, they share common interests with the platform. The platform has neither motivation nor reason to fight it hard. On the contrary, the platform is more willing to believe that when the water is clear, there are no fish.
rush video number
Kuaishou’s revenue mainly includes three business segments: online marketing services, live broadcasting and other (mainly e-commerce).
As of the first quarter, Kuaishou’s online advertising revenue was 11.35 billion yuan, a year-on-year increase of 32.6%. After several quarters of high growth, the volume of this business has become the largest source of revenue.
Online marketing services benefit from the fact that the content of the advertising market is dominated by pictures and texts, and it is moving towards video-based. Different from Douyin’s recommendation algorithm, Kuaishou mainly relies on social networking and content expansion to provide efficient brand exposure and conversion.
The core of “New Market Business” is to complete the online social relationship through “people + content + data”, and attract brands in the form of online society. From this perspective, the business logic of Kuaishou online advertising is closer to that of video accounts.
Interestingly, the core content of the 2022 WeChat Open Class is also centered on the commercialization of video accounts. From Xicheng Boys to Cui Jian to Jay Chou’s concert, the video accounts have shown off their muscles for a year. So far, they have not seen stable and effective results. In the form of realization, Kuaishou is going faster in this field.
In the first quarter of this year, Tencent’s social and other advertising revenue was 15.7 billion yuan, down 15% year-on-year, while the gap between Kuaishou’s online advertising revenue and Tencent’s became smaller and smaller in the same period.
This does not mean that Kuaishou can sit back and relax. You must know that behind the video account, whether it is WeChat’s 1 billion-level user volume and personal connections, or the linking ability of small programs and search, or mature payment, it is more powerful than Kuaishou. “Hinterland”.
As the second largest source of income, Kuaishou’s live broadcast income has already reached the top. Moreover, on May 7, after the release of the “Opinions on Regulating Online Live Streaming Rewards and Strengthening the Protection of Minors”, the management of minors has been strengthened, and the live broadcast business will further develop. Under pressure. As of March 31, the revenue of live broadcast business was 7.84 billion yuan, a slight increase of 8.2% year-on-year.
The strengthened supervision of the live broadcast industry has relatively limited impact on Kuaishou. On the one hand, growth in the business has largely stagnated over the past few quarters, and commercialization and e-commerce growth will offset this headwind.
On the other hand, the form of live-streaming rewards can easily be converted into live-streaming delivery, that is, “shopping instead of rewards”, which can prevent minors from rewarding various gifts, but cannot prevent minors from chopping their hands under the guidance of live-streaming . From this point of view, restricting live broadcast rewards will accelerate the trend of anchors to bring goods.
Kuaishou e-commerce has completed a breakthrough from 0 to 1. From the perspective of growth rate, it is about to face the first bottleneck. In the first quarter of this year, Kuaishou GMV reached 175.08 billion yuan, a year-on-year increase of 47.7%. Without a big promotion, it is not easy to break through the 200 billion yuan barrier.
Due to the lack of independent logistics, its limited ability to perform contracts, and the lack of a payment system, it is impossible to complete the closed-loop transaction. Kuaishou e-commerce can only expand in the form of light assets. Its core advantage is the content form of live broadcast and short video, allowing users to complete transactions during the entertainment process, or place orders because of interactivity.
The influx of small and medium-sized businesses focusing on individuals is the main driving force behind the rapid growth of Kuaishou e-commerce in the past few quarters. With the increase in transaction frequency and business scale, the drawbacks of Kuaishou e-commerce are becoming more prominent. In addition to the fake mobile phones and counterfeit goods mentioned above, Kuaishou’s trusted e-commerce seems to be bucking the trend.
“Kuishou’s live broadcast is more like a shopping guide, and users will have more emotions than Taobao when placing an order.” Xiaogu, the person in charge of Kuaishou e-commerce, has a more emotional side to his understanding of business. We have seen that no matter Cat Dog Pin or Douyin e-commerce, they are all trying to find ways around the supply itself, while Kuaishou e-commerce is still doing shopping guides. In the words of a Kuaishou e-commerce person, “Our platform does not directly touch the goods”.
As long as Kuaishou continues to “do not touch the goods”, then the quality control problem will become a time bomb, the number of time bombs will also increase as the number of merchants grows.
In March of this year, Kuaishou cut off Taobao and JD.com’s external chain, and its e-commerce business announced its independence. It means that the “tour guide” will end. Under the weak infrastructure, how long Kuaishou’s “trust” card can last does not depend on himself, but on the veterans.
What is the profit?
Kuaishou proposed the concept of “New Market” last year, aiming to replicate offline fireworks online, ignoring an important question: if offline merchants are replicated online, should they also replicate offline market supervision?
Fireworks in the world require the enthusiasm of people, but also cannot ignore the order and rules.
In addition, the revenue of other services covering e-commerce revenue in this quarter was 1.87 billion yuan, a year-on-year increase of 54.6%, and its absolute value cannot be compared with the GMV of 100 billion yuan.
Song Zhen, the person in charge of Kuaishou brand, mentioned earlier that in order to shorten the retail circulation link, Kuaishou reduced the CPS commission of merchants to achieve cost-effectiveness. The advantage of this is that it can quickly accumulate merchants and SKUs. The problem is that low commissions suppress the revenue scale of e-commerce services.
In addition, it is impossible for the platform to maintain low commissions for a long time, and it is impossible for the platform to cultivate business resources at its own expense. Moreover, focusing on cost performance and not paying attention to the supply chain means that most merchants operate in the form of low gross profit. Once the commission is raised at a certain point of time, it will inevitably lead to the loss of merchants.
The online advertising business needs to guard against the commercialization of video accounts. The e-commerce business has no GMV and does not bring much revenue. As for the live broadcast business, it is the best policy to maintain the existing revenue scale and gradually reduce the cost.
Then the question arises. What are the merchants who provide the goods, the advertisers who provide the brand marketing, and the anchors who provide the share? It should be a question that Kuaishou needs to think about.
(Disclaimer: This article only represents the author’s point of view and does not represent the position of Sina.com.)
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