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Text / Li Xia
Source: Bohu Finance (ID:bohuFN)
Tang Yan made Momo because he didn’t know how to approach a girl he saw in a bar back then. Now, it has been more than ten years since Momo came out, but in the battlefield of strangers socializing, it is still brand new.
Tinder, uki, jimu, other fun, gel, a can, flow, whether it is well-known or niche, still or dead, the main interest, tree hole or engage in ancient, two-dimensional, this battlefield Still vibrant, but difficult to grow.
Finally, eight years after Momo landed on Nasdaq, the stranger social field is expected to usher in a significant player in the capital market. Soul, who has submitted a prospectus to the Hong Kong Stock Exchange, is valued at US$2 billion.
Excessive marketing, advertising restraint
On May 11, 2021, Soul submitted a listing application to the SEC (US Securities and Exchange Commission), but one month later, Soul temporarily made a decision to suspend the listing, saying, “Because the company has other capital operation considerations, it has decided to suspend the listing first. IPO process. Its major shareholder Tencent also supports this decision.”
One year later, on June 10, Soul terminated the listing plan in the United States, and 20 days later, Soul submitted the prospectus to the Hong Kong Stock Exchange. Soul’s angel investor, Du Xin, founder of Niou Capital, told the financial community: “The restart of Soul’s IPO may have something to do with the current improvement in market conditions.”
According to the audit speed of the Hong Kong Stock Exchange since the beginning of this year, and the practice that most newly listed companies’ prospectus will expire after 6 months, Soul may not be listed until next year at the earliest.
Of course, the premise is to pass the Hong Kong Stock Exchange hearing.
In the three-year period from 2019 to 2021, Soul’s revenue was 70 million, 500 million, and 1.28 billion, respectively. The growth was very rapid, but compared with the net loss of 350 million, 580 million, and 1.32 billion, it was nothing.
A careful study found that the bulk of the losses came from sales and marketing expenses. In the past three years, it was 200 million, 620 million, and 1.51 billion, which was higher than the net loss.
Dare to such unbridled output, mainly because the front row is excellent. Needless to say, the strength of the aforementioned major shareholder, the prospectus shows that it accounts for 49.9% of Soul’s shares. In addition, Mihayou, a local tyrant who made crazy money around the world with a “Yuanshen”, also entered 5.47%.
The crazy output has also achieved certain results. In the past three years, Soul’s MAUs were 11.5 million, 20.8 million, and 31.6 million, respectively, and the DAUs were 3.3 million, 5.9 million, and 9.3 million. The data has more than doubled in three years. .
After you have the traffic, you have come to the last step: a platform for socializing with strangers, how to close the business loop between traffic and cash? Soul tells us that this is “value-added services.”
Value-added services, namely virtual gifts and membership subscriptions. In 2019, it accounted for 100% of Soul’s revenue, and it dropped slightly to 93.9% in 2021 because of “advertising services” and “others” this year.
Although Soul also knows that in China’s mobile social network market in 2021, the proportion of advertising and value-added service revenue will be 49% and 44% respectively, but at this stage, Soul obviously does not want to make money lying down.
To sum up, it can be calculated that if Soul no longer pursues user growth, and then reduces the expenditure on marketing – and other factors remain unchanged, profitability will not be a problem.
The remaining question is the common problem faced by social platforms, how to find new means of monetization? Especially Soul, if it still does not exert its advertising force like Station B after its listing, the ceiling will be seen at a glance, and there is no need for listing.
Balancing Social and Commercial: Metaverse Advertising
Last month, an anchor named Xu Guohao was fined 108 million yuan for tax evasion, and he liked it after that. And his live broadcast platform is the familiar “Momo”.
The social platform is doing live broadcasts, and it seems that they are not doing their job properly, but this really made Momo successful, at least from the financial statements.
In 2021, Zhiwen Group, the parent company of Momo, achieved revenue of 14.58 billion, of which 8.38 billion came from live video broadcasts, accounting for 57% of revenue. In 2016, this proportion had reached 84%. Even CEO Tang Yan exclaimed, “Live broadcast will be so profitable!”.
Today, the originator of strangers’ social networking is going further and further on the road of live broadcast, not only has music, dancing, games, outdoor and other divisions, but also more and more abundant commercial realization at the end.
Compared with virtual gifts, Momo has already started the live broadcast mode, and fans can directly go to the anchor to buy physical gifts to show their support. In addition to opening their own stores, the anchors can also directly recommend the products in Momo’s selection library and earn commissions from them.
The latest data shows that in the first quarter of this year, Zhiwen Group’s net profit attributable to its parent was 290 million. If the loss caused by the impairment of 4.4 billion goodwill and intangible assets in the fourth quarter of 2021 is excluded, Momo has achieved more than 6 years, 26 consecutive years. quarterly earnings. It’s not much more fragrant than socializing with strangers.
But the price of commercial success is that Momo’s social significance has become less and less. Live broadcast is a one-person performance. Fans give gifts in the live broadcast room, which has no social basis at all: equality.
From the existing signs, Soul’s sincerity in socializing is much better than Momo’s. At present, the most typical mode of making friends in Soul is a variety of “party halls” established based on interests. Anyone can go in and speak, and the social atmosphere is very strong.
Momo, which has found commercial value, discarded some of its social attributes. How can Soul, which focuses on social networking, be compatible with its commercial value?
Soul gave its answer very early, which is the first sentence of the text of the prospectus: We are committed to building a social metaverse with Soul as a link with users.
Soul mentioned that he will invest in the technology of the social metaverse in the future, including XR (extended reality, a technology that combines virtual and real), virtual space and metaverse content creation, and finally realize the virtualization of users and spaces, so that each user has a complete set of Virtual assets and spaces.
In this social metaverse, what Soul has to do is to sell these virtual assets and collect the fees generated in the middle of user transactions to realize income.
For example, avatars, which are avatars. In the early days, Soul regarded itself as a community of interest for young people. In order to avoid social barriers caused by appearance, there were avatars, which users could design and buy and sell by themselves.
(screenshot of prospectus)In addition to avatars, users can also create their own unique party rooms, musical compositions, and virtual pets. For pets, Soul also provides virtual goods such as food and clothing. In this way, the youth memory QQ show and QQ pets of the post-8090s have come to the life of Generation Z again, and the influence of major shareholders can be seen with the naked eye.
However, in the Soul Metaverse Project, the most important source of revenue is advertising.
Although Soul’s advertising revenue has been relatively low in the past two years, it is different in the social metaverse. Soul said that “metaverse advertising” will be a major contributor to Metaverse monetization. In the future, the boundaries of advertising production can be continuously expanded by inserting digital billboards in the Metaverse City.
This vivid social metaverse picture, it is estimated that not many people have not seen it with tears in their eyes. Remembering that someone spent tens of millions to buy land on the Metaverse last year, many media were not optimistic, and here we can only say: the layout is small.
Finally: A Transition Story
From Momo and Tantan in the past to Soul and Uki now, generations of stranger social products have hit the boredom and loneliness of urban life, taking root in places where acquaintances are absent.
But apps have changed one after another, and in the end, no one can grow into a giant in the fertile soil of strangers’ socializing like WeChat.
The attributes of strangers are determined, everyone can only be hot for three minutes, “Little Sweet” when you need it, and “Mrs. Niu” when you don’t need it. So after 8090 was already greasy and married and no longer opened Momo, Gen Z spent time on Soul and other younger social products.
Now, it is impossible for the Internet traffic to grow at a high speed, and the status quo of the fertility rate also tells us that the number of new generations entering the Internet will continue to collapse in the future, which means that the cost of acquiring new traffic will continue to increase.
Momo has already begun to monetize through live streaming, and Soul also needs to weigh the relationship between traffic growth and cost-benefit in the days to come.
However, the realization of social traffic is not easy, which requires secondary education for users. Just like WeChat with 1.2 billion monthly active users, first cultivate the habit of users to read public accounts, pay with WeChat, and watch video accounts, and continue to find their own position from Ali, Byte, and Station B with high traffic.
For Soul, its current users are mainly post-00s, and their consumption power is insufficient. Now, in order to increase revenue, Soul has begun to increase the cost of membership subscriptions and virtual avatars.
In addition, in order to improve the efficiency of monetization, Soul is also engaged in some sleazy operations, such as sending some text messages and notifications that “someone has peeked at you”, which will arouse your curiosity. It consumes the user’s energy and experience.
Even if the social metaverse is really an antidote, it’s still a nascent concept. There will still be a long transition period before Soul realizes the establishment of a billboard in the Metaverse City, and Soul needs a more convincing story.
Reference source:
1. Financial Industry: Why did Soul abandon the US and switch to Hong Kong for listing? Monthly active users have exceeded 30 million Tencent and Mihayou are major shareholders
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