This article comes from the WeChat public account "Dudong Finance Research Institute".
"(You all) just look at it and don't give gifts. It's useless to watch it, it's just a listing!"
Douyu CEO O Chen Shaojie 's complaints reveal the biggest dilemma of Douyu. Although we have a large traffic and many users, we just don't make money.
In 2018, Douyu was crazily poaching people and burning money. The number of anchors doubled, and he distributed 2.8 billion to anchors and purchased content copyrights in a year, in order to produce a beautiful data before going public -
In 2018, Douyu had 253 million registered users and 136 million average monthly active users, ranking first in the game live broadcast industry; Douyu achieved net revenue of 3.654 billion, a year-on-year increase of 93.8%, a net loss of 876 million, and a gross profit margin rose from negative to 4.1%.
Douyu officially submitted a prospectus to the SEC with such results, with an estimated financing scale of US$500 million.
game live broadcast business seems to be a simple and direct reward business, but in fact it is a "chore", with high investment and low output. The income of the top anchors in is astonishing, but the platform will lose it if it doesn’t burn money.
No wonder some people say that Douyu's business, which is almost negative for profit, is even more difficult than video websites.
Faced with serious imbalance in revenue and expenditure, Panda can’t stand it anymore, and the platform is difficult to make profits. How far can Douyu and Huya go? Profit will be a test for all the people in the game.
's head competition is between tiger fish . Next, they will compete in many fields such as guild management, e-sports events, and going overseas to gain more bargaining chips for themselves and add new stories to this reward business.
Of course, there is also a largest variable here, Tencent.
Tencent is already Douyu's largest shareholder and expressed its willingness to increase its holdings in the E round of financing; it is also the second largest shareholder of Huya and has signed terms in the financing. In the future, it can obtain 50.1% of the equity through market competition prices.
If one day, Douyu will show Tencent and tiger fish shake hands, there is no need to be surprised.
/01/How is Douyu refined: monthly expenses of 300 million, 3-year loss of 2.3 billion
For live broadcast platforms, burning money is a key step to gain traffic. game live streaming is more expensive than Pan Entertainment live streaming.
, founder of Yingke, , Feng Yousheng, , has said before that these two live broadcast platforms have their own shortcomings - Pan Entertainment Live, which can be broadcast by signing a contracted anchor, and has stronger cash flow. The disadvantage is that the user stickiness is insufficient; game live broadcast has strong user stickiness and large traffic, but it requires payment for game copyright, event cost and high-definition bandwidth cost, which is relatively expensive.
This is true. Yingke, which mainly focuses on show live broadcasts, achieved profitability in the second year. However, due to the lack of stickiness, the number of monthly active users has been stable in recent years, and the price-to-earnings ratio has dropped to three times. Douyu, based on game live broadcasts, has strong user stickiness and monthly active users continue to grow, but has lost 2.3 billion in three years.
Douyu has attracted top anchors through a lot of money, generated high-quality content, and attracted a lot of popularity. It mainly relies on live broadcast rewards and sharing, C-end user privileged subscriptions and B-end customer advertising monetization. The anchor only receives 40% of the reward, but with the high contract fee and basic salary, the actual share is 70% or even higher.
In 2018, the number of Douyu's anchors skyrocketed rapidly, with the number of registered anchors 6 million. There are 5,200 top anchors directly signed with Douyu. Among the top 100 game anchors, Douyu has 50, and the top 10 has 8. Douyu paid a huge cost for this.
3.5 billion is Douyu's operating cost in 2018, of which 2.79 billion is the revenue sharing fee and content fee. Fortunately, the continued growth of the number of anchors has also driven the growth of Douyu's user base and revenue scale.
Douyu has 253 million registered users and 136 million average monthly active users, the industry's first place; the average quarterly paid users of 3.8 million is lower than Huya's 4.8 million, but ARPPU (average income per paid user) continues to grow, increasing from 156 yuan in 2017 to 208 yuan.
But it never made a profit. From 2016 to 2018, Douyu's total revenue was 787 million, 1.886 billion and 3.654 billion, respectively; cost investment was 1.155 billion, 1.89 billion and 3.503 billion, respectively, which is roughly the same as the revenue scale.After
revenue minus costs, Douyu achieved gross profit for the first time in 2018, but the net loss did not decrease but rose, expanding from 613 million in 2017 to 876 million.
This is "thanks" to the substantial increase in operating expenses. From 2017 to 2018, Douyu's total operating expenses were 614 million yuan and 1.01 billion yuan, a year-on-year increase of 64.6%. The largest one is sales expenses, which always account for more than 50%, reaching 539 million in 2018.
has no choice. The top anchors have too strong bargaining power and too high content cost. However, their gift income is not as good as the show anchors. Douyu's quarterly payment rate of 2.8% is not only not as good as Kuaishou, Momo, etc., but also is lower than Huya's 4%.
2.8%, which means that only 2.8 people watch the game live broadcast for every 100 people. No wonder the CEO has to come on stage and complain. (You guys) are useless!
revenue growth depends on cost investment, gross profit will turn positive, and the payment rate has remained at a low level, which basically shows that Douyu's business model and basic return model are gradually stable, which is a "chore" with high input and low output.
Faced with severe imbalance in revenue and expenditure, pandas can't stand it anymore. How far can Douyu and Huya go? Of course, it won’t work if you keep doing this. Profit is a test for all the people in the game.
"The time it takes to ultimately make a profit depends on our ability to grow rapidly in a cost-effective way that we may not be able to successfully grow in this way," Douyu said.
is right. To maintain growth, it is unlikely to control costs or compress costs.
Douyu's users, payment rates and revenue growth depends on top anchors. Perhaps it is necessary to survive until the trend is over, and the cost of content and anchors will have a chance to drop significantly; Douyu's paid users, payment rates and ARPPU (average income per paid user) are in an overall trend of improvement, but there are also obvious fluctuations in the middle.
For example, in Q2 2018, the number and ratio of paid users were significantly lower than Q1 and Q3, the main reason was the decrease in promotional activities during the period.
You cannot have both fish and bear's paw. Douyu chose to grow, and it said in its prospectus that various costs and expenses will continue to grow at an absolute scale in the future.
This means that for a long time, Douyu still finds it difficult to get rid of the trouble of burning money.
/02/ "Deformed" top anchor strategy
In recent years, the live game broadcast has been on the rise. The income of top anchors is astonishing, but Douyu will lose it if it doesn't burn money. Just like a film company, traffic depends on top stars.
The monthly income of a big LOL anchor may not be as good as the income of an unknown young lady playing a game in the show live broadcast room, but they are the traffic responsible for the platform. The original LOL anchors Xiaozhi and Lu Benwei both joked that if the barrage in the live broadcast room is fully opened, the server can be knocked out.
Douyu will bring 50% of the top anchors under his command, with the largest traffic; Douyu has the best barrage culture, with high user stickiness. Therefore, its registered users, monthly active users, etc. are higher than Huya, but Huya's monetization ability is stronger than it.
Huya’s payment rate is 4%, while Douyu is only 2.8%. Don’t underestimate the 1.2% gap. From 2017 to 2018, Douyu’s quarterly payment rate only rose from 2.2% to 2.8%; the average customer price of
is even greater. In 2018, Douyu's quarterly ARPPU was 208 yuan, and the Q4's ARPPU was the highest, only 242 yuan; while Huya Q4's ARPU (average single user income) was about 300 yuan.
Douyu's ARPPU is even worse than Huya's ARPU. Why?
Because Douyu and Huya have different innate genes, the former is born A Station, and the latter is born YY. In the years of hard battles, different operation strategies have been formed, and the user structure has also been different.
Simply put, Douyu is a big anchor who makes money, while Huya is a big anchor who makes money, and medium-sized anchors who make money.
Douyu focuses on recommending and packaging big anchors, and there is a big gap between anchors. LOL's super popular anchor PDD is re-spreading in Douyu, with a popularity of over 10 million, while other anchors are below 1.5 million. Obviously, Douyu does not have the soil to cultivate a large number of medium-sized anchors.
Douyu, who debuted as a game Qingliu, has surrounded a group of young gamers who are very good at "setting the rhythm" and make the platform atmosphere very free and interesting.For four years, Douyu has been paying attention to their preferences - black screen barrage, complaining about anchors, and grassroots counterattacks. Douyu hopes to create a social closed loop through "fish bars", competitive competitions, etc. to improve user stickiness and willingness to pay.
However, Douyu, the Douyu, who is more to , trains users to watch more dramas than to consume, and it has failed to capture the real paid group in the live broadcast world - the rich.
, Huya has a mature show guild operation model and gift reward atmosphere. Traffic distribution depends on operation rules. New trade unions and new anchors will also gain traffic, and a large number of new anchors and medium-sized anchors will be released.
public information shows that Huya currently has more than 30,000 guilds. The guild is an organization between the platform and the anchor, similar to an artist's agency. The major guilds have countless enthusiastic fans and wealthy local tycoons.
leads the tyrants, a large number of grassroots consumers follow up, and the money-making system begins to operate.
Under the hustle and bustle, it is the operating logic that is ignored by everyone but directly touches the depths of human nature. Tens of millions of people lingered in the process. With their clever control of human nature, the platform has successfully created a real-life gladiatorial arena in the virtual world with money as its direct weapon, guild battles, continuous microphone PKs, hourly and weekly competitions to stimulate consumption.
Although it is often the case, The people’s money is 30% or 7% of the money, and the local tyrants’ money is returned in full. But for the anchor, fans and local tycoons are indispensable, both the former are famous and the latter are profitable. If you have high popularity, you will naturally make money, but if you have low popularity, you may not make less. Previously, the live broadcast room of YY female anchor Shen Man was less popular than that of the top anchors, but their income was at the top because of the crowds of rich people.
Nowadays, this system has also begun to help Huya attract money. "Ji Meng Abu" is a typical example. Huya Xingxiu's monthly activeness is not as good as Douyu's No. 1 "Xuxu Baby", but the monthly flow rate can reach 46%.
Data source: Xiaohulu Comprehensive List
Why? Because the rich prefer star show and appearance.
Data source: Xiaohulu Comprehensive List
Douyu also has show live broadcasts and local tycoon users, but it only started to build a guild system in 2018. According to Xiaohulu data, there are 1,400+ guilds, and their operating rules and quantity are not as good as Huya, and their money-making ability is naturally slightly inferior.
2018 Valentine's Day, Huya's Yuwan Guild led the anchors to collectively change jobs to Douyu. Yuwan accounts for a small half of Huya's comprehensive online game (mainly PC games), with most medium-sized anchors and mobile games are also doing well.
In the live broadcast world, comprehensive online games are an existence that brings rich people to the show. This may be a signal that Douyu is working towards medium-sized anchors and competing for the tycoons.
In 2018, Douyu shared the profit share of Yuwan by 157 million. If it is 500 million, it will be a 300 million turnover. PDD received more than 20 million gifts on Douyu's debut, and the turnover of one person is not inferior to that of a thousand-person guild. But looking around, how many PDDs are there?
is also the guild model's industrialization and replicability.
/03/Where is Douyu’s future?
China has become the world's largest game market, and the corresponding game live broadcast market is also huge.
According to iResearch Consulting, the total revenue of China's game live broadcast market reached 13.2 billion in 2018, and is expected to reach 39.8 billion in 2023, with an annual compound growth rate of 24.7%, almost twice the growth rate of the non-game live broadcast market during the same period.
Douyu and Huya are both staring at opportunities on the 10 billion track. They make a living by rewarding income and are both looking for other profit possibilities.
At present, advertising and gaming media cannot bear the banner of profitability. Because in terms of user experience, advertising is contrary to live broadcasts, many users have complained - are you watching live broadcasts in ? Come to Douyu, watch ads and give you the kind of you can watch live broadcasts for free. In the past three years, Douyu's advertising revenue has increased and its revenue share has shown a downward trend.
Although Douyu investors said in 2017 that with a strong traffic foundation, game intermodal alone is enough to make Douyu profitable, it is obvious that this statement is not yet valid; self-made events and PGC programs can also bring traffic, and the monetization ability remains to be seen. The second half of the head fight has begun. In early April, Huya planned to issue an additional $550 million. Douyu submitted a prospectus on the 22nd, planning to raise $500 million.Next, they will compete in many fields such as guild management, e-sports events, and going overseas to gain more bargaining chips for themselves and add new stories to this reward business.
After all, few paid users and low per capita payment have always been the main points of game live broadcast platforms. But from another perspective, is the payment rate ceiling of platform higher than that of pan-entertainment live broadcast platforms? Douyu and Huya have monthly active users of over 100 million, and the payment rates are only 2.8% and 4%. How to develop the remaining 90%+ of the users' willingness to pay while maintaining growth may be the key to defeating the opponent.
Of course, there is also a largest variable here, Tencent.
It is already Douyu's largest shareholder and expressed its willingness to increase its holdings during the E round of financing; it is also Huya's second largest shareholder and has signed terms in the financing. In the future, it can obtain 50.1% of the equity through market competition prices.
Tencent stands behind the two major platforms of the game live track, which is equivalent to taking away more than half of the active users of on the track. Douyu, Huya and Penguin Esports, for it, the greater significance is the promotion and distribution channel of its own games, and it is the biggest winner.
If one day, Douyu will show Tencent and tiger fish shake hands, there is no need to be surprised.
