A streaming social media platform has a much bigger audience. Facebook and Instagram are more personalize social platform. One such video social platform is twitch which cater to the gaming audience and also you tube live. However China has bring this to a whole new level, to anything you can think of, Talkshow hosts, dancing, eating, outdoor activities, gaming, reading a book/manga even online tution.
YY Inc catogories them as follows:
- Music, Dance, and Talk Shows. Users can watch music, dance, and talk shows on the YY Live platforms. Viewers may show support and appreciation by purchasing and giving virtual gifts.
- Game Broadcasting. Users can live stream their online games, either casual or competitive. Professional teams and commentators often attract many viewers, who may show support and appreciation by purchasing and giving virtual gifts.
- Dating Shows. Users host, participate in, or live stream dating shows through live video or audio, during which participants and audiences can purchase and give virtual gifts to the host or other participants. The format of our online dating show is based on a popular dating TV show in China.
- Finance (Zhiniu Finance, www.zhiniu8.com). Users interested in finance and investment can stream finance shows hosted by financial experts that cover a wide range of investment-related topics, from stock market trends to the basics of investment.
- Outdoor Activities and Sports. Users can live stream outdoor activities, such as camping, hiking, travel, and tourism, as well as professional sports, such as basketball, football and snooker.
Business Model
IVAS businesses, including music and entertainment, online games (In game items or advantage) , online dating, live game broadcasting and the membership program. In online education, we generate revenue through charging students tuition fees for accessing premium content. As a small part of the business, we also generate income from third party online advertising on our separate game media website Duowan.com.
HUYA Incis the No.1 game live streaming platform in China, with cooperation with e-sports event organizers, as well as major game developers and publishers, have developed e-sports live streaming as one of the most popular content on the platform. Huya also furhter extended our content to other entertainment genres, such as talent shows, anime and outdoor activities. HUYA Inc had recently IPO in NASDAQ.
BIGO Inc
Bigo is a fast-growing global tech company. Headquartered in Singapore, Bigo owns BIGO LIVE, a leading global live streaming platform excluding China. Bigo has created a video-based online community for global young generation users. It has established footprints with a strong presence in South-Eastern Asia, Southern Asia, the Middle East and America, paving the way for further global expansion. Their Product Line Includes Live-Broadcasting, Vocal Social Media, Short Video Platform Video editing, Anime Social App and live game streaming many more. YY Inc to acquire 100% of Bigo Inc announced on 4th March 2019.
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| YY Inc Acquired 100% of Bigo Inc announced on 4th March 2019 |
Just like Instagram, YY Inc give millennials another tools to express themselves. Bigo presence globally could bring in more profit than YY Inc operation in just china. And ultimately like all social platform when it mature, advertisement may be a future growth segment.
Business Risk
High competition for quality content performers, YY Inc paying more to the performers to keep them on the platform from competitors such as MOMO Inc. Gross Profit Margin and Operating Margin has been falling. Acquiring Bingo should mitigate this, Bingos market are outside china.
Revenue come from virtual gifts from content viewers, revenue will be affected if the group of user stop spending. However, judging from how crazy Chinese/Japanese/Koreans are to their idols or anime. Check out those go gaga over virtual idols like Natusmi Miku and the new ones in China. The audiences should growth. But these guys will follow where the content is so market share is important.
Cash Flow
YY Inc, even though the margin is lowered, it is still generating healthy cash flow, contributing to its coffers. Cash and investment assets have been increasing throughout the years.
Free Cash Flow (FCF) = Net Profit - CAPEX
Adjusted FCF = Net Profit + Non-Cash items + Borrowings - CAPEX
All $ in RMB, Millions
Sum of The Parts Valuation (USD)
Conclusion
We know how successful Facebook and Twitch.Tv originated from the West, now come the Video streaming madness from Asia. However YY has no moat, its main contributor, the broadcaster will shift to diff platform depending on where they can earn more. Just like uber and grab.
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