In March, a report titled “China unicorn Development Report 2017” went viral. According to the report, live-streaming platform Douyu has become a unicorn, valued at $1.5 billion by the end of 2017. However, at the end of March, some media reported in “2017 China Unicorn Companies List: Douyu Live Streaming Leads the Live Streaming Industry” that “After E round of financing, according to industry insiders, the market valuation has exceeded 3 billion DOLLARS.”
Obviously, The valuation of Douyu has achieved a rapid rise, in only two or three months, or just a quarter of the time, douyu’s valuation has doubled, which has to be impressive, but for such a rapid rise in the valuation of Douyu, there are many people raised doubts.
Outside question one: financing data is not transparent
Douyu’s most well-known round of financing came from Tencent’s strategic investment in March. The amount is not small, at 630 million US dollars, which is also the highest financing record in the live streaming industry. Douyu CEO Chen Shaojie expressed his gratitude to Tencent on wechat moments at that time, saying that “Douyu will fully cooperate with Tencent in the field of game live broadcasting and do a good job in the strategic coordination between the game and live broadcasting industry.”
Despite the amount of financing, Douyu did not disclose the proportion of Tencent’s shares, which also makes many people wonder whether Tencent has control of Douyu. Betta fish valuation exactly how much? Douyu valuation ranking industry top several? With no official data available, douyu’s valuation remains a mystery due to the lack of a stake in Tencent.
Since Tencent’s shareholding is not transparent, where do douyu’s $1.5 billion and $3 billion valuations come from? Of course, we look at it from another perspective, douyu did not announce the intention of Tencent’s share ratio may be well understood. On the one hand, Douyu’s IPO was frequently reported before, so the company’s valuation is naturally the data that enterprises care most about. If specific financing related data are released, it may be adversely affected in the capital market, such as being undervalued.
On the other hand, the competition in the live streaming industry is extremely fierce, and arbitrarily releasing their own financing-related data may also have a negative impact on future development. From this point of view, it seems reasonable that Douyu did not disclose Tencent’s share ratio, but the puzzle about Douyu’s valuation will always exist, which will lead to douyu’s current valuation will always be untenable.
Outside doubt 2: Douyu has faced the problem of capital chain fracture
In April last year, it was suddenly revealed online that Douyu owed wages to a third-party brokerage company, which immediately exploded in the live broadcasting industry. Many anchors also took advantage of the situation to denounce Douyu. From the perspective of the environment douyu was in at that time, on the one hand, he had to face the strict supervision and high pressure of competition in the live broadcast industry, and he was always anxious about being reshuffled. On the other hand, his determined strategy made douyu develop the habit of attacking everywhere, and the competition was on the verge of breaking out.
In essence, douyu pursues the route of pan-entertainment live broadcasting platform, especially the strategy of rapid expansion, which is the root cause of the financial problems. At the peak of competition in the live broadcast industry, Douyu had limited money in hand, but the rising signing fees of anchors and high maintenance and operation costs caused the situation that Douyu could not make ends meet temporarily.
Before the capital chain rupture storm, Douyu CEO Zhang Wenming also said in 2016 that Douyu was once faced with the risk of capital chain rupture. It can be said that the rapid expansion strategy has brought douyu both glory and harm. On the one hand, only by running fast can you see the scenery farther. Douyu’s all-round development strategy is to eat both big fish and small fish, which makes douyu closer to its goal of becoming a comprehensive live broadcasting platform. On the other hand, the all-round development mode means stepping into unfamiliar areas. The cost of trial and error and the threshold of the live broadcasting industry also cost Douyu a lot.
The problem of capital chain fracture also sounded the alarm to Douyu, in the end what degree is reasonable to grasp the speed of expansion strategy. More importantly, in the valuation standard, capital chain fracture actually reflects many financial defects, such as cash flow, turnover speed and so on. Throughout the whole live broadcast industry, under the tense development situation, capital chain control to a certain extent represents the stability of the platform, and douyu’s problems in the past are established facts. Then, will the conclusion of excessive valuation be valid now?
Outside question three: the development environment of internal friction in the future financing prospect is not friendly
Internal conflict is the big taboo of enterprise development, meizu a few days ago the internal departments of the chaos is a typical. Of course, for Douyu, its internal friction originates from the improper operation and management strategy, and the most direct manifestation of this internal friction is the continuous burning of money.
On the one hand, Douyu’s operating culture favors ranking system. Last year, Douyu held timed ranking activities in each live broadcast zone. This also leads to a problem. It is common for anchors to compete for the first place. When douyu is faced with big anchors, it can only take a casual attitude, so it is ambiguous in the selection of relevant anchors’ traffic tilt. In the end, such ingratiation of both sides did not promote the development of Douyu, but aggravated the “siding” culture.
On the other hand, the internal friction of the betta is reflected in the host contract, platform after the head of a bidding war believes everyone not unfamiliar, but in terms of signing selectively attitude seems to be quite tough, also used the technique of the most effective and most direct, constantly improve the signing, super thousands or even hundreds of millions of the host contract fees are not uncommon.
Under the cultivation system of douyu, anchors are treasures. However, it is precisely this principle that makes douyu’s money burn very quickly, and such internal friction inertia may last for a long time until the flow of human resources in the live broadcasting industry reaches a relatively stable stage.
Serious internal friction is also deeply branded into the genes of Douyu to a certain extent, and such a development environment is obviously not conducive to the future financing of Douyu. First, capital expects every penny to be spent in the right way, that is, efficiently, and internal friction, if unavoidable, will eventually have a lasting negative impact on that efficiency. Secondly, internal friction is an unhealthy sign of development, which will hinder the profit of livestreaming platforms as they strive for stable profits.
So, bettas if he can’t solve the problem of internal friction as soon as possible, so will not only increase the destruction of their own operating environment, and even more in the accumulation of internal friction factor (low-quality anchor, operation of unhealthy culture, etc.), under the premise of questioned by the capital, in a nutshell, pre-ipo bettas are in the back of the financing way than previously so easy, I’m afraid.
To break the doubt, Bettas also need to improve their internal skills
According to the latest data from Cheetah Big Data, douyu’s weekly active penetration rate ranks third in the industry, next only to YY and Huya Live. This is enough to show that douyu has become the leading platform in the industry after several years of experience, but it also means that douyu still has a lot of room for growth. From this valuation is questioned by the outside world, if Douyu further improve its internal skills, I believe that the capital and the market will soon return to it.
Since Douyu’s rapid expansion strategy once brought its capital chain into trouble, it is inevitable that Douyu also needs to self-examine the platform’s shortcomings. The platform of rapid expansion is often blinded by the blue sea of the market and forgets the essence of steady progress. Therefore, for Douyu, an overall monitoring mechanism is needed to ensure efficiency and avoid loopholes in its all-round strategic expansion under the premise of financial guarantee at present.
Not to mention the constant pressure from supervision on live streaming platforms, if Douyu establishes drainage and quality output schemes based on previous experience when stepping into the new vertical field of live streaming, it will be like a tiger with added wings. Diversified content will also help it obtain additional traffic and improve the stickiness of original users.
Therefore, rapid expansion is not necessary, but douyu needs to grasp the degree of each node. Since douyu has made the promise of industrial layout, the future ecological stability needs every screw tightened now to ensure.
In terms of internal friction, Douyu should continue to optimize the current management and operation system. Anchor head is important, but live nature or content services, so to spell quality, standards can have a lot of, heat fans, content, effect, yield, etc., after the establishment of a series of transparent and reliable standards, strict implementation of good can have their own system of “live”, also is expected to live in the industry in different differentiation advantage.
However, the ultimate goal of livestreaming platforms is to seek a bright future, such as becoming a reliably profitable head platform. The capital environment and competition environment of the Internet industry are very complicated, and there are still many variables in the future of the live broadcasting industry. If Douyu really wants to dispel the outside world’s doubts about its valuation, it can walk with ease in the live broadcast industry, and cultivate good internal skills to have the best recipe for not damaging the wealth or breaking the game.
Article/Liu Kuang public account, ID: Liukuang110