Author | Chiron
Edit | Tang Fei
Under the cold winter of the Internet, Himalaya's determination to impact IPOs has become more and more determined.
A few days ago, the information disclosed by the Hong Kong Stock Exchange showed that Himalaya once again submitted an IPO application and intended to be listed on the main board of Hong Kong stocks.
As China's leading audio sharing platform, Himalaya has always had a strong appeal to capital. Aiqicha shows that since 2012, Himalaya has completed a total of 9 rounds of financing, and in April 2021, it completed a series E financing of 900 million US dollars, which continued to attract Tencent, Xiaomi, JD.com and other first-line Internet companies to stand for it.
With the endorsement of shareholders of first-line Internet companies, Himalaya has been actively embracing the capital market. In May 2021, Himalaya filed an IPO application with the U.S. Securities and Exchange Commission, but by September, Himalaya abruptly withdrew its U.S. stock IPO plans. On September 13, Himalaya filed another IPO application with the Hong Kong Stock Exchange, but six months later, the prospectus showed "invalid".
From this point of view, the latest disclosure of the prospectus of the Hong Kong Stock Exchange is already the third time that Himalaya has impacted the capital market.
From the tightness of the time of the three IPOs, it can also be inferred that The urgency of Himalaya's impact on the capital market is also related to the company's own financial situation and is closely related to the crisis of the domestic online audio industry.
1. The "sound" meaning of the Internet
Similar to the development logic of long video, after the maturity of the mobile Internet, it also directly gave birth to a decentralized online audio track. According to the data released by Ai Media Consulting, in 2020, the market size of China's network audio industry will be 12.3 billion yuan, and it is expected that in 2023, this number can exceed 30 billion yuan.
In contrast to the booming online audio, the traditional broadcast industry continues to wither. In early 2018, CNN announced that iHeartMedia, the largest radio station in North America, had filed for bankruptcy due to $20 billion in debt. In late 2020, Disney also announced the closure of Disney Radio, which had been in operation for two decades, and turned to focusing on the streaming business.
The reason for this market trend is mainly because online audio can be decentralized compared to traditional radio stations. For example, under traditional radio, listeners can only listen to a fixed program at a certain time, which is very inefficient. In the online audio market, listeners can listen to their favorite programs anytime, anywhere.
The decentralized characteristics of online audio, on the one hand, allow listeners to cross time and space, listen to audio programs of interest, and enhance user stickiness; on the other hand, they can also bring more imagination space to the platform in business.
For example, in traditional radio stations, because operators don't know the characteristics of the listener and what they like, they can only push vaguely targeted ads at a fixed time and region. In the online audio track, operators can not only push targeted advertisements based on the characteristics of listeners, but also attract listeners to pay by virtue of content-level attraction.
Taking Himalaya as an example, the prospectus shows that its revenue mainly comes from three sectors: paid subscriptions, advertising, and live broadcasting. In 2021, its paid subscription revenue was 2.99 billion, advertising revenue was 1.49 billion, and live broadcast revenue was 1 billion.
Attracted by the market dividend, a number of new and old players have entered the online audio track.
For example, on June 8, 2020, ByteDance entered the track with "Tomato Listening"; on October 26, CCTV launched "Cloud Listening"; on April 30, 2021, on the first anniversary of the launch of TME's long audio strategy, Tencent also merged Cool Me Listening and Lazy Listening Books into "Lazy Listening".
2. The "bone feeling" reality of the Himalayas
Companion attributes are the magic weapon for the rise of online audio.
According to The Himalaya prospectus data, in 2021, the average daily usage time of a single user in the online audio industry is 131.2 minutes, which is longer than industries such as short video (87.2 minutes), long video (71.9 minutes) and online music (63.8 minutes).
The amazing "stickiness" should have brought a lot of money, but the status quo is that the players in this industry are not happy.
According to the "2021 Sound Economy Insight Report" released by QuestMobile, in October 2021, the monthly active life of the Himalaya App was 96.6 million, an increase of 22% year-on-year, accounting for nearly 70% of the market share, and is the absolute leader in the industry.
After becoming an oligarch in the industry, Himalaya can earn huge revenues with economies of scale and massive traffic, and the data disclosed in the prospectus shows that from 2019 to 2021, Himalaya's revenue was 2.68 billion yuan, 4.05 billion yuan and 5.86 billion yuan, and the gross profit margin was 44.5%, 49.1% and 54.0% respectively.
However, during the reporting period, Himalaya's adjusted losses for the year were 749 million yuan, 539 million yuan and 759 million yuan respectively, and the cumulative net loss in the three years exceeded 2 billion yuan.
The reason for this is mainly because Himalaya has invested huge content costs to attract traffic, which have not been eliminated by subscription payments and other monetization methods.
According to the prospectus, as of the end of 2021, Himalaya has more than 339 million audio content, with a total duration of more than 2.4 billion minutes. For comparison, as of mid-2021, the cumulative number of audio content on the Litchi platform is 293 million, which is about 14% less than the former.
The reason why the gap between lychee and Himalaya is so large is mainly because the Himalayas adopt a more "broad" content route. Unlike Lychee, which only focuses on UGC, Himalaya has several dimensions of "PGC+PUGC+UGC", covering more than 100 fields such as history and humanities, parent-child feelings, business and finance.
This comes at a very high cost.
According to the prospectus, from 2019 to 2021, the cost of Himalayas was 1.5 billion yuan, 2.07 billion yuan and 2.69 billion yuan, respectively. Among them, the cost of revenue sharing accounts for the absolute majority, with 900 million yuan, 1.29 billion yuan and 1.6 billion yuan in the past three years, accounting for about 30% of revenue.
But The content dilemma of Himalaya is that although the high cost investment can attract more listeners to a certain extent, it is difficult to dilute the cost through the scale effect. Some media quoted insiders as saying: "On the audio platform, the average album can sell 100,000 copies is already a super hit, and the album that sells one million copies is not at all."
In terms of economies of scale, long videos have certain advantages. Netflix said that just one month after the launch of "Squid Games", 111 million users around the world watched the show. According to Bloomberg, the cost of "Squid Games" is only $21.4 million, but "internal estimates that "Squid Games" may bring more than 40 times the cost of profits, nearly $900 million." ”
And even if it costs a lot of money, Himalaya does not have an absolute moat in terms of content and customer acquisition. If The Himalayas don't sustain high costs in the future, it's possible for listeners to move to other platforms with content of interest.
In the prospectus, Himalayas said: "If our competitors' platforms offer more attractive compensation packages to attract our popular content creators, the cost of retaining those content creators may increase." This also means that the "drive" of the audio story told by the Himalayas may only stay in the "high-input" stage.
3. The "new story" of the Himalayas
The "small and beautiful" audio track is still difficult to run, and Himalaya has turned to hope that through the "second curve", it will tell a "big and complete" story to the capital market.
Considering that the traffic of its own platform is difficult to offset the high-cost content, Himalaya hopes to achieve a wider range of product coverage through the "audio ecosystem" and cooperation with downstream terminal manufacturers, such as car brands and smart speakers.
According to the prospectus, in 2021, the average monthly active users of Himalaya IoT and other open platforms will be 152.3 million. At present, Himalaya has cooperated with 74 automobile manufacturers such as Tesla China, Mercedes-Benz, BMW, Audi and so on to provide content support for the latter's car machine.
In fact, the Himalayan strategy was indeed prescient. According to the data released by China Insight Consulting, in 2018, the size of China's Internet of Things/in-vehicle online audio market was 58.6 million, and by 2021, this figure will further grow to 850 million yuan, with a compound annual growth rate of 143.9%, and it is expected that in 2026, the relevant market size will climb to 16.2 billion yuan.
But the problem also arises, for terminal manufacturers, the choice of content platform is not unique, in order to allow users to harvest more comprehensive content, in addition to Himalaya, car companies can also cooperate with other online audio platforms, which brings uncertainty to the future of Himalaya. For example, Mercedes-Benz and Audi two car companies in addition to cooperation with Himalaya, but also with Cool Me Music to maintain cooperative relations.
In addition, IoT (Internet of Things) is also one of the "new stories" of the Himalayas.
According to the user listening to the content terminal division, Himalaya platform users can be divided into mobile users and IoT users, according to the Himalaya prospectus, as of the first half of 2021, Himalaya average monthly active 262 million, of which IoT and other platforms monthly active 151 million, accounting for the vast majority.
According to data from the Prospective Industry Research Institute, in the Chinese smart speaker market in 2020, the sales volume of Alibaba, Baidu and Xiaomi accounted for more than 95% of the market share, of which Alibaba's sales ranked first, about 12.9 million units; Baidu and Xiaomi ranked second and third with sales of about 12.3 million units and 10 million units, respectively.
Himalaya's prospectus shows that "[Himalaya] has reached cooperation with Alibaba, Baidu, Xiaomi, Huawei and other companies in terms of content." ”
But these manufacturers are not "all in" Himalayas. At the Baidu level, Xiaodu members were launched in June 2019, in addition to the mall vouchers, the rights and interests of members are reflected in the richness of content resources, and the free content includes music, audio, video live broadcast and on-demand programs. In the field of audio, Dragonfly FM is the first platform for Xiaodu members to cooperate, which provides Xiaodu members with a paid audio program package worth 2,000 yuan, covering children, talk shows, audio novels, history and culture and other categories, including gao Xiaosong, Jiang Xun, Lang Lang and other big coffee anchors of the boutique content.
In short, Himalaya sees the contradiction between high-cost content and inefficient monetization of its own platform users, so it hopes to expand between different terminals and harvest as many users as possible to eliminate the continuous loss problem caused by high-cost content.
However, at the ecological level, Himalaya's high-cost content does not have a moat in the absolute sense, because for terminal manufacturers, no matter how much content Himalaya has, it is difficult to compete with the entire online audio industry.
From this, we can find that the "new story" of the Himalayas still requires high content investment on the one hand, and on the other hand, it needs to compete with other online audio platforms on the B-side. Under this new contradiction, whether the Himalayas can achieve break-even needs to be a question mark.
*This article is based on publicly available materials and is for informational purposes only and does not constitute any investment advice