Wen | Chen Chang
Edited | Sun Yue
Recently, The Beijing-based company Feitianyun submitted a prospectus to the Hong Kong Stock Exchange, and at the moment of the fire of the meta-universe concept, the company claimed that "the vision is to become a forerunner and leader in China's meta-universe ecology." ”
The predecessor of Feitian Yundong is Feitian in the Palm of the Hand, which was listed on the New Third Board in July 2017 and applied for delisting two years later. In the two years of the New Third Board, the company has completed the transformation from the game business to the AR/VR content and service business (that is, the meta-universe scene application layer), and has just officially changed its name to "Feitian Cloud Movement" in December 2021.
The most gold-absorbing meta-universe related business has the lowest gross profit margin
Previously, games such as the Rainbow Universe of the Tianxia Show and the Drunken Master of Zhongqingbao emerged in an endless stream, leading the majority of users to get started and participate in the wave of the meta-universe.
But unlike these C-side game businesses, Feitian Yundong is doing 2B business. According to the prospectus, the company's business mainly includes AR/VR services, AR/VR content, AR/VR SaaS, IP business and others.
The AR/VR service business is the main source of revenue for Feitian Yundong, and its model is "I develop and help you use", through cooperation with media platforms and their agents to provide customer service solutions, including serving AR/VR interactive content ads, and charging customers according to service results (such as marketing performance). The business currently serves more than 40 advertisers and has more than 200 advertising products, mostly apps and websites.
The AR/VR content business model is "I develop, you use", according to the customer's requirements to develop AR/VR content, customers apply this to their business, and provide end users with use, bringing them a diversified and immersive experience in the virtual world.
The business currently covers the entertainment, education, cultural tourism, technology, health care and automotive industries, and the prospectus specifically mentions that in 2021, it has developed customized secondary school geography VR courseware for an education business subsidiary of an Internet technology group. Students can intuitively and interactively learn about the structure of the earth and the formation of air pressure belts by wearing VR devices.
The business model of AR/VR SaaS is "you develop, you use", and Feitian Cloud Provides customers with AR/VR SaaS platform for their own generation, release and utilization of relevant AR/VR content.
The IP business is Feitian Cloud's first purchase of IP from a third party, and then authorizes the customer to grant IP rights; other businesses mainly include SMS services, promotion services, technical services, artist endorsement services and past games and game-related businesses, but the company has completed the closure of games and game-related businesses in 2019.
Through the above businesses, Feitian Yundong has obtained positive revenue for several consecutive years. From 2018 to 2020, the revenue was 164 million yuan, 251 million yuan and 339 million yuan, respectively, corresponding to gross profit margins of 41.7%, 30.0% and 30.9%.
Among them, the main revenue AR/VR service business accounted for 28.7%, 57.6%, 41.9%, and the gross profit was 580,100 yuan, 2,904,400 yuan and 2,749,000 yuan, respectively, but the "Finance World" weekly found that the gross profit margin of the business was the lowest compared with the AR/VR content and AR/VR SaaS two meta-universe related businesses maintained at 45% and more than 50% for many years, and the figure was from 21.2% in 2019. That's down to 19.4% in 2020.
The revenue and proportion of each segment of Feitian Yundong's business, figure source: company prospectus
Gross profit and gross profit margin of each segment of Feitian Yundong's business, figure source: company prospectus
Feitian Yundong admits that since the AR/VR content and service industry is a new and developing industry, the historical growth rate may not be an indicator of future performance, and it is expected that the competition faced by all parties will continue to grow in the future. Accordingly, the profitability and outlook of the Company may also be affected by a variety of uncontrollable factors, including but not limited to the overall development trend of the industry, the emergence of other alternative business methods, changes in government regulations or policies affecting the industry, and the overall growth of the Internet industry in China or globally.
At present, there are more than 5,000 participants in the AR/VR content and service industry market, and according to iResearch data, The market share of Feitian Yundong in 2020 is only 2.3%.
In order to promote its own AR/VR SaaS platform, FeitianYundong's advertising and marketing expenses have been increasing, resulting in overall distribution and sales expenses increasing from 800,000 yuan in 2018 to 5.5 million yuan in 2019 and further 7.3 million yuan in 2020.
The prospectus also attributed part of the significant increase in the figure to an increase in staff costs, which as of the latest practicable date had fewer than 125 full-time employees.
Policy risks under Metacosm 1.0
In foreign countries, the title of the world's "first stock in the metaverse" has been crowned to the video game creation platform Roblox.
In March 2021, Roblox wrote the concept of "metacosmity" into the prospectus for the first time and successfully listed on the New York Stock Exchange, closing at $69.6 above the opening price on the day of listing, and the aura behind it attracted the enthusiasm and follow-up of investors, and the stock price soared by more than $120 in the 8 months of listing, with a closing price of $84.38 and a total market value of $48.842 billion as of press time.
Roblox's Q3 2021 earnings report shows that its revenue increased 102% year-over-year to $509.3 million, with an average of 47.3 million daily active users, and gamers spent 11.2 billion hours on the platform in the third quarter.
The reason for the impact on the domestic "first stock of the meta-universe", Feitian Yundong is undoubtedly eyeing the imaginative commercial space of this new thing.
According to iResearch, the metaverse is currently mainly in the 1.0 concept version stage, that is, the virtual world stage of the experiential attribute, and it is expected to evolve and go through the metaverse 2.0 and metaverse 3.0 stages, and finally, the virtual world will cover a wide range of real scenes, reflect all aspects of user life, and form a complete and sustainable immersive world.
Landing on the monetization path, the meta-universe industry can carry a variety of business models, such as marketing advertising, sales commissions, content payment, user tips, membership payment and digital asset transactions.
Feitian Yundong believes that all AR/VR scenes can be considered as the metaverse of the current era, and the core basis is the immersive experience based on AR/VR technology and the core application of the virtual world scene constructed by it, which provides the necessary conditions and entry thresholds for the development of the metaverse. Implicitly, the current AR/VR business lines provide the best entry point to become a member of the meta-universe army.
In the past two years, many policies issued by the state have clearly mentioned strengthening the deployment and support of other technology industries such as 5G, cloud computing, AR/VR, blockchain, and artificial intelligence, which are the key underlying technologies to promote the development of the meta-universe industry. For example, the Ministry of Industry and Information Technology issued the "Notice of the Ministry of Industry and Information Technology on Promoting the Accelerated Development of 5G", which states that China will accelerate the promotion of 5G + AR/VR new information consumption. For example, the "14th Five-Year Plan" and the outline of long-term goals for 2035 adopted by the Fourth Session of the 13th National People's Congress also mention the need to cultivate and expand emerging digital industries such as artificial intelligence, big data, blockchain, cloud computing, and network security.
Affected by this, the Internet giants led by the domestic BAT have opened the layout of the meta-universe, for fear of missing this inevitable track. However, the conceptual definitions, standard rules, laws and regulations of the metacosm and related industries are in the blank, with immature and unstable characteristics. A "2020-2021 Meta-Universe Development Research Report" of Tsinghua University said that because the meta-universe industry is still in the early stage of development, it has the characteristics of immaturity and instability of emerging industries, and at least there are ten major risk points of capital manipulation, public opinion bubble, ethical constraints, monopoly tension, industrial internal volume, computing pressure, economic risk, addiction risk, privacy risk and intellectual property protection, which requires the industry and market to return to rationality.
Feitian universe platform display screenshot, image source: company prospectus
It is worth mentioning that while providing customers with meta-universe services, Feitian Yundong announced in November 2021 that it will also release its own Feitian meta-universe platform, which is expected to have a virtual commercial block that allows users to move freely and enter the commercial scene of merchants, such as a showroom. The meta-universe platform plan is in the preliminary stages, and there is no definite monetization business model.
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