Image source @ Visual China
Wen 丨 深火 (ID: shenrancaijing), author 丨 Li Qiuhan, editor 丨 Wei Jia
Chen Rui, chairman of Station B, began to draw cakes again, this time not only targeting users, but also emphasizing making money.
On March 3, Station B released its 2021 Q4 and annual financial reports.
This is not a bright financial report. From the full year's data, it is still high growth and high loss, with total revenue of 19.4 billion yuan in 2021, an increase of 62% over 2020, while net loss also hit a new high, reaching 6.8 billion yuan, an increase of 119% year-on-year.
Focus on Q4, with an average monthly active user of 272 million, an increase of 35% year-on-year. Total revenue was 5.78 billion, of which advertising business alone performed strongly, up 120% year-on-year. Growth in the gaming business continued to be sluggish, while previously anticipated live streaming and value-added services, e-commerce and others slowed significantly.
What worries the outside world the most is its new quarter performance outlook. In Q1 2022, Station B estimates that the total revenue is only between 5.3 billion and 5.5 billion, lower than the 5.78 billion in Q4. This situation is the first time since the listing of Station B, and no clear reason is given in the financial report.
Perhaps because the data is not ideal, the management of Station B is passionately "drawing the pie" at the earnings meeting.
In terms of overall revenue, in view of the new high loss in 2021, Station B emphasized the key indicators of the future: to achieve Non-GAAP breakeven in 2024, and put forward specific indicators for user realization efficiency and improving gross profit margin.
When the annual financial report was released last year, Chen Rui also "drew the cake" and proposed to make the MAU 400 million by 2023, which will have a certain effect on the stock price. But this time, the capital market was obviously not impressed, and on the day of the earnings report, the stock price of Station B fell by nearly 8% at the close.
It is worth noting that in this financial report, Chen Rui also mentioned that he will focus on the improvement of execution and improve the operational efficiency of each business line.
From the suspension of the head UP owner LexBurner in early 2021 to the two statements after the death of the employee in early 2022, a series of storms have made the organizational management ability of Station B criticized by the outside world.
A number of B station employees and former employees told Deep Burn that the expansion speed of B station is too fast, organizational ability can not keep up, the most obvious feeling in the work is that it is difficult to cooperate, communication between various departments is not smooth, and even some employees complain that "I don't know who you should find to deal with the problem", secondly, the salary and welfare system lacks a perfect incentive system, and the salary of its similar positions is not dominant in the Internet industry, it is difficult to promote and increase salaries, benefits are small, it is difficult to leave high-quality talents, and the enthusiasm of employees is difficult to be mobilized.
Recently, some changes are happening. More than one B station employee mentioned to Shen Yan that at the beginning of 2022, station B ushered in a new HR vice president, with ByteDance background, and the hr vice president who had served for nearly 4 years was rotated to other positions.
This time, Chen Rui's actions and statements mean that B stands in addition to obsessing over growth, and finally has to start with the two "hard bones" of operational efficiency and organizational ability.
Disassembly into three steps: do growth, reduce costs, and improve organizational capabilities. The result of the adjustment of organizational ability may be the key to determining whether this "big pie" can be achieved.
How to increase revenue?
"If the company's past energy on user growth and revenue growth was seven or three, in this year's work plan, it will adjust the distribution ratio to five to five," said the management of Station B at the earnings meeting.
This means that Station B will pay more and more attention to "making money". To implement it, it is nothing more than "open source throttling".
In terms of revenue, Station B relies on mobile games, live broadcasting and value-added services, advertising, e-commerce and other four sectors, and the growth rate of Q4 has dropped twice and risen twice. Live broadcasting and value-added services accounted for the largest proportion of revenue, reaching 32.8%, advertising business ranked second, accounting for 27.5%, and the proportion of game business to total revenue continued to decline, ranking third for the first time, accounting for 22.4%.
Station B's revenue composition changes in recent years Mapping / Deep Burning
In terms of games, full-year revenue for 2021 was $5.1 billion, up 6% year-on-year. Although Station B launched a new game "Kangong Riding Crown Sword", "Mobile Battle Ji" and "Sword Art Online" in Q3, the performance was less than expected, and Q4 relied on the popular games "Original God" and "League of Legends Mobile Game" to earn 1.295 billion yuan, an increase of 15% year-on-year, which was the largest increase in a single quarter in 2021.
But after all, it is not self-research and independence, and the recovery is not entirely on itself.
There are still three mountains in front of the B station game, self-research ability, market competition, and regulatory environment. Tencent and ByteDance two major factories in the game industry crazy "enclosure", B station wants to absorb talents to enhance the road of self-development capabilities, is not clear; the game market, need to continue to invest, explosive models can not be sought; tightening supervision, the industry is still struggling to wait for the game version number. At present, Station B has also turned its attention to overseas.
The second is live broadcasting and value-added services. Its Q2 and Q3 maintained a year-on-year growth of more than 95%, making the outside world expect this business. However, in Q4, the year-on-year growth rate fell to 52%, which slowed down sharply, and for the first time there was negative growth from the previous quarter, and the imagination space was discounted.
In terms of members contributing value-added service revenue, the number of members in Q4 2021 was 72.2 million, an increase of 35% year-on-year, an increase of only 0.1% month-on-month, and the payment rate was 9%, which was not much different from the past, but there were three other indicators that fell significantly. The year-on-year growth rate of monthly paying users has fallen from more than 50% in the first three quarters to 37%; paid user ARPU (average revenue per user) has hit a new low, from 46 yuan in the previous quarter to 43 yuan; and the average daily usage time of users has fallen from 88 minutes in the previous quarter to 82 minutes.
User stickiness and monetization efficiency are not ideal. At present, the method given by Station B is to expand the user's basic disk and expand the large screen and overseas users. This is a market that video platforms are seizing, and with reference to iQiyi, which has an earlier layout, this help to monetization efficiency may also be extremely limited.
Station B has changed the year-on-year growth rate of each revenue sector in recent years Mapping / Deep Burning
The e-commerce business is also facing similar problems. In Q4 2021, e-commerce and other revenue was 1.003 billion yuan, an increase of 35% year-on-year. Open a small yellow car, test live e-commerce, which was the focus of the expansion of station B in 2021, the growth rate in the first three quarters was 230%, 195%, 78%, but in Q4 directly fell to 35%.
In the context of the challenges faced by the e-commerce giant platforms, the B station e-commerce, whose growth rate has slowed down significantly, how the prospects need to be marked with a question mark.
Finally, let's talk about the advertising business. This is the only business that maintained a high growth rate in Q4 2021.
Close to young people, B station does have an advantage in advertising. In 2021, Station B launched Story Model, that is, vertical screen content, similar to inserting a small vibrato in Station B to bring imagination. The earnings report meeting mentioned that at the DAU level, the penetration rate exceeds 20%, and the "big pie" drawn by Chen Rui is that this indicator has a chance to reach 50% in the future.
This gives Station B an opportunity to advertise for performance. However, it needs to rely heavily on technology and algorithms, which are not the strengths of Station B.
In addition, the advertising environment is up, which is also the cake that all giants are grabbing, and how much the B station can pry is full of unknowns.
How to reduce expenses?
This time, Station B released the signal to reduce costs for the first time. In the earnings meeting, management mentioned that the first is to actively manage operating expenses, followed by the emphasis on the return on investment of R&D expenses, followed by the control of the number of personnel.
An industry insider said that this is taking the "three fees" to open the knife, but each way to reduce costs is to a certain extent contradicts the "high growth" pursued by Station B, and it remains to be seen how much room for final adjustment can be.
Station B has seen changes in total operating expenses in the past three years mapping / deep combustion
In 2021, the total operating expenses of Station B were 10.5 billion yuan, an increase of 75% year-on-year. Among them, operating and sales expenses are the largest, accounting for 55%. This expenditure was $1.762 billion in Q4, up 73% year-on-year and the largest increase in the quarter.
The management of Station B mentioned that the money was mainly spent on user acquisition, and believed that there was room for further optimization of marketing expenditures.
Let's do the math.
In 2021, The number of monthly active users of Station B increased by 69.7 million, the operating and marketing expenses were 5.8 billion yuan, and the average cost of customer acquisition was 83.2 yuan. In Q4, the monthly active users of Station B reached 272 million, which is 128 million yuan away from the previous target of 400 million monthly active users proposed by Station B in 2023, even if the change in the cost of customer acquisition that rises year by year is ignored, the rough calculation also needs to burn another 10.65 billion yuan, that is, the annual expenditure is about 5.325 billion yuan.
The above-mentioned industry insiders believe that the increase in the cost of obtaining users is a common problem in the Internet industry. Trying to reduce costs by optimizing marketing spending, there is not much room to do.
R&D expenses mainly include personnel costs associated with developing new games, enhancing data capabilities and optimizing new product features. In terms of reduction methods, the management of Station B has targeted game research and development, but the statement is conservative, saying that it will pay close attention to the return on investment of all research and development projects.
The outside world has placed expectations on the game of Station B, and has been aiming at its heavy self-developed games. Previously, some people in the game industry said to Deep Burn that heavy game research and development is like gambling, spending hundreds of millions of years of research and development, it is possible to produce explosive products, but the greater probability is not to make money. It is not easy to pay attention to the return on investment in this area.
Finally, in terms of general and administrative expenditure, it will be $1.8 billion in 2021. In the conference call, Chen Rui also signaled that the increase in the number of employees in 2022 will be very limited. Although in the process of breaking the circle, Station B has indeed experienced a doubling of the number of employees, the number of nearly 10,000 employees is not huge for the Internet platform with nearly 300 million monthly active users.
And a number of B station employees said to Shen Yan that B station is saving restraint on personnel expenses. They even ridiculed that the salary of the same position is generally "20% off the Internet industry" and relies on "power generation for love". Rapid growth requires talents, and it is necessary to retain talents with salary and welfare benefits, and the space that can be saved is also extremely limited.
Previously, iQiyi made drastic adjustments and left its main business to improve operational efficiency, but Station B could not, and under the goal of high growth, there were few opportunities to reduce costs.
Can you improve organizational skills?
With the plan to increase revenue and reduce expenditure, whether it can be realized depends on the implementation. This is also why in the financial report, Chen Rui rarely mentioned that it will focus on the improvement of execution and improve the operational efficiency of each business line.
This is precisely where the B station has been controversial after breaking the circle.
According to their feedback, the problems in the organizational ability of Station B are first, after the expansion of the company, there is a lack of cross-departmental and multi-departmental operation of the organization or personnel, and the other is the lack of a perfect employee incentive system.
To promote the efficient operation of large factories, some large factories use the way to build a middle office, that is, to extract the public part of the business system to provide services, which is not necessarily the best solution, but in solving the operation of large organizations, each large and small factory has its own strategy. Zhang Miaomiao, a former manager of Station B, told Shen Yan that what surprised her was that similar departments almost did not exist in Station B, which had a scale of nearly 10,000 people.
"When I perceive that my business is at a new stage and I need to move forward with a function, who in other departments should coordinate to support me?" Who initiates it? How to move forward? Who is in control? There are no clear regulations", the big and small factories she has stayed in before, some set up the middle office, some set up the PM department, "but in the B station, it is up to you to temporarily catch some people."
When the company is small, this can also solve the problem, but the company is bigger, "this is very inefficient", Zhang Miaomiao said, for this additional project demand, some colleagues have work in their hands, may not be able to cooperate specially, "directly lead to new business is difficult to expand."
Wang Lulu, an employee in front of Station B, also mentioned this problem. In order to advance the project, she had to find her own people, even invite colleagues to dinner, and buy drinks for her colleagues. "The cost of internal communication is far greater than external communication," she says. One of her business orders, because the advance was too slow, dragged on for more than half a year, directly yellow.
In terms of employee incentive system and welfare, the salary of ordinary employees is not high in the Internet industry, but for talents, Station B is also generous. More than one headhunter who has worked with Station B for a long time told Deep Burn that in positions such as products and technology, the salary of Station B is not low.
Source / Visual China
Zhang Shujian, an employee of station B, was recruited by high salaries, "after all, the money given is really much", but his words turned sharply, "the benefits behind do not have to think".
For example, a former employee who used to work a night shift at Station B would subsidize 50 yuan, "This is in Shanghai, and in 2016, some companies in Beijing had a night allowance of more than 100 yuan." ”
As a management, Li Feifei feels that she lacks "management tools", from the opportunity to get promotions, salary increases, stocks, to the organization department team building, her authority is limited, it is difficult to motivate employees.
In her department, where only about 10 percent of people get promoted or get a raise a year, she believes that "a sufficient percentage of people need to be covered to maintain the stability of the team."
Compared with the more mature salary system of the big factory, an Internet person who has worked in a number of large factories introduced to Shen Yan that Alibaba is a "361" system, that is, every 10 people have 3 3.75 performance, 6 3.5 performance, and 1 3.25 performance. Employees who get 3.75 and 3.5 performance can get a salary increase, and employees who get 3.75 can take the initiative to promote. At ByteDance, getting high-performance m+ (that is, equivalent to Alibaba's 3.75-level performance) can increase wages, in addition to housing subsidies, free meals and other benefits.
Zhang Shujian remembers that at the end of 2020, at a company executive conference, Chen Rui himself also lamented, "B station now has no other way but to rely on stocks to retain people."
Li Feifei also has similar feelings. She mentioned that many people are against the development prospects of station B, the salary is not high in the industry, some positions are difficult to get salary adjustments and promotion opportunities, so that ordinary employees outside the top of the pyramid, "can not catch any hope, the real can get stock incentives, only a very small number, relying on this can not retain the big team."
The problem exposed by this is that with the current momentum and influence, Station B can recruit talents, but how to retain talents, and let them integrate into it, smooth and coordinated operation, Station B has not done enough.
To revitalize the company's organizational capabilities, HR plays an important role. Zhang Shujian introduced that the HR of the B station is more like a docking person when recruiting people, and the HRBP for the business is still only like the role of recruitment, "the HRBP of the big factory will not be too involved in the business, but there is no sense of existence at all, and it has only been seen on the B station", he said.
According to Li Feifei, the previous HR vice president, before coming to Station B, worked in a consulting company for many years, and in early 2022, the new VICE PRESIDENT of HR replaced by Station B had a background of ByteDance. This means that Station B is starting to make changes.
Whether the big cake drawn by Station B can be realized or not is a very important link.
Although there are still various problems in Station B, in Li Feifei's view, Station B still has unique advantages, high user quality, large development value, "willing to exchange losses for growth, many companies take money, but also can not exchange growth," he said.
Note: At the request of the interviewees, all names in this article are pseudonyms.
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