Short videos go to sea, followed by editing tools.
According to QuestMobile's "Revelation of China's Mobile Internet Development", the scale of users in the domestic short video industry has exceeded 900 million, whether it is young people in the city, a group of silver hair, or a small town crowd in the sinking market, they all love to brush short videos, and even shoot short videos themselves.
The short video track has also attracted a large influx of capital.
According to the latest data from Tianyancha, there are more than 100,000 enterprises in the mainland cultural and sports entertainment industry with "video" in their business scope, of which more than 17,000 were established in 2020; more than 26,000 were established in 2021, an increase of 50.5% year-on-year; a total of more than 60% of the enterprises were established in the past 2 years.
From the perspective of investment and financing, in the past 2021 alone, there have been 38 investment and financing incidents in the domestic video-related entertainment media industry, with a total financing amount of more than 34.8 billion yuan.
Benefiting from the rapid growth of the scale of short video users and the scale of the market, the video editing software industry has developed rapidly as the upstream of the short video industry.
Among them, in the fourth quarter of 2021, Xiaoying Technology, which focuses on editing and creation, has repeatedly been listed in the list of "China's Top 30 Non-game Manufacturers and Applications with Overseas Revenue" released by App Annie, and its core product VivaVideo ranks at the top of the list, maintaining its competitive advantage in the field of video creation software.
VivaCut and TempoApp under Xiaoying Technology have shown extremely bright results in the two emerging markets of the Middle East and Southeast Asia, respectively.
On March 2, Xiaoying Technology updated the prospectus and continued to promote the listing process of the ChiNext board of the Shenzhen Stock Exchange, with Guotai Junan as the sponsor.
From another point of view, even if it is listed, Xiaoying Technology still cannot avoid market competition, such as Fast Shadow, a product of Beijing Kuaishou Technology Co., Ltd., and KineMaster, a product of KineMaster Corporation, a major overseas competitor.
First, anchor the short video track for nine years
At the beginning of its establishment in 2012, Xiaoying Technology took international operation as its development direction.
So shortly after the launch of the Xiaoying APP in 2013, Xiaoying Technology launched the overseas version of "VivaVideo" in 2014, and won the first place in the Google Play Brazilian Video List in the same year.
In 2015, Triller, a music short video platform owned by Proxima Media, and Go90, a mobile short video platform owned by the US telecommunications group Verizon Communications, were established, and Xiaoying, which has a first-mover advantage, has more than 100 million cumulative users worldwide, and its ranking has directly risen to 81st in the total list of the US App Store.
In August 2017, Xiaoying Technology launched the UGC short video community VidStatus in the Indian market, providing local users in India with short video content that meets the local culture and user preferences.
In 2018, it ranked first in 11 countries in the App Store and first in 60 countries in Google Play; in 2019, The cumulative number of users in the world exceeded 600 million, and SensorTower ranked fourth in the revenue of China's short video/live app overseas app store in the second quarter.
However, after continuously improving the number of users, in 2019, Xiaoying Technology began to pay more attention to the resource investment of overseas markets such as East Asia, Southeast Asia, Europe and North America in addition to Chinese mainland, while advertising was more focused on overseas markets, resulting in significant revenue growth in these regions.
The reason is simple, first of all, it is due to the relatively high willingness of overseas users to pay compared with China.
Secondly, as a third-party video creation platform, the more people use software, the lower the cost of developing software, with a marginal cost reduction effect, mobile video editing tools to undertake the business model of PC video editing tools, and monetization through membership is its main source of income.
In addition, in the words of Xiaoying Technology, that is, the current technical personnel of Xiaoying Technology account for about 40%, and the product matrix of Xiaoying Technology is completely independently developed, with a number of patented technologies in audio and video, graphic images.
Covering more than 200 countries around the world, with more than 1 billion users, it has great advantages in both innovative technology and market share.
According to the prospectus, At present, Xiaoying Technology has set up a number of subsidiaries in Hong Kong, India, Singapore, the British Virgin Islands, etc., and its product users are in more than 200 countries and regions around the world.
According to Tianyan, Xiaoying Technology has completed 5 rounds of financing, including many continuously optimistic institutions such as Innovation Factory and Wuyue Capital.
Second, it's more about questions than answers
Complying with national and regional regulatory policies seems to be the consensus of every enterprise going to sea.
However, in 2020, India's Ministry of Information Electronics and Technology announced the removal of 59 Chinese applications in the Indian market, including "Xiaoying" and "Kwai", on the grounds that "sovereign security and privacy information are threatened", resulting in Xiaoying Technology being unable to obtain new users in India.
When Xiaoying Technology continues to expand the market and penetrate video creation products into more countries, the same or similar situation is still unavoidable.
However, the dilemma faced by Xiaoying Technology is far more than that.
From the perspective of competition, the company's main competitors have two categories, one is the creation software launched by the head short video platform, such as CapCut launched by ByteDance and Kuaiyote. The other is third-party specialized video creation software videoolap and Spice, among others.
First of all, it should not be ignored that third-party video editing apps such as Xiaoying are facing the squeeze of the short video platform's own editing software and overseas editing tools to a certain extent.
According to the late Post news, Kuaishou is preparing a budget of more than 5 billion yuan in 2021 to support the development of overseas business, and the growth of Kwai and Snack Video user data under heavy funds is strong, according to Kuaishou's 2021Q2 financial report, its monthly active users of short videos in overseas markets have reached 180 million.
Among them, Kwai mainly targets the Latin American market represented by Brazil and Mexico, while Snack Video is deeply rooted in the Asian market represented by Indonesia and Pakistan.
In overseas markets, youtube, Instagram and Snapchat add short video features.
In 2020, Reels seized the opportunity to quickly enter the U.S.-India market, pulling Instagram daily downloads to exceed one million for the first time on the second day of launch in India; according to Snapchat's 2021Q1 financial report, Snapchat's short video function Spotlight has reached 125 million monthly active users worldwide (the main application MAU is nearly 500 million), and the penetration rate has reached nearly 25%.
From another point of view, brands that do not lean on the editing tools are actually more likely to increase their market share, because they have more courage to fight the price war than third-party editing tools.
Secondly, improving product technology is a good choice for third-party editing tools, but Xiaoying Technology's R&D investment has declined year by year.
According to the data, the research and development expenses of Xiaoying Technology in 2018, 2019, 2020 and January to June 2021 (hereinafter referred to as the reporting period) were 26.05 million yuan, 33.83 million yuan, 42.66 million yuan and 25.71 million yuan, respectively, and the proportion of research and development expenses to operating income was 18.42%, 17.29%, 14.15% and 13.82% respectively.
It can be seen that as a technology-based enterprise, the proportion of R&D investment of Xiaoying Technology every year is lower than the average of about 25% of comparable companies.
In fact, the reason is because the revenue model of Xiaoying Technology in recent years is too single.
Third, it is difficult to break the single curse of revenue
Among the three editing tools of Xiaoying Technology, Viva Video, as the main product, accounts for nearly 80% of the company's operating income.
During the reporting period, the subscription revenue of mobile video creation software was 115 million yuan, 168 million yuan, 285 million yuan and 162 million yuan respectively, accounting for 81.38%, 85.68%, 94.60% and 87.31% of the main business income of the current period, respectively.
Among them, the overseas operating income of Xiaoying Technology was 97.83 million yuan, 119 million yuan, 243 million yuan and 167 million yuan, accounting for 69.19%, 60.96%, 80.45% and 90.17% of the operating income, respectively.
On the other hand, compared with the domestic market, the proportion of overseas sales continued to rise, reaching 90.17% in the first half of 2021.
The overseas mobile application market mainly includes Google Play, overseas App Store, overseas Huawei application market, etc.; the domestic mobile application market mainly includes Chinese mainland App Store, domestic Huawei application market, Tencent App Treasure and Xiaomi App Store.
However, it is undeniable that as the first batch of brands to enter the industry, Xiaoying Technology also has its own research and development technology and research and development team.
However, at a time when domestic editing tools are emerging in an endless stream, users do not lack editing tools and lack the habit of paying for editing.
To this end, from the perspective of the overall domestic application market distribution, even if Xiaoying Technology has listed most of the popular application platforms in China, the proportion of revenue will still not increase but decline.
In addition, the channel price is expensive, and the proportion of the main cost is also rising.
During the reporting period, the channel cost (the channel cost of products issued in the third-party mobile application market) was 35.63 million yuan, 47.13 million yuan, 85.57 million yuan and 51.03 million yuan, accounting for 45.49%, 36.89%, 67.38% and 62.00% of the main business cost, respectively.
It should be known that under the single obvious situation of revenue, the soaring cost of channels is not conducive to the overall development of Xiaoying Technology.
Because for editing tools, playing differentiation, technical research and development investment is not necessarily essential, and there are enough R & D personnel to be equipped with sufficient capital investment.
Of course, the funds raised by the listing will upgrade tools and services to a certain extent, and can also expand global marketing, but these are temporary, and what can really form barriers must be in the product.
But then again, Xiaoying Technology is ready to sprint for the IPO, and all the problems will be solved after stepping on the secondary market, which remains to be confirmed.