Image source @ Visual China
Wen | City Boundary, the author is | Li Nan, and the editor is Lei Yanpeng, |
There are more than 1,200 answers to the question of "how powerful is a beauty camera?" Some respondents do not hesitate to expose their "ugly photos" and answer the confusion of netizens with "photo deception". Some people joke that software such as beauty cameras is an oriental magic that can shock Europe and the United States.
In fact, this "beauty" business is not easy to do.
On March 30, Meitu released its 2021 annual results, and the fair value of the purchase of Ether increased by 425.6 million yuan as one of the highlights, which is the second consecutive year since its listing to achieve full-year profit in terms of adjusted net profit.
In 2016, the year of Meitu's IPO, a survey showed that its core product, Meitu Xiuxiu, processed more than half of the photos in mainstream social networks. Moreover, in addition to Meitu Xiuxiu, Meitu also has a series of products related to "becoming beautiful" such as Meipai and beauty cameras.
What new story does Meitu have around the "beauty" business?
01, the business behind the beauty artifact
The heart of beauty is shared by everyone.
According to the "2021 Medical Aesthetic Industry White Paper" released by the New Oxygen Data Yan Institute, the scale of China's medical aesthetic market is expected to reach 184.6 billion in 2021, returning to more than 20% of the growth channel. This is a portrayal of the beauty industry. And retouching to show a more "good-looking" image is much more convenient and popular than medical beauty.
The business of Xiutu Beauty is intuitively reflected in Meitu Company.
Meitu products are divided into two categories: user-oriented and industry-oriented, the most core product is still Meitu Xiuxiu, which has about 114 million monthly active users in 2021, in addition to beauty cameras, BeautyPlus, Meipai and so on.
From the perspective of financial data, in 2021, Meitu achieved revenue of 1.67 billion yuan, an increase of 39.5% year-on-year, compared with 22.1% in 2020, and the net adjusted profit attributable to the company's owners was 85.07 million yuan, an increase of 39.7% year-on-year.
In 2021, although Meitu's gross profit margin was as high as 67.5%, sales and marketing expenses of 391 million yuan, administrative expenses of 265 million yuan, and research and development expenses of 545 million yuan alone reached 1.2 billion yuan, eroding the company's net profit.
Among them, R&D expenses increased by 35% year-on-year, meitu said, mainly due to the increase in R&D employee expenses; sales and marketing expenses increased by 36%, mainly due to an increase in staff costs and promotion expenses; and administrative expenses increased by 28.7%, mainly due to increased staff costs.
The business of "becoming beautiful" is not easy to do, this is the second time that Meitu has achieved positive adjusted profits for the whole year, and the performance improvement is related to changes in revenue structure.
Meitu's commercialization is mainly in four aspects: online advertising, VIP subscription and image SaaS (software as a service), Internet value-added services, IMS (Talent Content Marketing Solutions) and others. Among them, online advertising has been meitu's largest source of revenue for a long time, and in 2020, this part of the business revenue will still account for as high as 57%.
Advertising is the most important way to monetize the Internet industry, and Meitu, which has hundreds of millions of users, will naturally arouse the interest of brand parties, such as Meitu Xiuxiu screen, background board, search banner, retouching tutorial information flow, etc., which are important resources for its advertising delivery. Meitu will also launch specific photo editing theme activities in the software according to different festivals and celebrations to promote customer brands.
By 2021, advertising will remain Meitu's largest source of revenue, achieving revenue of 770 million, but an increase of 12.5% year-on-year, and the proportion of Meitu's total revenue has dropped to 46%. The company's second largest source of revenue, VIP subscription and image SaaS business, grew significantly, achieving revenue of 520 million, a year-on-year growth rate of 146.9%, accounting for 31.2% of total revenue.
More ads will eventually affect the product experience. Meitu is getting rid of its dependence on advertising, and the second curve is the key to pulling its development.
In addition, with the peak of Internet traffic, advertising will be more inclined to the user sticky platform, for Meitu products, whether advertising revenue can maintain steady growth is a major challenge. Zhang Yi, chief analyst of Ai Media Consulting, pointed out to the market that many tool software are monetized through advertising, but because the landing conversion is very low, this form has not been welcomed by advertisers.
If nothing else, VIP subscriptions and video SaaS will soon become Meitu's most important revenue pillars.
VIP subscription is similar to the VIP model of other Internet products, and you can enjoy more features by obtaining VIP permissions. Starting in 2018, Meitu tested the waters of premium subscription services in overseas markets.
In 2019, premium subscription services and in-app purchases generated $86 million in revenue for Meitu. Since 2020, Meitu has enabled VIP subscription services in its main applications, and the revenue of premium subscription services and in-app purchases in that year was 207 million yuan, a year-on-year increase of 140.1%.
Through the support of AI computer vision technology, VIP members can get paid dedicated functions to get a better image editing experience. As far as the core product Meitu Xiuxiu is concerned, VIP members can achieve hair increases, teeth reshaping, more skin tone adjustments, and get more camera effects and filter materials.
According to Meitu's financial report, in December 2021, Meitu had about 4 million VIP members worldwide, more than double the level at the end of 2020. The corresponding VIP subscription and image SaaS business achieved revenue of 520 million yuan, an increase of 146.9% year-on-year.
Advanced features are not actually a necessity for the average user. The city communicates with some old users of Meitu Xiuxiu, some of them use Meitu Xiuxiu to modify portraits, and some mainly use the puzzle function, but the common point is that they have never paid. For them, "no refinement, just add a filter is enough", the basic functions of the software have met the needs.
Therefore, to a certain extent, Meitu's revenue depends on people who are more "demanding" of "beauty". Whether it can continue to attract such people to subscribe to membership is one of the key points of its future growth. In this regard, Meitu faces challenges including byte power.
In the App Store photography and video rankings, Meitu Xiuxiu is in the lead, but Byte's wake-up and light face cameras are often ranked higher than Meitu's beauty cameras. According to Meitu's performance report, Meitu Xiuxiu's monthly active users in 2021 were about 115 million, unchanged from 2020, and the monthly active users of Beauty Cameras were 56.87 million, a year-on-year decrease of 8.1%.
Jiaqing, who has been using Meitu Xiuxiu for many years, now generally takes Meitu Xiuxiu to repair the photos taken by Apple's original camera, and uses the elimination pen function and mosaic function. She mentioned that Meitu Xiuxiu "manually fine-tuned the face function is very good", but "the selfie function is too fake". Other old users who do not use Meitu Xiuxiu much have also reported the same problem.
How Meitu makes users look good in software functions has a long-term accumulation, but the understanding of beauty, users have their own preferences. This gave new forces the opportunity to rise.
02, once compared with Ali, Baidu
Wu Xinhong, one of the founders of Meitu, once worked with his team for three days to make a product called "Mars Wen", which exceeded 40 million users in a year without promotion; another founder is Cai Wensheng, who allegedly sold the 265 website for tens of millions of dollars to Google.
(Wu Xinhong)
Both Wu and Cai are not idle people. They are not highly educated, Cai Wensheng dropped out of high school, Wu Xinhong graduated from high school and started a business, and then self-examination for college and undergraduate. The two were among the first people in China to run a domain name business, and they also got acquainted because of domain name investment.
The Chinese Internet has been doing copy to China business for a long time, and Meitu's original goal was to make a fool's Photoshop.
Anyone who has made a poster or repaired a photo will not be unfamiliar with Photoshop, which is powerful, but for the average person, it is more complicated to use and the learning cost is higher. What Meitu has to do, obviously, there is a big market. In October 2008, the predecessor of Meitu Xiuxiu, "Meitu Master", was launched, but at that time, there were already some domestic products on the market, such as light and shadow magicians and QQ images.
How do you achieve a breakthrough? Wu Xinhong found a very clever angle: the image editing needs of women who want to make themselves beautiful quickly have not yet been met, and Meitu can "focus on female users".
So Meitu added beauty functions to the software, so that users can achieve effects such as skin grinding and whitening through very simple operations, and easily "become beautiful". The beauty function was launched during the Spring Festival in 2009, and after that, meitu Xiuxiu's users achieved explosive growth. By January 2013, Meitu Xiuxiu's mobile users exceeded 100 million, of which female users accounted for 59%.
Since then, Meitu has also experienced two important nodes: in May 2013, it released meitu mobile phones, and in May 2014, it launched Meipai.
The birth of Meitu mobile phone caters to the trend of combining Software and hardware on the Internet, bringing a new imagination space to Meitu; Meipai allows Meitu to enter the community and short video field from a tool. Both directions have great promise, but unfortunately they are not suitable for Meitu.
Meitu mobile phone is still a product that satisfies the user's "beauty" psychology, mainly for female users who love selfies. Meitu's first-generation mobile phone product, Meitu Kiss, is equipped with an 8-megapixel front camera, compared with the iPhone 5S front camera that was launched in the same year with only 1.2 million pixels. Even at that time, meitu's mobile phone was not benchmarked against China Cool Link, but the selfie artifact Casio camera.
Relying on the user base and brand effect accumulated before Meitu Xiuxiu, the performance of Meitu mobile phones was once remarkable. In the first half of 2016, Meitu mobile phones sold about 357,400 units, and Meitu smart hardware achieved revenue of 556.8 million yuan, accounting for 95.1% of total revenue.
From 2015 to 2017, Meitu's mobile phone business achieved profitability, but by 2018, the mobile phone industry began to enter a white-hot competition stage. When the selfie function of the big factory products also becomes stronger, the advantages of the Meitu mobile phone that mainly focuses on beauty selfies gradually disappear, and because the sales volume is far from being comparable to the big factory, the Meitu mobile phone is also inferior in component cost control, and it is difficult to support the continued development.
In 2018, Meitu's total annual revenue fell by 37.8% year-on-year, with a net loss of 1.2 billion yuan, of which the loss of smart phones was about 500 million yuan. In November of the same year, Meitu licensed the brand of its Meitu mobile phones to Xiaomi. In March 2021, Wu Xinhong announced that the cooperation between Meitu and Xiaomi was terminated early, and Meitu withdrew from the field of mobile phone manufacturing and sales.
Mobile phones are different from software, which is an area where several giants are fighting hard, and there is almost no stage for small and medium-sized manufacturers. As for the decline of Meipai, there are similarities with Meitu mobile phones. And the decline of meipai is even more regrettable.
In 2014, 4G networks were popularized, and mobile short videos came to the first year of development. In May of that year, Meipai was launched. By January 2015, the number of users reached 100 million, taking less than nine months. In comparison, it took about 14 months for WeChat users to reach 100 million.
Meipai once stood in the first echelon of short videos. According to iResearch, in the first 10 months of 2016, Meipai ranked second in terms of the average number of monthly active devices accessing the relevant short video platform's own applications, second only to Kuaishou (then named "GIF Kuaishou"). Unfortunately, short videos soon became a battlefield for giants to compete for deer.
In March 2017, Kuaishou announced the completion of a $350 million financing, led by Tencent. Alibaba Culture and Entertainment Group announced Tudou's comprehensive transformation into a short video platform, and in April 2017, Baidu Video strategically invested in Renren Video to accelerate the layout of PGC short video content.
In addition to BAT going down together, today's headlines also announced that they would give 1 billion yuan to subsidize the creation of short videos, and Douyin began to make full efforts in 2017, and by the end of 2019, it achieved daily active users exceeding 400 million.
From capital strength to ecological resources, it is difficult for Meitu to compete with these opponents, and another important point is that Meitu relies too much on the experience of manufacturing explosive tools before, but these experiences are not suitable for content-heavy products such as short videos.
Wu Xinhong later admitted in an interview with Haike Finance that content operation and recommendation algorithms make short videos more valuable, and he is not really focusing on short video content consumption, "The inertia of huge tools leads to blind command." ”
In October 2016, before the listing, the total number of monthly active users of all Meitu applications was about 456 million, of which the number of monthly active users of Meitu Xiuxiu and Meipai was 106 million and 110 million, respectively.
By 2021, the total number of monthly active users of all Meitu apps will shrink to about 221 million, of which Meitu Xiuxiu will be about 115 million, but Meipai will be classified as "other" categories, while the total monthly active users of "other" products will only be 0.22 billion.
What was once glorious has dimmed.
03, how to tell the new story
Meitu is not young. It had previously attacked everywhere and constantly chased the wind outlet, but it could not find a development path that really suited itself. Now it's time to tell itself a new story.
Meitu still focuses on beauty, and its slogan is to help users become beautiful in all directions through image products and face value management services, and to help the digital upgrading of the beauty industry through SaaS services.
The so-called SaaS, that is, the mode of providing services through the network, can be simply understood as the Internetization of traditional software. Broadly speaking, cloud service offerings that do not require on-premises deployment can be counted as SaaS.
For users, in the traditional license model, users have to pay a one-time high license fee for purchasing software products, while in the SaaS model, users can decide the subscription time according to their needs and save costs. For enterprises, as long as the quality of their services is excellent, they can continue to earn subscription revenue.
In the field of image editing, the Adobe company behind Photoshop is the SaaS giant. For Meitu, expanding SaaS services and making efforts in the ToB field will be the key direction in the future.
In terms of beauty industry SaaS (hereinafter referred to as "Beauty Industry SaaS"), Meitu acquired a controlling stake in Medede in January 2022. The latter provides merchant services and SaaS product services to cosmetics retailers, claiming to have more than 11,500 cosmetics corporate customers.
The report released by Meituan and the China Chamber of Commerce estimates that excluding the upstream beauty products manufacturing industry, the market size of China's life beauty service industry in 2020 will be about 637.3 billion yuan, and the online rate is only 1.5%, which has huge room for improvement. It is estimated that by 2025, the market size of China's life beauty service industry will reach 837.5 billion yuan, and the online rate will increase to about 9.6%.
The Development Space of SaaS in the United States industry is vast, but for Meitu, there are many opponents in this field, such as Praise and Weimob have entered the game. In addition, the beauty industry SaaS has been snubbed by capital because it is difficult to make a profit. The chaos of store donations in the beauty industry will also restrict the development of related SaaS services.
In the field of image SaaS, Meitu has an innate advantage. This part of the business can be roughly divided into two aspects, one is for photography, and the other is for design. On March 5, Meitu released six imaging products, of which Meitu Xiuxiu Mac Version, Meitu Design Studio, Meitu Cloud Repair, and Meitu ID Photos are biased towards B-end scenes.
Specifically, Meitu Xiuxiu Mac version provides picture processing and poster design services; Meitu Design Studio provides poster templates and commercial copyright materials for the online marketing and cargo needs of small and medium-sized enterprise users; Meitu Cloud provides intelligent imaging solutions for commercial photography; Meitu ID photos can produce high-definition ID photos for specific needs such as teacher qualification identification and accountant application.
Meitu Xiuxiu's retouching function for individual users can also be useful for commercial photography. Meitu performance report said that in 2021, although the scale of Meitu Cloud Repair's new AI-based business is not large, it has also made good progress, and the number of customers has increased, and the number of photos processed per month has reached millions per month.
(Screenshot of Meitu Yunxiu)
In fact, THERE are already AI-based retouching products on the market, including retouching systems specifically for the field of wedding photography. When the city boundary tried Meitu Cloud Repair, it was found that the software provided functions such as teeth and skin beautification similar to Meitu Xiuxiu, which could perform "fool-like" operations, but there was a short delay in the effect feedback brought by adjusting the parameters. Meitu cloud repair may need to be further optimized.
Some photographers pointed out to the city that professionals are more inclined to use traditional Photoshop and Lightroom. Another retouching blogger said that using Meitu cloud repair, "it is difficult to use a computer."
Services such as poster design provided by Meitu may be more noteworthy.
Some investors held Meitu shares in 2017, and since then, Meitu's stock price has been all the way down. At present, he is optimistic about Meitu's layout in the field of image SaaS. In his view, more small and medium-sized micro enterprises have emerged, and they can't afford to hire so many senior photographers and designers, "If Meitu Xiuxiu can let the HR in a company design posters, then this market is very broad." ”
At the same time, the person pointed out to the city that Adobe continues to raise subscription fees, but the functions have not been significantly improved, which is not suitable for small and micro enterprises.
Returning to the source of the Meitu story, its previous success came from simplifying complex functions so that ordinary people can achieve "beauty" without having to learn professional software such as Photoshop. With the popularity of pictures and short video content, whether it is image editing or poster design, the related demand has greatly increased, and Meitu's "low threshold" products and services do have a broad space.
But a question that cannot be avoided is whether the technical experience accumulated by Meitu before is enough to form a solid moat. Its core products, Meitu Xiuxiu and beauty cameras, have long been ahead of many opponents, but in the C-end market, applications such as the light face camera born in 2018 and the awakening map born in 2020 have challenged Meitu. If the giant also expands into the field of image SaaS, Meitu will face the problems it has encountered in the field of short video and mobile phones.
(Hong Kong Stock Exchange, Meitu Chairman Cai Wensheng rings the gong, actor Angelababy stands on the platform)
In December 2016, Wu Xinhong and Cai Wensheng, together with Angelababy, the brand ambassador of Meitu Mobile Phone, sounded the gong of Meitu's listing in Hong Kong. In March 2017, Meitu's stock price reached its peak, and its total market value once rushed to nearly 100 billion Hong Kong dollars.
Five years later, as of April 8, its total market capitalization was only HK$4.633 billion, less than the fraction of what it once was.
In more than ten years of development, Meitu has been thinking about how to make people "beautiful". Now, Meitu needs to explore transformation to give itself a "beauty".