Who will save the Himalayas?

Image source @ Visual China

Text | Ox Knife Finance, author | Wu Dalang

There are only 500 million yuan left on the Himalayas account, and the annual loss has to burn 700 million or 800 million yuan, and if it is not listed, it will really have no money.

In fact, the audio track has long been out of chance, two years ago Litchi FM was listed in the U.S. stock market, and now it has reached a miserable point where the stock price is hovering at $1 and the market value is less than $100 million.

The impact of the IPO twice failed, and Himalaya seems to be unable to speak well of the "sound" of the Scriptures.

Investors can point out every flaw in the audio platform with a single swipe: only 12.9% of the average 116 million monthly active users on mobile; making money can't catch up with spending money; and copyright disputes. It was like a hot potato.

But on March 29 this year – just 16 days after the failure of the second listing – Himalaya once again submitted a prospectus to the Hong Kong Stock Exchange, and was able to revive it so quickly, perhaps not from rational thinking, but from its desperate obsession.

The Himalayas were already on the strings and had to be sent. Since its inception in 2012, the audio company has harvested 9 rounds of financing in ten years, repeatedly breaking financing records, with a valuation of up to 24 billion yuan.

At the same time, Himalaya is also under this huge pressure of loss, with a three-year adjusted loss of 2 billion, and the profit is still far from being expected.

Himalaya is "pushed" by huge capital exit pressure to go public. Before it submitted its IPO, there were many investors behind it, including Tencent, Xiaomi, Sony Music, American Transatlantic Capital, PwC Capital and so on.

However, the timing of the selection is not coincidental, shortly after the first IPO application to the United States in September last year, the capital market environment changed, and Himalaya feared changes and took the initiative to withdraw its application for listing in the United States.

The second "data invalidation" does not mean that the listing failed, And Himalaya can still reactivate the program by updating the data, which has led to the three rounds of applications today.

In other words, Himalaya is not necessarily isolated from the listing, and the possibility of success still exists. However, under the spread of media opinion, repeated stagnation will amplify the current decline, so that the company's prospects have been criticized a lot.

In fact, the doubts of the outside world should not be completely ignored, And Himalaya does face great challenges, and it is not wise to rush to the market.

The established audio company needs to overcome the problem of burning money and create an effective monetization path. If there is no good formula, at that time, the listed stock price is bound to not look good, and the panic of investors will have a superimposed effect.

Financially, consecutive years of losses have become a major symptom of the Himalayas.

According to the prospectus, from 2019 to 2021, Himalaya's revenue was 2.698 billion yuan, 4.076 billion yuan and 5.857 billion yuan, net losses were 1.925 billion yuan, 2.882 billion yuan and 5.106 billion yuan, and adjusted losses in the past three years were 748 million yuan, 539 million yuan and 759 million yuan, respectively.

The cumulative net loss in three years exceeded 2 billion yuan, and Himalaya was mired in increasing revenue and not increasing profits.

From the perspective of the prospectus, in addition to the high marketing and channel costs of Himalaya in successive years, it also has to take the initiative to buy copyrights, and does not hesitate to invest in content costs, and losses are inevitable.

As early as 2020, The revenue score paid by Himalaya to content creators and signatories reached 1.293 billion yuan, accounting for more than 30% of the total revenue, of which more than 255 million yuan was spent on copyright alone.

Probably because of the boiling over copyright disputes, Himalayas intends to let them "collect money and seal their mouths" - "Douluo Continent", "Left Ear", "Ruyi Chuan", etc., no less than dozens of well-known IPs have been in court with them.

Today, Himalaya is almost frustrated by this decision, not understanding that once it is on the "thief ship" of copyright, it will be difficult to get down.

What do you mean by that? The high-priced copyrights can not be wasted, so Himalayas creates them in the form of professional production, celebrity endorsements, and huge publicity, such as the "Three-Body" radio drama launched in 2019, which cost tens of millions of small-cost movies.

The problem is that copyright is actually a high-investment and low-return asset, and it is too difficult to make a profit on it - without a good monetization ecology, buying copyright at a high price will go to the road of no return.

The reason is that If Himalaya wants to grab resources, it adopts a model similar to "advance payment + share", and after the advance payment, it may have to make up the share of the cost.

Public data shows that in the three years from 2018 to 2020, Himalaya paid revenue sharing fees to partners of 460 million, 900 million and 1.3 billion, respectively. Taking reading as an example, Himalaya has paid more than 85 million yuan in the past three years.

From the analysis of revenue structure, Himalaya currently mainly relies on subscriptions and advertising, and these two revenues account for 51.1% and 25.4% of the total revenue, respectively.

Speaking of advertising first, it is clear that audio platforms advertise with natural limitations – ads are certainly best represented by video streams, and listeners may be bored by the interruption of knowledge content by ads.

Therefore, in the process of negotiation with advertisers, no matter how many Himalayan monthly active people are, they cannot be converted into equal bargaining power.

However, it is not practical to rely on subscription services to put the advantages of large scale.

Red Star Capital Bureau once did a survey, Himalaya mainly takes the "price reduction" strategy to attract users to pay, such as baidu, Tencent Music, WPS tied to the joint membership promotion.

Rao's mobile payment rate is only a small 12%.

Is it possible to increase the user payment rate? difficult.

According to iResearch, although China is the world's largest online audio market, its penetration rate is only 45.5%.

According to the data of China Insight Consulting, as of 2020, China Mobile's online audio MAU only accounts for 16.1% of the total number of mobile Internet MAU.

China's audio listening market is not spacious compared to the video industry, as the penetration rate of the former has exceeded 70%.

The ceiling of this industry is so low.

In fact, today's long audio tracks are even more crowded, like an inflated balloon ready to explode.

The industry leader Himalaya has many problems not solved, and investors can't wait to create the next Himalaya.

With the addition of Tencent, NetEase, ByteDance, B station and other Internet manufacturers, the penetration rate of "lazy listening" has surpassed Himalaya to become the first in the industry, "Tomato Listening" has caught up with and ranked third, and the track has become a red sea.

Fortunately, before people could wait for schadenfreude and hoped to see the scene of it flying higher and falling heavier, Himalaya had learned to save itself.

It is reported that Himalaya has set its sights on the IoT of all things and believes that audio is the golden partner of Internet of Things scene services.

Himalaya has increased its layout of hardware terminals such as automobiles, smart homes, smart speakers, and smart wearables year by year. The data shows that Himalaya has reached cooperation with Ali, Baidu, Huawei and more than 60 car companies.

Despite pushing new boundaries, after all, Himalaya has been developing audio for so long, technology, and funding, but the beautiful vision may be greatly compromised.

Niu Dao Finance expects that the future audio IoT is playing an ecological war, and brands that can provide a full range of intelligent solutions have the strength to compete, and audio companies without ecological protection may make a big wave.

This is the advantage of a traditional IoT brand like Xiaomi, and it may also be a disadvantage for an audio monolithic company like Himalaya.

Moreover, the popularity of audio IoT in the sinking market is far away.

Then It may be a rational decision for Himalaya to accumulate as many chips as possible in the user experience of platform content.

Some people say that with the end of the Internet wave, the content dividend period has passed, and the development of the audio industry should move closer to the refinement of content to output the content that users really need.

Of course, such an idea will also be there in The Himalayas: the support for UGC is a perfect example. The reality is that the content tone of Himalaya seems to be different from the UGC blog style, and in the end, Himalaya still devotes itself to the professional production of PUGC and PGC, which returns to the strange circle of previous content costs.

Some people say that Himalayas should find a new way to monetize, no longer rely on traffic and capital supply, and have their own hematopoietic system.

The question is, can such a monetization opportunity be found? The user stickiness of the business model of always long audio is better than that of videos and games.

Even if you play the "pay for knowledge" card, it is still not enough. Listening, it is difficult to systematically digest and understand the learning knowledge points, and the willingness of users to pay is very low.

Each of the challenges Himalaya faces is tricky, which explains its bumpy road to market.

Although the audio giant has long been known, the negative sentiment is greatly amplified whenever Himalaya announces the suspension of an IPO or a loss of performance.

For Himalayas, success and failure seem to be between investors' thoughts.