Can the female anchors who earn millions a year support the future of Momo?

At the end of October, this girl was not too cold for a week because she was traveling. However, this did not affect her many fans who would "wander" into the live broadcast room every day and ask, "When will the show start?"

At 21:30 on the evening of November 6, the female anchor, who was called A Leng by fans, finally appeared in the live broadcast room. That day was her 24th birthday. Fans in the live broadcast room competed to give her various birthday gifts and spontaneously formed the A Leng Family. Even a casual Momo status post by A Leng received nearly 60,000 views and 1,800 comments.

A Leng is a female anchor who joined the Momo live broadcast platform in March this year. In just 8 months, she has already accumulated 2.83 billion star points on the Momo live broadcast, becoming the female anchor with the highest star point on the Momo platform. These star points are equivalent to 28.3 million RMB.

In the live streaming industry, the profit sharing between the better platforms and the anchors is generally 70:30. For example, Inke has 68% for the platform and 32% for the anchors. However, industry insiders say that the profit sharing between Momo Live and the anchors should be 60:40, that is, 60% for the platform and 40% for the anchors. If this profit sharing situation is true, according to Momo Live's 40:60 profit sharing, she has earned more than 11 million yuan in 8 months. With the real economy in such a slump today, the media can probably come up with a headline like "A manufacturing company's annual profit is less than a female anchor's income from tips in half a year" to attract attention.

In just eight months, A Leng earned more than 28 million yuan through live streaming on the Momo platform.

Looking at the top 10 anchors on Momo Live's Starlight List, except A Leng, the second place Puff has 1.15 billion Starlight points, and the third place Qian Xiaoqian has 990 million Starlight points. All in all, the top 10 anchors have a total of 10 billion Starlight points, which is exactly 100 million yuan when converted into RMB.

In other words , these 10 anchors (8 female anchors + 2 male anchors), who sang and danced in the live broadcast room, told jokes and chatted with fans, brought Momo 100 million yuan in revenue in half a year.

The day before yesterday, Momo released its 2016 third quarter report. Momo's revenue reached US$157 million, a year-on-year increase of 319%; net profit was US$49.5 million, a year-on-year increase of 1182%; and live streaming contributed US$108.6 million in revenue, accounting for 70% of total revenue. I saw someone forwarded the link to Momo’s financial report in the circle of friends and commented: “This is a company that is focused on making money.”

Live streaming is undoubtedly the most eye-catching industry this year. Driven by capital, a large number of live streaming platforms such as Yingke, Huajiao, Douyu , Panda, and Yizhibo have risen rapidly. Together with the old-fashioned YY Live, the entire live streaming market is bustling. Everyone has been competing in the speed of burning money, and it seems that no one has mentioned the issue of profitability. Recently, the 2016 Live Streaming App Data Report released by Quest Mobile showed that from October last year to May this year, the MAU (monthly active users) of online live streaming apps increased from 52.71 million to 85.85 million, an increase of 38.6%. Currently, the first tier of live streaming platforms are Inke, YY, Douyu, Huya, and Panda, while the second tier are Huajiao, Fanxing, Yizhibo, Quanmin, Momo, etc.

Interestingly, Yingke, the industry leader in the first echelon, achieved an annual revenue of 30.48 million yuan in 2015, with a net profit of only 1.67 million yuan. Although Yingke has not announced its revenue performance for 2016, given that it has been investing heavily in celebrity resources for live streaming, it should have a first-class money-burning speed, and its profit forecast for 2016 is not optimistic. Panda, Douyu, Huya and Yizhibo have all signed a number of entertainment or gaming stars with sky-high contract fees, but it seems unlikely that they will be able to make quick profits in a short period of time. At present, live streaming platforms are naturally regarded as spending a lot of money to attract users and the future.

How did Momo, which has never been considered by the outside world to be in the first tier of live streaming, achieve “making a fortune in silence”? It should be said that Momo Live was born during the "bottleneck period" of Momo Company.

In the first, second, third and fourth quarters of 2015, Momo's revenue was US$26.3 million, US$30.7 million, US$37.5 million and US$39.5 million respectively. Although the revenue increased quarter-on-quarter, the increase was not large. Membership subscription revenue, mobile marketing and game revenue are its three major businesses that are its main sources of revenue.

As for the membership subscription revenue business alone, the operating income in 2015 was US$14.6 million, a year-on-year increase of 23%, which has basically reached its peak.

At this time, most of the outside world's doubts are that Momo's three major business revenues are about to hit the growth ceiling, and it is difficult to maintain sustained growth. The capital market also "voted with its feet". On February 12 this year, Momo's stock price fell to its lowest point since its issuance at US$6.72, and the company's market value also fell to less than US$1.3 billion.

Even after Momo released its 2015 financial report on March 15, with full-year revenue of $134 million and net profit of $13.7 million, achieving four consecutive quarters of profitability, and even though the company's founder Tang Yan said, "Momo has been profitable for four consecutive quarters, and we are very happy about this," the capital market still reacted lukewarmly.

Although Momo has achieved profitability for four consecutive quarters in 2015, the outside world still believes that its revenue will easily hit a "ceiling".

At this moment, Momo urgently needs to find a new profit model to break the "ceiling" believed by the outside world and the capital market. Although perhaps in the eyes of the unruly founder Tang Yan, these so-called "ceilings" from the outside world are fallacies.

In fact, Momo has been trying live streaming since September 2015, when it launched "Momo Live", a product that is high-end but very expensive, but users are not very interested in it.

Momo invited Liang Qiaobai, the music director of "I Am a Singer", to help out on the spot. It positioned itself as "a grassroots live streaming platform different from that for ordinary people". The signed singers are all professional singers. They used live singing, fans posting barrages, and giving virtual gifts to create an interactive and highly social "online concert". Such a high-quality live broadcast program naturally requires a lot of investment in each episode, from the singers to the live performances. However, compared with the investment, the fans' tips are very few, so it is naturally a money-burning product.

After the high-quality live streaming route suffered a setback, in December 2015, Momo launched live streaming for celebrities, which had a relatively strict review mechanism. The anchors needed to submit talent videos and other relevant materials to pass the review. In April 2016, live streaming was fully opened to the public, and users only needed to submit their identity information. In Momo’s latest version 6.7 update, Momo Live replaced the original “Discover” button at the bottom bar. At the same time, Momo also launched an independent APP Hani Live.

Momo Live finally experienced a big boom. Compared with other independent live broadcast platforms, Momo has only inserted the "live broadcast" function among its existing 300 million users. The stranger social attribute of Momo itself makes its user group more willing to "show themselves", and they can move from users to anchors in minutes. Most users go to Momo to kill time. In the era when there was no live broadcast, they would search for people nearby, and when there was a live broadcast, they would go and watch the host.

As a result, Momo Live has its own "UGG" production positive cycle, where some users become anchors, some users become fans, and some users are both anchors and fans of other anchors.

By searching nearby during live broadcast, you can find the host closest to you. If you like the host, you can give him/her a reward or even a high reward so that the host can get to know you and complete a stranger social interaction. Momo's strong stranger social attributes and its inherently good user quality make its live broadcast fans more willing to pay compared to other platforms.

Live streaming platforms like Panda TV, Douyu, Huya, Yizhibo, and Huajiao have signed many big-name stars and gaming industry stars at sky-high prices. For example, it is rumored in the industry that Wang Sicong's Panda TV spent tens of millions to sign Angelababy, and even spent tens of millions to sign retired gaming player Ruofeng. Momo has always "produced" anchors in an UGG way and never signed any anchors, thus saving a lot of signing fees.

The main costs of live streaming platforms come from three sources: marketing costs for acquiring users, host costs for acquiring content, and bandwidth costs. Obviously, in Momo Live, the first two costs are almost negligible, and the only hard cost is bandwidth.

The high enthusiasm of fans to pay and the low operating costs have resulted in a huge explosion in Momo Live’s revenue and net profit. The live broadcast revenue in the first, second and third quarters of 2015 was US$15.6 million, US$57.9 million and US$108.6 million, respectively, accounting for 30.65%, 58% and 69.17% of the total revenue, respectively. This number shocked the industry. It turned out that Momo was the "harvester" of the live streaming industry.

However, the capital market responded to Momo's third-quarter financial report in a very strange way. After the financial report was released, Momo's stock price rose by more than 10% in pre-market trading on Tuesday. However, after rising by about 6% at the opening, Momo's stock price fell nearly 13% to close at US$23.25, falling below its 50-day moving average. Perhaps this is related to the fact that live streaming revenue is the only highlight in Momo’s financial report. (Of course, it is not ruled out that this is related to Momo's P/E ratio, which is as high as 166, a number close to the P/E ratio.)

On the day Momo released its third-quarter earnings report, its stock price fell nearly 13%, falling below its 50-day moving average

The financial report shows that in the third quarter, Momo had 77.4 million monthly active users. This number of monthly active users has almost remained stable at this level since two years ago, and it is difficult to break through it.

The second largest revenue business comes from membership subscriptions, with revenue of US$18.1 million, accounting for 11.5%; the third largest revenue source is mobile marketing, with revenue of US$17.7 million, accounting for 11.3%. Membership subscriptions and mobile marketing saw almost no growth compared to second quarter revenue.

The live broadcast business had an operating income of US$15.6 million in the first quarter, which soared to US$57.9 million in the second quarter, and then increased to US$108.6 million in the third quarter, accounting for 30.65%, 58% and 69.17% of Momo's total revenue respectively. Even Momo founder Tang Yan admitted that the live streaming business is still the biggest engine for Momo's continued revenue and profit growth.

In fact, for Momo Live and other live streaming platforms, perhaps the market value of them is now supported by female anchors. But as for Momo, there are still many stories to tell in its future.

Live streaming not only brings a surge in revenue, but also further implements the video social strategy. In August this year, Momo upgraded to version 7.0 and added the Moment feature, allowing users to post short videos within 10 seconds that disappear after reading in their updates. Recently, version 7.1 upgraded the Moment feature and added face changing. In addition to moments and live broadcasts, Momo News also supports short videos. Of course, it will take time to test whether users will buy into these new features.

Perhaps for Momo, what it most wants to create for users is a "four-in-one" experience of video + interest + LBS + social networking, rather than live streaming. Live streaming is only part of its video strategy.

Momo founder Tang Yan also confirmed this in the third quarter earnings call. He said that our success in the live broadcast business has given us the opportunity to explore deeper into the video, social and pan-entertainment industries by deeply integrating video elements into Momo's main social scenarios and providing users with more entertainment content. He set Momo's long-term vision as "playing a very important role in China's pan-social and pan-entertainment industries."

In addition, it cannot be denied that Momo, with 300 million users, has become a natural user traffic entrance. Now, the competition for users in the mobile Internet has entered the second half, that is, the competition for users' time. Momo utilizes its own traffic portal, and in addition to implementing video social networking, mobile marketing may also be an important part of its future. You know, Facebook, the object that all social products have been trying to learn from, currently derives 90% of its revenue from mobile marketing.

As for Momo, it started with social networking, became popular with live streaming, but where did it reach its peak? Or has it reached its peak? Now, this cannot be interpreted by the outside world, and only Momo can give the answer in the future.