Xunlei "abandons" Xunlei Kankan and bets on new business

On July 15, Xunlei officially announced that it would sell all the shares of Xunlei Kankan to Beijing Xiangchao International Media Co., Ltd. (hereinafter referred to as Xiangchao International) for 130 million yuan. Among them, 26 million yuan will be paid one year after the transaction is completed.

For Xunlei, the high cost of video maintenance and the difficulty of making profits have always been pain points, so it finally chose to sell the non-core and non-profit Xunlei Kankan. On April 1 this year, Xunlei signed an agreement with Xiangchao International to finalize the transaction.

It is reported that after selling Xunlei Kankan, Xunlei can reduce content costs, effectively avoid copyright market risks, and focus on the company's important businesses. A relevant person in charge of Xunlei told reporters that the company will focus on developing two new businesses, mobile Internet business and Crystal Project.

Xunlei Kankan Transformation

For Xunlei, the video business is too heavy. According to public data, Xunlei Kankan's advertising revenue before the sale was $38.4 million, while the content cost was as high as $34.7 million. Xunlei's financial report shows that Xunlei Kankan lost $7 million in the first quarter of 2015, a 55.6% increase from the same period last year.

At the beginning of this year, Xunlei Kankan CEO Hao Zhizhong said that the key issue for Xunlei Kankan in 2015 is to improve its monetization capabilities, and its profit plan mainly comes from advertising and paid services. According to data released by Analysys International, in terms of the share of advertising revenue in the Chinese online video market in the first quarter of 2015, Youku Tudou ranked first with 21.17%, iQiyi and Tencent ranked second and third respectively, and Xunlei Kankan only accounted for 1.12% of the market share, ranking tenth.

The comprehensive service coverage data of video websites in the first quarter of 2015 disclosed by iResearch also shows that Xunlei Kankan is far behind the first-tier Youku, iQiyi and Tencent.

Xiangchao International's acquisition of Xunlei Kankan may bring a turnaround for the company. It is understood that Xiangchao International is a film and television company that integrates film and television planning, investment, production and distribution, and artist management. The company's works include "Ugly Wudi" and "Confucius Spring and Autumn".

A relevant person in charge of Xunlei Kankan told the 21st Century Business Herald reporter that the cooperation between Xunlei Kankan and Xiangchao International is focused on the content level, and Xunlei Kankan will undergo a transformation in the future. In addition to the regular business of video websites such as shooting self-made dramas and purchasing content copyrights, a new operating model will be launched. At the same time, Xunlei Kankan will also maintain a business cooperation relationship with Xunlei to share resources and channels.

Testing new business

In 2014, Xunlei went public in the US stock market. Compared with the domestic A-share market, Xunlei was undervalued in the US stock market. According to iFind data, as of July 16, 2015, Xunlei had fallen 39.06% from its issue price. Xunlei itself has also begun to think about transformation. Xunlei Chairman Zou Shenglong said that Xunlei will transform from a company mainly based on PC business to a mobile Internet company and explore new business models.

It is understood that after the sale of Xunlei Kankan, Xunlei's other businesses include membership, games, mobile business and Crystal Plan. Among them, mobile business and Crystal Plan are the focus of the future. Focusing on mobile Internet, Xunlei has seven products including mobile Xunlei, Xunlei Video, Xunlei Kuainiao, Leifeng Wi-Fi, Xunlei Pocket Wi-Fi, Xunlei Reading, and Kuaiwan Mobile Games. The Crystal Plan mainly includes Xunlei Money Making Treasure and Star Domain CDN (Content Distribution Network).

Yang Fan, TMT analyst at Analysys International, believes that in addition to Xunlei's download business, Xunlei is transforming towards 2B business, focusing on network data transmission. In Yang Fan's view, its product Star Domain CDN is of great significance. "Traditional CDN vendors need to connect with operators, rent computer rooms, and rent bandwidth, which is relatively costly. Xunlei uses users' idle bandwidth and storage to innovate technology and reduce costs. CDN is very important for Internet companies, and the Star Domain CDN launched by Xunlei may bring better services to companies."

Xunlei, which has not made any breakthroughs in the mobile end, is trying to develop new business forms by leveraging its accumulated traffic on the PC end and its technical advantages in data storage and data transmission. In fact, CDN has brought a new business model to Xunlei. The person in charge of the Crystal Project told reporters that currently, Money Money and Star Domain CDN have begun to make profits.

However, it should be pointed out that Xunlei's performance has declined, and membership revenue is also decreasing. According to the financial report, in the first quarter of this year, Xunlei's total revenue was US$30.2 million, a year-on-year decrease of 8.4%, and an operating loss of US$1.4 million. Among them, membership revenue was US$21.2 million, a year-on-year decrease of 14.7%; other Internet value-added service revenue was US$8 million, a year-on-year increase of 18.2%.

Yang Fan analyzed that while expanding new businesses, Xunlei still faces some bottlenecks. On the one hand, Xunlei has not made a big breakthrough in its profit model; on the other hand, copyright issues have led to a decrease in the number of Xunlei users. As domestic network speeds up, user demand for Xunlei has also declined, and the company lacks new growth points.

Under such circumstances, Xunlei urgently needs new businesses to "transfuse blood" for it. The person in charge of the above-mentioned Crystal Project said that the future goal of MoneyMaker is to achieve a shipment volume of millions, while Star Domain CDN will provide services to partners and even the society in a sharing economy model.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.