YY Development hidden dangers frequently arise: privatization is forced to end, loss of personnel becomes a serious injury

The wave of privatization of Chinese stocks, which has been popular for some time, has cooled down with the decline of China's stock market. Many Chinese stocks listed in the United States have had to stop privatization because of this. Happy Gathering Times (hereinafter referred to as YY) bears the brunt and becomes the first Chinese company in the privatization army to be forced to withdraw.

Original title: YY's dilemma: In addition to terminating privatization, there are more concerns.

The wave of privatization of Chinese stocks that has been popular for some time has cooled down with the decline of China's stock market. Many Chinese stocks listed in the United States have no choice but to stop privatization. Happy Gathering Times (hereinafter referred to as YY) bears the brunt, becoming the first Chinese company among the privatization army to be forced to withdraw.

Although on the surface, the unsuccessful privatization does not seem to have affected YY's continued wealth in silence. However, it is worth noting that YY, which started from live broadcasts, has no obvious advantages in the process of moving from a PC show to a mobile terminal. Instead, it has been overtaken by startups represented by Yingke.

In addition, many employees who have lost their equity aspirations choose to vote with their feet.

Privatization has been suspended, the mobile live broadcast business has failed to seize the lead, and the turnover rate of employees in the company except technicians is high... Faced with so many problems, how will YY solve them? How to break through the current dilemma? Where will the next step go?

On

June 15, one month before the termination of privatization, YY announced that the special committee of the company's board of directors had received emails from Chairman Lei Jun and CEO Li Xueling, announcing that the buyers group had withdrawn the non-binding privatization plan of July 9, 2015, effective immediately.

The email stated that considering the recent unfavorable market conditions, the buyer group has decided not to continue promoting the privatization of YY.

In addition, YY also announced that the board of directors has authorized the company to repurchase up to US$200 million in shares and senior convertible bonds due in 2019 over the next 12 months. Depending on market conditions, YY may complete this repurchase through open market transactions, non-public negotiated transactions, and other legal methods. The timing and amount of the repurchase will depend on market conditions, the trading price of ADS shares and other factors, and the repurchase will be funded from the company's current cash holdings.

From this perspective, YY is currently very sufficient in terms of funds, which is due to the profitability of YY Entertainment shows. Interface journalists previously learned from people close to YY that YY Entertainment contributed more than 50% of the entire company's revenue.

According to the 2015 YY financial report, the company's net revenue was 5.897 billion yuan, an increase of 60.3% over the 2014 fiscal year. Net profit was 1.033 billion yuan, compared with 1.065 billion yuan in fiscal year 2014. In the first quarter of 2016, YY's net profit was 208.3 million yuan, compared to 227 million yuan in the same period last year. Among them, revenue from Huya Live Broadcast in the first quarter was 117.7 million yuan, an increase of 114% compared with 55 million yuan in the previous quarter.

YY's privatization was suspended this time because the domestic market could not give YY more funds in the capital market. Wu Tianhua, founder of Tiger Securities, a U.S. stock brokerage, said that the buyer group of YY's privatization is basically a financial investment. If the return of A shares cannot get a high premium, it will be of little significance to return. This may be the main reason why they terminated the privatization.

The funds were still sufficient, the popularity of the domestic stock market receded, and returning to the domestic capital market did not have much benefit. Many factors eventually led YY to stop privatization.

Affected by this, YY's share price fell accordingly. On the day the privatization was announced, YY's share price was quoted at US$62.51; on June 16, due to the suspension of privatization, YY's share price had dropped to US$37.17, which was also the lowest price in the past 52 weeks, and its highest share price had reached US$77.52.

In addition to the impact on stock prices, employee stock ownership plans were also forced to stop. According to interface reporters, during the privatization process of YY, the company level stated that all internal employees would be allowed to hold shares. With the termination of privatization, this promise will be difficult to fulfill.

Hidden dangers of YY: Poor management, staff loss

and termination of privatization have made some employees lose their thoughts about equity, which is one of the reasons for the recent excessive turnover of YY personnel. The company has long had difficulty retaining talents, which is caused by the flaws in YY's management model.

According to the reporter's understanding, almost all of YY's management are technical personnel, which also causes YY to lack publicity, which leads to a very high turnover rate in YY's three fields of operations, products, and marketing in addition to technical personnel. Molly, who once worked in YY's marketing department, said: "The leadership's judgment and support for the market will be relatively lacking. No matter which business department you are in, when you are working on a project, you will find that a group of people change very quickly."

In YY, if there is a problem with a project, it is difficult to progress. The first thing the leadership thinks of is to find people from outside and parachute into the project team. However, the people who parachuted in need of working with the existing team, which makes the project progress even slower. Molly believes that the gap between airborne personnel and the team, as well as whether it is suitable for this project, is a big reason that affects the flow of YY personnel.

The rapid flow of personnel is most affected by the progress of the project. According to Molly,"This is not a department. It is a common problem in the entire YY."

Low employee benefits are also one of the factors leading to excessive turnover of YY personnel. Compared with other companies, YY's employee benefits are not very good. A person who once worked as a product manager at YY Voice and later moved to Netease told reporters: "I left because YY's treatment was not particularly good. I worked at YY for a year. After the salary adjustment ended, I found that there was no salary increase, so I left. Netease will be better than YY overall."

A YY leaving employee small A also said, YY in the treatment of the advantage is really not obvious, She for example: "Take travel subsidies for example, YY is 1200 yuan per person per year, Netease has 5000 yuan."

YY's failure to seize the lead in the field of Mobile Live Video Broadcasting is also related to the company's poor management. Due to the lengthy management process application process, its response on Mobile Live Video Broadcasting was slow.

ME live broadcast is a good example.

At the beginning of this year, the emergence of Yingke Live Broadcast attracted a lot of attention in the market, and the popularity of the live broadcast industry has also spawned a number of mobile live broadcast products. YY, which started out on the PC side by live shows, failed to seize this opportunity well and moved to the mobile side earlier.

Data shows that Yingke held an online press conference in June 2015;360 registered Zanthoxylum bungeanum in May of the same year; and YY's mobile live broadcast product-ME Live was officially announced in March this year.

Li Xueling, CEO of YY, said at the press conference: "In the past, I created YY, but today I want to invent ME!" He hopes to get a good market response in the field of mobile live streaming through ME live streaming.

Another reason why YY lags behind Yingke, Zanthoxylum and other products in the mobile live broadcast market is its shortcomings in operations and market operations.

Xiao A told reporters: "ME Live Broadcast and Yingke are actually similar in terms of appearance and quality of anchors, but ME Live Broadcast will have a smaller voice in the market. The main reason is that YY is not very good at marketing and marketing, although they want to do this. Do this well."

Molly believes that this is related to YY's genes. Almost all of the company's leadership is from technical background, which leads to the above-mentioned leadership lack market sensitivity and fail to perceive rapid changes in the market in a timely manner.

When the reporter asked ME Live for relevant data, the other party said that it had only been launched for a few months and there was no reliable data to publish. However, judging from the search popularity, the popularity of ME live broadcasts has not been high in the past seven days. In the Baidu Index, the overall search index of Yingke in the past seven days was 15155, and the mobile search index was 11167; while the two indexes of ME Live Broadcast were 810 and 475 respectively. The overall month-on-month decrease of 2% and 18% respectively, and the mobile month-on-month decrease of 1% and 19%.

According to the reporter, in YY's internal strategy, ME live broadcasts are targeted at Yingke and Zanthoxylum bungeanum, so it will be different from previous YY products in terms of user acquisition. When acquiring users, ME Live does not divert people from YY Entertainment, YY Voice, and Tiger Tooth, which already have a lot of traffic. Instead, it cooperates with stars, Internet celebrities and lesser-known artists in Taiwan to attract fans through this group of people., gain new users. In order to retain these anchors, ME Live chose to subsidize them. YY insiders refused to disclose the specific amount of subsidy.

Way out: 1 billion yuan to support live broadcast products?

Within YY, the users and functions of several of its major live broadcast products have been subdivided, such as positioning ME Live as mass live broadcast;YY Entertainment has just upgraded its brand name YYLive some time ago and still focuses on performing shows; Tiger Ya focuses on games Live broadcast, and previously launched the financial live broadcast brand "Zhiniu Finance".

However, most of the outside world's understanding of YY live broadcasts still stays on YYLive and Tiger Ya Live broadcasts. Xiao A said: "The anchor content on YYLive is mainly in forms such as Humai, and it will seem relatively low-end in terms of form and content. The live content and form of ME Live Broadcast are more biased towards users in first-tier cities."

Previously, Li Xueling also said: "YY will spend 1 billion yuan to support the development of live broadcasts."

YY is so obsessed with the live broadcast market not only because of the PC-side live broadcast show model, but also because of the huge potential of this market. According to the "2016 China Online Live Broadcast Industry Special Study: Warm Spring Encounters Cold Current" report, the number of online live broadcast platforms in China was close to 200 in 2015, of which the market size of online live broadcasts was about 9 billion, and the number of online live broadcast platform users has reached 200 million. The number of online users on large live broadcast platforms is close to 4 million during peak daily hours, and the number of rooms performing live broadcasts at the same time exceeds 3000.

The data also shows that in terms of the live broadcast industry market in China in 2015, traditional shows were the current mainstream, accounting for 70.8% of revenue; Mobile Live Video Broadcasting only accounted for 3.1%. However, with the rise of Mobile Live Video Broadcasting, by 2018, Mobile Live Video Broadcasting revenue will account for 34.6% of the overall live broadcast market revenue.

Thanks to YY's long-term operation in live shows, technological precipitation has become an advantage for the company. Molly said: "YY is still relatively stable and strong in terms of technology. It will be faster than other companies in the design and application of product function development, product segmentation, multi-flat operations, panoramic and VR functions."

Zhang Yi told reporters that in the Internet industry, technical barriers are a false proposition. To say that a company is highly skilled actually means that it can respond faster to technical issues.

Zhang Yi said: "The homogenization and replicability of the operating model of the live broadcast platform can easily cause aesthetic fatigue to users. Moreover, there are too many products of the same type, and the transfer costs for users are relatively low. In addition, the vulgar cultural tendency of the content of the live broadcast platform may encounter at any time. Ban, these are all problems that the live broadcast industry currently faces that need to be solved."

The current homogenization of live broadcast content is actually competition among anchors. Molly said: "YY's live streaming ecosystem is that the platform connects with the guild (similar to a celebrity's agency, which manages anchors), and the guild signs anchors. In this way, the guild has great influence. YY Entertainment and Huya both use this model. Only ME has completely divorced from the guild model and directly signed anchors or signed contracts with an agency company. Apart from money, there is no too special label to attract anchors."

These departing employees also told reporters that YY will not be eliminated in this wave of Mobile Live Video Broadcasting. After all, YY still has enough funds. Yingke only received tens of millions of Series A financing at the end of 2015. At the beginning of this year, Yingke announced that it had completed 80 million yuan in Series A+ financing, of which Kunlun Wanwei received 68 million yuan.

However, management problems are still problems that need to be solved in the development of YY. For example, during the incubation period of a new project, the company level or project team will pay more attention to the profitability of the product in the early stages, which makes it difficult to guarantee product quality and experience.

Molly said: "The projects incubated by YY are a gamble attitude. Maybe it would be great if one of the 100 projects could come out with a relatively good one. In addition, there will be such a natural orientation within the company. Projects with more revenue will receive more dividends at the end of the year. Therefore, the team operations and products that are incubated will be unconsciously biased towards profit factors, but ignore the product itself. This may be due to fewer projects leading to 'runout'."

All in all, YY's development trend and ideas are correct, but how to truly create a product as influential as YY Voice back then is a question they need to think about.

Editor: yvette