Xunlei seeks diversification and transformation of financial reports, focusing on entering the fields of Short Video and live broadcasts

Judging from the just-released financial report for the fourth quarter of 2016, Xunlei's advertising and cloud computing businesses have increased by more than 200% respectively, and Xunlei's App has also changed greatly. Xunlei's diversified transformation seems to have caught new light.

Original title: Xunlei, not just downloading

the "necessary tools for downloading", but Xunlei now wants to tear off this label. After its listing, except for its cloud computing business, Xunlei seemed very silent. Judging from the just-released financial report for the fourth quarter of 2016, Xunlei's advertising and cloud computing businesses have increased by more than 200% respectively, and Xunlei's App has also changed greatly. Xunlei's diversified transformation seems to have caught new light.

Chiding Cloud Computing

Xunlei's total revenue for the whole year of 2016 was US$157 million, a year-on-year increase of 20.7%. The revenue growth was due to the growth of member revenue, mobile advertising and cloud computing businesses. Among them, Xunlei's strategic business cloud computing revenue increased by 230.4% year-on-year.

The revenue growth contributed by cloud computing is very eye-catching, indicating that the cloud computing strategy chosen by Xunlei has run a good fast track. NetCore Technology, a subsidiary of Xunlei, launched a CDN (Content Delivery Network) service in 2015, called Star Domain CDN. This service uses hardware "Moneymaker" to provide users with crowdfunding methods to obtain idle bandwidth and computing resources, and then reconfigured and scheduled through big data algorithms. The CDN network built in this way not only allows participating users to receive rewards, but also allows customers and partners to obtain high-quality CDN services at prices far lower than traditional CDN markets.

In 2016, live broadcasts became a major hit, which also became a key factor driving the rapid growth of Xunlei CDN revenue. The live broadcast industry has the characteristics of large capacity, high concurrency, and ultra-high video quality. It has particularly high requirements for bandwidth and traffic, which also leads to higher and higher bandwidth costs for enterprises.

In May 2016, Star Domain CDN launched the "Star Domain CDN·Live Broadcast Ultimate Edition" and "Star Domain CDN·Live Broadcast Extreme Edition" for the live broadcast industry, providing network-wide detection, intelligent networking, parallel transmission and live broadcast for the video live broadcast industry. Technological innovation in four aspects: weak network acceleration. At present, hundreds of live broadcast platforms including Xiaomi, iQiyi, Panda Live, bilibili, Momo, Tentacles, Big Peng VR, Zhanqi Live, and GoGal Qualification have become Star Domain CDN users.

At the analyst meeting, Zou Shenglong, chairman of Xunlei, also affirmed the stimulating effect of live broadcast products on business growth. "In the fourth quarter of 2016, cloud computing revenue increased by 80.4% year-on-year. This was especially due to the overall promotion of the live broadcast business. The cooperation between Xunlei and Panda TV was also particularly successful." Zou Shenglong said that Xunlei is exploring the possibility of developing Short Video business outside the live broadcast industry. "For cloud computing, technology and product coverage need to be further improved in terms of revenue scale, users and diversity. Live broadcasting will be a key area of our continued application. However, we will also be looking at other opportunities in the market and how cloud computing can be applied to these areas. At present, Thunder's Short Video technology is in the early stage of testing and building a technical framework."

In

2016, Xunlei member revenue was US$90.2 million, a year-on-year increase of 9.4%; Internet advertising revenue was US$16.9 million, a year-on-year increase of 252.2%; and other Internet value-added services revenue was US$49.9 million, a year-on-year increase of 16.7%.

Thanks to the rapid commercialization of mobile applications, Xunlei has begun to taste benefits in terms of advertising and value-added service revenue.

In the PC era, Xunlei's dominant position in the field of download and transmission is self-evident. For example, video acceleration, game acceleration, and Internet acceleration are all functions that users need. To this end, Xunlei has also developed Xunlei cloud broadcast, online game accelerator, Xunlei Kuaibird and other products are combined with previous download acceleration to form Xunlei's cloud acceleration product matrix.

However, with the rise of online disks, the popularization of 4G, and the migration of users to mobile terminals, it is urgent to open up more commercial channels. Previously, what Xunlei did was nothing more than large-capacity entertainment data transmission. In the era of mobile Internet, its data transmission capabilities were more reflected in Short Video, live broadcasts and other content.

The reporter turned on his mobile phone and found that the recommended content on the homepage was filled with small videos and live broadcasts. The categories of "short films" and "live broadcasts" were added to the toolbar. The "Follow" recommended various celebrity videos, anchors, columns, etc. The download tool needs to be entered at "My" and the logos in the upper right corner.

Mobile Xunlei is no longer a simple download tool, but has transformed into an entertainment content distribution platform that integrates downloads, Short Video, live broadcasts, etc. Diversified content has increased the richness of mobile phones Xunlei and also brought about an increase in user activity. In the fourth quarter of 2015, mobile Xunlei was officially commercialized. In the second quarter of 2016, the number of daily active users of mobile Xunlei exceeded 10 million. The growth and activity of users have also led to an increase in member revenue. Currently, 30% of member revenue comes from mobile Xunlei, including new paid and renewed users.

There is no need to mention the popularity of live broadcasts. Intuitively, this is an indispensable tool to gather popularity; from the perspective of effectiveness, live broadcasts have become a revenue straw in a certain sense. According to Momo's just-released fourth-quarter financial report, the live broadcast business accounted for nearly 80% of Momo's revenue.

On the other hand, the popularity of Short Video has spread from the end of last year to the beginning of this year. Mobile big data service provider Aurora recently released "Short Video explode, who is at the forefront? -- The Vertical Short Video App Industry Report shows that the penetration rate of Vertical Short Video Apps is 19.3%, the user size reaches 131 million, and on average, nearly one in five mobile netizens is a Short Video Appuser.

In addition, Jinshan Cloud monitoring data shows that from August 2016 to February 2017, the bandwidth of medium-sized Short Video customers increased by 350%, and storage increased by 500%. On the one hand, this data proves that the pressure on bandwidth and storage has doubled after the outbreak of Short Video, and on the other hand, it shows that the entire ecological chain of Short Video is expanding rapidly.

"Tools and applications are all ready to go. Xunlei consolidates user activity and stickiness by enriching platform content." Industry insiders analyzed that with market conditions as a guarantee, combined with the cooperation of Xunlei's cloud computing business and the accumulated technology accumulation over the years, Xunlei has certain reasons to regard Short Video and live broadcasts as the key direction of its business.

Since

its listing on NASDAQ in August 2014, Xunlei's share price has dropped from the initial US$12.11 to US$3.56 today, and it urgently needs a profit fulcrum. The financial report shows that Xunlei's total revenue for the fourth quarter of 2016 was US$39.5 million, a year-on-year increase of 12.3%, and a month-on-month decrease of 3.6%. Xunlei's net loss in the fourth quarter was US$7 million, an increase of 52% from the same period last year and a narrowing from the previous quarter.

Xunlei was founded in 2003. As an Internet company with a history of more than ten years, Xunlei is regarded as the "elder" in the industry. For a long time, Xunlei itself has been a free download tool that is less relevant to content and has insufficient liquidity in the domestic market. Its business model mainly includes online advertising, paid value-added, games, etc., which is relatively simple. The functions of paid members are limited, and it is difficult to find room for appreciation in advertising and games.

Xunlei began to develop its B-end business in 2015. To this end, it sold Xunlei, which has long been in the second echelon of the video field. Originally, the cooperation between video business and download business was very suitable for Xunlei, but the copyright war was too costly. It would be a good thing to divest this online long video business, which has huge investment, high copyright risks and difficulty in seeing profits. Today, judging from the results of the financial report, Xunlei made the right choice.

"Although the explosion rate in the cloud computing field is slow, it will definitely bring huge revenue." The above-mentioned industry insiders said, but Xunlei still has many competitors in the CDN field, especially some such as Lanxun, Century Internet, and NetScience. Established companies.

In addition to the ToB business, Xunlei ToC is also facing some unstable factors. "Live broadcast and Short Video businesses have great uncertainties. Some marginal content can not only quickly attract users, but also easily cause risks. It is a revenue catalyst in the development process of the company, but it can easily become cumbersome when it becomes bigger. Once a regulatory crisis is triggered, it will have a great impact on the business." Zhang Yi, chairman of Ai Media Consulting, analyzed.

For the future, Xunlei has also made some arrangements. Xunlei has established an artificial intelligence engineering laboratory internally. It has also invested in virtual reality company "Da Peng VR" and 360°VR camera manufacturer Insta360. According to people from Xunlei,"Xunlei hopes to provide traffic, users and Xunlei innovative technical services specifically for those pigs who catch up with VR, and to create an upstream and downstream alliance to provide user traffic, business models and technology reserves for companies on both sides."

Editor: Nancy