Split up the sports business, PPTV breaks its arm to survive

On July 10, PPTV officially announced the spin-off of the Sports Media Division (referred to as "PPTV Sports") and the establishment of a subsidiary. Since becoming a prostitute in Suning, PPTV Sports has sought independent development, and finally completed this long-cherished wish in the past two years.

PPTV has finally come to this point.

On July 10, PPTV officially announced the spin-off of the Sports Media Division (referred to as "PPTV Sports") and the establishment of a subsidiary. Since becoming a prostitute in Suning, PPTV Sports has sought independent development, and finally completed this long-cherished wish in the past two years.

PPTV's internal letter shows that sports companies have independent R & D, sales and program production, operations, and business procurement functions, and add new services such as live broadcast services, event operations, advertising sales, and sports investment. This means that PPTV Sports is completely divorced from the PPTV management system and stands on its own.

Splitting the sports business, PPTV Broken Arm Survival

, as PPTV's only profitable (game business profit) and most imaginative high-quality asset, has experienced the ups and downs of PPTV. When the company was extremely short of money and raised funds everywhere, PPTV Sports was both a cash cow and a bargaining chip for external financing.

On the road to seeking independence, PPTV Sports had had scandals with gaming companies, football-loving IT tycoons Zhu Jun, IDG, etc., but most of them passed away. The turning point occurred after Suning invested in PPTV. PPTV Sports was accelerated to divest its existing business system and finally embarked on the "road to independence." PPTV, whose losses have not narrowed, can only break its arm to survive.

The spin-off was shattered for the first time.

Compared with video stations such as Youku Tudou, Sohu, and iQiyi, which mainly have "Datong Road" attributes, PPTV is regarded as an exception in the industry.

If you just purchase film and television content and move it to the website for users to order, the "big road" type website will not have much value-added value in the film and television industry chain. Video users are also mostly chasing content. Users will go wherever they go if they can provide popular film and television drama content.

In recent years, video websites have begun to cut into the upper reaches of the industrial chain, self-produced content, and even established film and television drama companies. This fundamentally explains one truth: whoever controls the content, especially the unique and scarce content that users are pursuing, will have the opportunity to recruit new users and retain users.

Colleagues on the video website jokingly called this a "bet." For example, LeTV introduced "Legend of Zhen Huan", which was broadcast exclusively on the entire network, iQiyi introduced South Korean waterwood opera "You from the Stars", Tencent Video won "The Voice of China", and Youku Tudou and Sohu Video trained young directors and made efforts to make their own dramas. Users will only stay on the platform because of content.

However, PPTV has gone astray and focuses on relatively niche sports event content. PPTV long proposed the concept of Internet TV, setting its life as "on-demand + live broadcast", emphasizing the characteristics of quasi-broadcast-level content production.

Sports is a special column of PPTV. With the help of near-broadcast-level content production and the online live broadcast of many events, it has won a lot of popularity. In 2012, PPTV Sports invested approximately 45 million yuan and generated revenue of 80 million yuan. The revenue structure was 10% of paid content, 30% of sports lottery, and 60% of advertising. PPTV Sports 'plan for future revenue is 40% for advertising, 30% for lottery, and 30% for content payment.

In June 2013, PPTV internally announced that the "Sports Center" would be upgraded to the "Sports Media Division" and appointed Zhou Liang, the person in charge of the sports center, as the general manager of the Sports Media Division.

This is seen as a step before PPTV makes a good valuation for the whole. In fact, in parallel with this, PPTV Sports Media Division was spun off, introduced strategic investors, and raised funds to revitalize the entire PPTV. At that time, not only Macau's local gaming industry institutions, but also Jiucheng Chairman Zhu Jun, who has always been fond of football.

It is worth noting that IDG, which originally had a Premier League cooperation project with PPTV Sports, is not willing to be just a copyright provider. Instead, it takes advantage of the opportunity of PPTV Sports 'spin-off financing to enter, thereby binding it more closely and creating a bigger sports content charging business model with the Premier League as its core.

However, all the plans disappeared when investors Suning and Hony entered the market. PPTV Sports 'dream of establishing a subsidiary was shattered for the first time.

Suning adjusts its video strategy to  accelerate the spin-off of PPTV Sports.

Finally, in October 2013, PPTV received a "betrothal gift" of US$420 million from Suning and Hony Investment, of which Suning invested US$250 million.

PPTV solved the urgent need, but did not let go of the inner worries. PPTV Sports does not need pure financial investment, but a strategic investor who can help it become bigger and stronger from the industrial chain level. In other words, neither Su Ning nor Hongyi are the financial owners of PPTV Sports.

It doesn't matter. At the very least, for management and early-stage investment institutions, money can solve survival and exit problems.

According to Suning's announcement, Suning holds US$250 million and 44% of PPTV. Hony invested US$170 million and acquired a 29.9% stake in PPTV. Without any surprises, all VCs including Japan's Softbank, Softbank China, Lanchi, and Defengjie withdrew. The founding management team, including PPTV President Yao Xin and CEO Tao Chuang, reduced its holdings by 16%, to 26%.

On March 30, 2014, Tao Chuang announced his resignation as CEO in the form of an internal email, welcoming Lu Yan, a representative of Hony Capital, former senior vice president of Lenovo Global, as the new CEO of PPTV. Another vice president of PPTV and head of PPTV's multi-terminal business unit Shan Xiaolei also left the company with a low profile.

In the six months after being invested by Suning, PPTV experienced frequent personnel turmoil. What reflects behind it is the differences between Suning, PPTV management team and Hony on the company's business strategies. What Suning is interested in is the traffic at mobile entrances and the implementation of video shopping. PPTV hopes that Suning can monetize its traffic. As for Hony Investment as industrial capital, it values the long-term synergy of the industrial chain.

A noteworthy detail is that Zhou Liang insulted Jiangsu fans while serving as a commentator for a Super League game. This directly led PPTV to publicly apologize and dismiss Zhou Liang.

The turbulent period is far from over. On December 10 of the same year, Suning announced that it would increase its stake in PPTV to 64%, changing from a single major shareholder to a controlling shareholder of PPTV. Fan Zhijun, vice president of Suning, became chairman of the PPTV Management Executive Committee, and Lu Yan, former CEO, resigned.

At the media conference after taking up his new job, Fan Zhijun made a bold statement that he would work with Suning and PPTV to create a new business model for the video industry-making life videos. The definition given by PPTV is to develop rigid video needs related to users 'daily lives based on original entertainment videos. For example, make videos into QR codes and place them at Suning sales counters to let customers understand how to use the products through the videos.

In Fan Zhijun's vision, PPTV can also develop in the direction of intelligent hardware, making terminal products such as PPBoxes, mobile phones, and TVs. Through Suning's online and offline channels, it will achieve the sales target of 4 million units in 2015.

These are undoubtedly typical "Suning thinking". Regarding the construction of the PPTV platform, Fan Zhijun said boldly,"Invest 3 billion yuan to enrich content and establish PP Film Company." In terms of user experience, copyright purchase direction, UGC and PGC, the Suning system led by Fan Zhijun has no specific implementation. Embedding Suning shopping in the video puts it on an important topic.

PPTV is destined to make a Suning transformation, but PPTV Sports is no longer the target of transformation. This is regarded by the management team as insufficient long-tail effect, low single-output ratio, and projects that consume too much peak bandwidth should not be included in future PPTV blueprints.

PPTV Sports, which is determined to develop its independent subsidiaries, has finally ushered in a new life. With the addition of live broadcast services, event operations, advertising sales, sports investment and other services, PPTV Sports has established a new foundation.

PPTV

Sports, which has become an independent subsidiary in crisis, must make new financing.

When it first split, PPTV Sports was already ready for financing. However, after PPTV introduced Suning and Hony Investment as a whole, there was no more sports to do.

Although it started early, more than 70% of PPTV Sports traffic comes from the Premier League, and the live broadcast of the event is relatively simple. In addition, in addition to the online broadcast rights of the Spanish Football League A (referred to as "La Liga"), PPTV Sports has not yet obtained the online broadcast rights of the other three major leagues in Europe (Serie A, Bundesliga, and Ligue 1).

For fans, live broadcasting is the last word. As for broadcasting, it is the next best choice. This is also the reason why the long-tail advertising effect of sports copyright is poor.

Trapped by capital, PPTV Sports did not build a moat in the sports video field based on its first-mover advantage. Suning's 2014 financial report showed that PPTV lost 485 million yuan.

On the contrary, LeTV Sports and Tencent Sports are among the latecomers, using the power of capital to purchase and store rich sports copyright content in addition to famous commentary.

There are two cores of sports video websites, one is event copyright, and the other is user experience. Whether the copyright of the event is rich is determined by the company's capital capabilities; the user experience is one of the commentators/commentators to improve the viewing of the event, and the other is the ability of the cloud to improve the smoothness of the live broadcast of the event. In fact, the user experience is ultimately determined by the capabilities of capital. Therefore, the core competitiveness of sports video still relies on the ability of capital.

On May 13, LeSports raised RMB 800 million at a valuation of 2.8 billion yuan, including seven institutions and individuals including Yunfeng Fund, Dongfang Huifu, and Price Investment. Prior to this, LeSports appointed former CCTV Sports Channel host Liu Jianhong as chief content officer. Former CCTV football commentator Huang Jianxiang joined LeSports to create homemade sports programs.

Starting from July 1 this year, the strategic cooperation agreement between Tencent and the NBA officially took effect. In the future, Tencent will broadcast hundreds of high-definition NBA games live across all channels. It will also launch new NBA event live broadcasts and high-quality columns, and work with the NBA to develop NBA passes, China official website, team official website, NBA community, NBA game time mobile apps, etc.

This is not good news for PPTV Sports, which wants to develop sports video content. After the independent subsidiary of PPTV Sports, before new capital entered, PPTV faced more "dangers" than "opportunities."

Editor: yvonne