Can Feng Xin use the power of the capital market to complete the storm's dream of mutual entertainment?

since landing in the A-share market last year, after Storm Group created more than 30 trading boards, Feng Xin, CEO of Storm Group, was once reluctant to give an interview to the media. Until the storm did not rise again, Feng Xin finally opened his mouth to talk about the reasons for the soaring stock price.

original title Storm Feng Xin: how does the storm avoid burning money?

since landing in the A-share market last year, after Storm Group created more than 30 trading boards, Feng Xin, CEO of Storm Group, was once reluctant to give an interview to the media. Until the storm did not rise again, Feng Xin finally opened his mouth to talk about the reasons for the soaring stock price. In an interview with reporters in July last year, Feng Xin said frankly: expected that the storm will be enthusiastically sought after the listing, but the duration is unexpected.

after the interview, Storm once again appeared the limit board. Finally, in 2015, Storm Group gained 55 limit boards, making it the most awesome "demon stock" in 2015.

A year later, Storm's share price has fallen to around 60 yuan, a far cry from the good times at that time. Feng Xin, who has seen the ups and downs in the capital market, no longer talks about the stock price easily. On November 26, Feng Xin said with a smile in an interview with reporters that "I am not allowed to comment on the stock price within the company." At present, Feng Xin prefers to put aside the capital level and talk about the ecology and strategy of the storm. "the ecological layout of the storm ended last year, and all that's left is to take root." Feng Xin said.

after the soaring stock prices last year, both Feng Xin and Storm are becoming "realistic" this year. Although the share price has halved at a relatively high level, the Internet entertainment layout of Stormwind Group has entered a "small-step fast run" stage. From the financing situation, Stormwind is still favored by the capital market. In August this year, Stormwind TV received round A financing of 200 million yuan, valuing the company at 2 billion yuan. In September, Stormwind Sports received 204 million yuan in round A financing, less than 100 days after Stormwind Sports was established.

Last year, Storm was laid out in the fields of film and television, sports, and TV hardware, but Feng Xin made it clear that he would not make mobile phones and cars, because he could not see a new entry point for mobile phones, and the time window had been closed. Feng Xin stressed to reporters that Storm's business has a clear boundary, although the company will also set foot in O2O, finance and other cross-border industries in the future, but Storm does not intend to challenge giants, the aim is to bring more revenue sources for Storm.

at present, the revenue structure of Storm Group has changed from a single advertising business to a profit model dominated by hardware sales and advertising. According to the three-quarter report, Storm TV's revenue has accounted for more than 50% of the total revenue, while the monthly active users of VR have increased nearly 10 times. If nothing happens, Storm's TV business is expected to catch up with Letv and sit in the first camp in China at the VR level.

the difficulty facing Feng Xin is that the capital chain of the storm is tight, but the layout of VR, sports and other ecosystems still needs to consume funds. On November 14, Stormwind Group announced that Feng Xin once again pledged his equity for financing, and the cumulative pledged shares accounted for 13% of the company's total equity. Can Feng Xin make use of the strength of the capital market to entertain each other in the storm?

< strong > create an interactive entertainment ecosystem < / strong >

at the 2016 Snowball Carnival, Feng Xin's speech theme is "Building a world-class Internet entertainment platform". According to Feng Xin, Storm will adhere to the "N421" strategy in the next 10 years. N represents a variety of commercial forms and carriers, such as advertising, e-commerce, finance, hardware, O2O and games. Audiovisual, VR, TV and sports are the foothold. Film and television and sports are the two major content providers, with DT (Data Technology) as the core to provide different entertainment services for users.

this is a task with great difficulty. In addition to the storm, Ali, Tencent and Letv are all actively building their own entertainment biosphere, and the giants do not hesitate to spend a lot of money on buying content, including sports IP and the establishment of film and television companies, and the platforms around the core of cultural entertainment are competing for users unabated.

Storm Group does not have many advantages in terms of content copyright and self-control. Although get resources from iqiyi, Aofei Animation and other content providers, and also own part of the copyright of the Chinese Super League and CBA League, this is not enough to support Feng Xin's dream of mutual entertainment. As the price of Internet TV is pushed down to an all-time low, in the case of serious homogenization, who owns the core copyright will win the entry battle.

Financial report data show that Storm Group achieved 50.2315 million yuan in revenue from online paid services in the first three quarters of this year, an increase of 304.41 percent over the same period last year. Thanks to the increase in sales of Storm TV, user fees will contribute more and more revenue. "TV's ARPU value (Average Revenue Per User, that is, average income per user) can last for five years, and each user's ARPU value is very likely. My estimate is that VR users should be between 50 and 100 yuan, and TV users should be between 200 and 400 yuan. Once this section begins to make money, the profit is very considerable. " Feng Xin said.

in terms of content, Storm mainly depends on sports and film and television. At present, the performance of sports is the best. Feng Xin revealed that at present, Storm Sports APP's user activity and retention ranks first in the industry, and even twice as much as the second. In fact, Storm does not have much copyright resources, even compared with Letv, Tencent and other competitors do not have important sports IP resources, but Feng Xin believes that content copyright is not the most important, the lower reaches of the sports industry occupy the audience for a longer time.

"at the sound of the whistle of the game, the copyright ends and there is no retention value, either you made money at that time, or you earned users. To next year, the real value is the competition of the user platform, spending a lot of money to buy IP is not a real skill. " Feng Xin said that it is not possible to do without copyright, but if there is only copyright, it may not be possible to obtain users.

< strong > scramble for the entrance to VR < / strong >

in the layout of Storm Group, VR is the most important one. Since the launch of the first generation of VR product Storm Mirror in September 2014, the virtual reality road of Storm has been unstoppable. In just two years, Storm Mirror has completed five iterations, during which the VR all-in-one machine Storm King has been launched.

with its low price, Storm Mirror is the first to seize the VR market, but mobile phone boxes like this are not very competitive, and products that lack core technology can easily be dragged down by knockoffs and price wars. Coupled with the poor user experience of VR boxes, Storm has a lead in the race, but newcomers have quickly caught up.

in Feng Xin's eyes, VR has the largest imagination space among the four screens of PC, mobile phone, VR and TV, and it is also the focus of Storm Group's layout. As of June this year, the cumulative sales of Storm Mirror exceeded 2 million, and the number of monthly active users increased nearly 10 times, making it the first camp in China's virtual reality industry.

Feng Xin said that in the future, the Internet will still be "the king of portals", while VR and TV will be the biggest portals in the next decade, especially VR. He said that the future is a four-screen war, not a two-screen war, in which VR has a broad market prospect. "the TV boss's share is hardly more than 30%, while the mobile phone boss is no more than 20%, but VR will not. VR boss may account for 50% to 60%."

as one of the important traffic portals in the future, VR can carry advertising, content payment and other cash modes, which are what Storm is good at. Feng Xin revealed that the VR marketing of Storm Mirror brought 20 million yuan in sales revenue this year.

however, the VR business of the recent storm has suffered a cold wave. Earlier, Storm Mirror, a shareholding company of Storm Group, reported layoffs of nearly 50%. However, Storm Mirror responded that it is actively laying out the VR ecology, splitting off the car, tourism, real estate, UGC and other business sectors, and plans to set up an independent ecological company. This personnel change is a normal business adjustment of the company.

subsequently, Storm Group CFO Bi Shijun also responded that the news that Storm Mirror had laid off more than half of the staff was not true, and that the real layoffs were about 50 people, or about 10%, while more than 100 people related to the content were split into the newly established VR subsidiaries.

although 2016 has been regarded as the first year of VR, VR manufacturers are generally weak. According to Steam, the total number of units installed in HTC Vive was only about 100000 units in July, an increase of only 0.3%, while growth stagnated in August. The pursuit of VR in the capital market is also decreasing. In the second half of the year, VR's financing record has decreased significantly, while VR manufacturers that have received financing are announcing their closure one after another.

some people in the industry told reporters that when VR and mobile phone manufacturers launched VR boxes, they just wanted to reduce costs, and the real core value was the VR all-in-one. However, at present, the level of all-in-one machines in China is limited and does not have real competitiveness. "the mobile phone box can achieve the role of the education market, but when the technology is mature, the cost will drop rapidly, and then the manufacturers with core competitiveness will win." He said that there will still be a number of VR manufacturers going bankrupt in the first half of next year, and the industry reshuffle is still not over.

it is clear that the VR business will not be able to contribute to Storm's profits in the short term. Bi Shijun believes that the two business sectors of Storm Sports and Storm TV are expected to make a profit in 2018, and the profit time of the VR sector may be later.

< strong > Diversified layout < / strong >

Storm can be called the biggest bull stock in 2015.

in the interview, Feng Xin repeatedly stressed the importance of complying with the trend, and Storm was resolutely transformed under the guidance of this strategy. With the help of that wave of trading boards, Storm Group proposed to expand its business line and transform itself from an online video company into an Internet entertainment platform in the era of DT (Data Technology).

however, success is also capital, failure is also capital. As the fundamentals of the storm are difficult to support high valuations, a decline in share prices is inevitable. Since the beginning of this year, Storm's share price has fallen all the way, with only about 60 yuan so far. According to a notice issued by Stormwind Group on November 14, Feng Xin has once again pledged his equity, and together with three pledges last year, its cumulative pledged shares account for 13% of the company's total share capital. Judging from this move, Storm does not have enough money and ammunition, and Feng Xin was at a high level when he pledged stocks last year, and the stock price is far from what it was then, which is a great challenge for Storm.

however, the layout of the storm at the ecological level is very fast, and capital markets are still willing to pay for the story of the storm. In August, Stormwind TV received 200 million yuan in round A financing, valuing the company at 2 billion yuan, setting a new record for Internet TV financing and valuation growth that has quadrupled its valuation in one year; in September, Stormwind Sports received 204 million yuan in round A financing, less than 100 days after the company was established.

in fact, in addition to entertainment services, Storm Group is also planning a series of diversified layouts, including finance, O2O and e-commerce are all new businesses that Storm will develop. Feng Xin said that in the past, Storm Group's revenue source was single, mainly concentrated in the advertising business. Before listing, Storm Group's advertising revenue accounted for more than 90% of the total revenue, so the company needs to add more profit points.

since the beginning of this year, Storm Group's hardware revenue has increased rapidly, surpassing the advertising business to become the company's main revenue. According to this year's quarterly report, the operating income reached 402 million yuan, an increase of 203.99% over the same period last year, of which Storm TV accounted for half of the revenue. However, due to the sharp rise in TV panel prices, Storm's net profit fell sharply by 97.16%. In addition, the sales volume of Storm Mirror has also exceeded 2 million, and the number of monthly active users has exceeded 1.5 million.

"at the end of last year, I said that the storm had completed 60% of the entire layout, and now the layout of the storm is over. There will be some subsidiaries in the future, but not the core layout. " Feng Xin said that the layout of Storm is to join two new services, TV and VR, on the basis of PC and mobile phones, which is the main battlefield of Storm in the next 5-10 years, and the two core shells are sports and film industry. "the film industry sounds small now, but we are working hard in the hope that it can achieve some results as soon as possible."

in O2O, finance and other sub-businesses, Feng Xin said that he did not want to challenge the giants, but it will not affect Storm to make more profits from users. "Cross-border itself is an efficiency competition. It turns out that you earn money from advertising, while another company earns money from games, e-commerce, O2O and finance. Can you beat him?. We want to do diversified business modules, that is, to improve efficiency, the same users we want to earn more money, the same users we need to be able to provide more services, this is the so-called N421. " Feng Xin said.

Edit: yvette