Can AIGC and overseas strategy help Hello Group regain growth?
Since 2017, the boom in social e-commerce has brought decentralized influencer economics into the mainstream. Over the past three years, affected by macroeconomic slowdown and decelerating GMV growth in social e-commerce, the once-hot influencer economy has also "cooled down."
(QuestMobile)
Although the growth rate of KOL advertising spending in 2023 remained higher than display and performance ads, the year-on-year growth of 12.3% was the lowest in three years.
(《2024 克劳锐中国内容机构 (MCN) 行业发展研究白皮书》)
Meanwhile, the number of registered MCN agencies in China surged to 25,400 last year. With slowing KOL ad growth and increasing MCN agencies, the influencer economy seems to face a "more monks, less gruel" dilemma.
Amid industry slowdown, Tianxia Show (600556.SH), which integrates Web3.0, AI, metaverse, and blockchain to empower influencer economics, reported 2023 revenue of 4.202 billion yuan with net profit of 92.78 million yuan. Despite Q4 impairments exceeding 100 million yuan for receivables and goodwill affecting profits, non-GAAP net profit decline narrowed sequentially for the third consecutive quarter.
Notably, Tianxia Show implemented aggressive cash flow management and cost optimization last year, reducing sales expenses by 67.1 million yuan (-21% YoY) while maintaining revenue growth.
(Tianxia Show financial data)
In Q1 2024, Tianxia Show further cut sales expenses by over 13 million yuan while maintaining slight revenue growth.
(Tianxia Show Q1 2024 report)
The company also reduced both long-term and short-term interest-bearing debts in Q1, continuing its cost discipline.
2023 operating cash flow reached 299 million yuan, the best since 2019.
(Tianxia Show financials)
By end-2023, Tianxia Show held 2.299 billion yuan in free cash flow, giving it competitive advantage.
Per《2024 中国内容生态发展研究》, China's content creators with 10K+ followers grew from ~5.5M in 2019 to ~14.2M in 2023, while KOL marketing expanded from 30B yuan (2018) to 86B yuan (2022). This still only represents 12% of online ads and 8.8% of total ad market, leaving substantial growth potential.
Alternatively, intensifying competition will accelerate new content creation technologies. Market leaders like Tianxia Show must leverage digital tools to connect "people, goods, and scenarios" for sustained traffic and efficiency advantages.
1. Tianxia Show's "Inspiration Island" text-generation algorithm received regulatory approval, with paid API calls expected to boost profits.
(QuestMobile)
In 2023, mid-tier KOLs increased while tail KOLs decreased despite platform support.
(《2024 克劳锐中国内容机构 (MCN) 行业发展研究白皮书》)
Factors like brands prioritizing performance ads, higher content quality demands, multi-platform requirements, and creative fatigue have raised industry barriers. Becoming top-tier now requires both opportunity and tech-powered "hardcore methods"!
Tianxia Show's 2023-launched "Inspiration Island" helps KOLs overcome creative blocks via massive Chinese NLP datasets, optimizing content across 30+ platforms like Douyin and Xiaohongshu. It won "2023 Intelligent Creation App Award" at the 5th Innovation Development Forum.
By end-2023, China had ~250 native LLMs, but only government-approved models can commercialize. Tianxia Show's algorithm was approved in the 5th batch, with SDK/API monetization now live.
December's "New Creator Incubation Program" lowered barriers for beginners. With 60 yuan/month pricing, mid-term subscriptions could reach 15-20% of 293.5K registered influencers (44-58K users), generating ~30M yuan annually. More AIGC apps could further boost this.
(Tianxia Show 2023 annual report)
WEIQ platform had 199,789 merchant clients (+9,186 YoY) and 2.935M influencers (+563K), including 1.469M professional ones (+432K). MCN agencies grew to 17,247 (+2,307). "Inspiration Island" has aided 100K+ creators in producing 10M+ pieces.
(Tianxia Show 2023 annual report)
2. ADream provides one-stop cross-border solutions for MCNs.
Global social commerce penetration averages 67% (vs 90% in China/Thailand). ecommerceDB projects sector growth from $724B (2022) to $6T (2030). SHEIN leveraged influencer marketing to expand globally early on.
TikTok's ROI (1:16) outperforms search/video ads. Independent sites enable overseas influencers to select products, track fulfillment, and manage commissions—ideal for social commerce. China now has 200K overseas independent sites (20.3% of exports vs 9.8% in 2016).
Challenges include language support gaps, local marketing inexperience, and slow customer service. HootSuite shows only 14.6% of Chinese independent sites use social marketing (vs 30%+ for large platforms), with 95% lacking user analytics—creating opportunities for Tianxia Show.
ADream enables rapid site deployment (1000s SKUs/hour) and integrates with TikTok Shop, Shopee, Lazada, Amazon etc. Local teams provide customized services, with Tianxia Show becoming a TikTok North America partner.
Collaboration with Malaysia's KOLS.ASIA and domestic vocational schools positions it for cross-border growth. Like NetEase Youdao's 3.35X ad growth (2017-2023), ADream's real-time analytics help brands understand overseas markets.
(NetEase Youdao financial data)
With policy support, ADream's rapid deployment + localization could drive 2024 revenue to 10M+ yuan.
3. Metaverse and blockchain achieve monetization.
After 2021's metaverse hype, Tianxia Show focused on commercialization. Its "Honnverse" virtual social product now monetizes digital tourism, marketing, and performances (e.g., "Cloud Tour China" platform).
Blockchain subsidiary Xingkuang Tech enables product traceability (crabs, rice etc.) and data asset management. Recent policies accelerate data rights commercialization—a tailwind for Tianxia Show.
4. Financial adjustments were unintentional; inflection point likely.
Despite regulatory warnings for 2020-2022 accounting inaccuracies (≤2% adjustments), post-adjustment profits actually rose. New dividend policy lifts payout ratio to 30.02%.
(Tianxia Show announcement)
Q1 profit dip reflects overseas expansion costs. The 2% stock rise post-earnings suggests market optimism.
(iFind)
With 10.96M yuan in 2023 overseas revenue and growing contract liabilities, sequential improvement is expected.
(QuestMobile)
As internet ad markets recover, "Inspiration Island" and ADream should contribute increasingly through 2024.
(Tianxia Show Q1 2024 report)
$IMS(600556.SH)’s rising contract liabilities signal probable quarterly improvements ahead!
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
