Livestream app Inke’s 2018 profits fall on lack of innovation as segment weakens
Mar 26, 2019
Profits for Chinese mobile live-streaming platform Inke plummeted in 2018 according to its first financial report since going public on the Hong Kong stock exchange in July.
The company’s total revenue dipped 2.1% year-on-year to RMB 3.9 billion (around $575.4 million) in 2018, while adjusted net profit plunged 24.7% year-on-year to RMB 5.9 billion in the same period. Revenue from its live-streaming business, which comprised 96.6% of the company’s revenue, declined 4.9% year-on-year to RMB 37.3 million in 2018.
Esme Pau, an analyst at China Tonghai Securities, said the results signal intensifying competition in China’s live-streaming industry and Inke’s lack of a differentiating feature. Inke has to compete with other platforms for performers and the increase in revenue sharing with streamers squeezed margins, she added. The company’s gross margin declined to 33.8% in 2018 from 35.4% in 2017.
Inke recouped some of its monthly active users (MAU), which rose 12.3% year-on-year to 25.5 million in 2018, though it fell well short of the 30 million peak seen in the last quarter of 2016.
“We expect further industry consolidation in livestreaming in 2019 and smaller players to exit, following the footsteps of Panda TV and Quanmin TV,” Pau told TechNode.
In addition to intensifying competition among peers, livestreaming has been losing steam since 2018 as short video apps take share of user time spent among Chinese netizens thanks to its segmented content and easily shareable format. So far 2019 has seen the collapse of Panda TV, once a leading player in livestreaming, while layoff rumors circulate about another live-streaming platform, Douyu.
The user base for short video apps in China has surged to 356 million in 2018 from 153 million in 2016, as upstart platforms like Douyin and Kuaishou take hold, according to data from research institute AskCI Consulting. The boom is expected to continue with total users projected to reach 667 million by 2020, the report said.
To tap the shift, Inke has launched its own standalone short video app, Zhongzi Video, and plans to further its market penetration into lower-tier cities by developing additional features and functions, the company said in the report.