Behind the IPO of the first gay social stock: it’s not easy to be big


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Wen / understand Jun
Source: understand finance and Economics (ID: dudongcj)
Have you ever paid attention to gay people? If you haven’t paid attention to it, it doesn’t matter. I’ll tell you.
This is an underrated group. According to Frost & Sullivan, almost one in 20 men is “gay.”. This ratio has not yet eliminated the elderly and children. Have wood to have, very surprised!
Compared with ordinary people, they have higher education and tend to have more money. More importantly, because most of them are unmarried and have children, their purchasing power is higher than that of ordinary people.
There is no doubt that this is a potentially huge gold mine. And Blue City brothers is to find this gold mine “Alibaba”, its main product blue is a homosexual social software.
Not long ago, Blue City brothers submitted a prospectus to the securities and Exchange Commission (SEC) in preparation for listing in the United States. According to the prospectus, although the company is guarding a gold mine, it is not easy to expand the business.
Theoretically, there are huge potential groups of homosexuals. But as of the first quarter of this year, Blue City brothers had only 6 million monthly jobs, including 49% of overseas users.
From the perspective of growth rate, the growth rate of Mau in the past five quarters has been basically maintained at about 20%. Compared with the potential target user group of at least 10 million levels, this growth rate is obviously not satisfactory.
More importantly, the company’s Mau and dau data deviated. At the same time of Mau growth, the company’s dau growth rate decreased from 15% in Q1 2019 to 8.7% in Q1 2020. In the first quarter of this year, the company’s dau fell by 100000 people month on month.
Although, in the past two years, the revenue of blue city was 460 million and 670 million respectively, the growth rate was good, and the loss was also narrowing. But it doesn’t, because the core of social stories is always user growth.
In other words, once the growth rate of users slows down, no matter how good the cash flow method is, it will not stop the collapse of growth logic.
Underrated group: one “comrade” in 20 men
In the blue city prospectus, he said that he covered the LGBTQ group. Straight men and straight women may not know LGBTQ. In short, LGBTQ is a sexual minority with abnormal sexual orientation.
LGBTQ is called because every letter of LGBTQ represents a group of people. For example, l: lesbian, G: gay, B: bisexual, t: transgender, Q: queer, and even intersex and asexual groups not included in the letter.
It sounds like it’s far away from you. But in fact, this group is much bigger than you think.
According to Frost & Sullivan data, the LGBTQ group accounts for 6.2% of the total population in 2019. In other words, there is one LGBTQ for every 15 people. According to China’s 1.4 billion population, there are about 86.8 million LGBTQ people in China.
Among them, “gay men” accounted for the largest proportion of 42.5%. After all, excluding nearly half of the women, almost one in 20 men is “gay.”. It hasn’t eliminated old people and children. I’m surprised, you have wood!
The main service of Blue City brothers is these “gay men”, and its main product blue is a gay social software. Specifically, users can chat on blued or share their daily lives through live video.
By the first quarter of this year, Blue City brothers had a monthly life of 6 million, including 49% of overseas users.
Although homosexual social products seem to be very simple, they are no different from Momo, but in fact they are very learned.
First of all, due to the different needs of each group of users, a product can only meet the needs of one type of users. In other words, although they are all homosexual, gay social products can only cover gay people.
Secondly, the details of its product design are also very particular. As the early blue founder said in an interview, product managers must be “gay men” to do well. Because he knows how to do this product to meet the needs of users and how to operate the market will be more popular. He even knows what color the group likes and what color to promote better.
As we all know, social networking is a good business with strong stickiness and network effect. Gay society is no exception.
From the prospectus, its important terminal blue has become China’s largest same-sex dating software, with a domestic market share of more than 90%. The average Mau and dau of the platform are 6 times and 7 times higher than the second place in the same industry in China; the average daily stay time is more than 60 minutes, and the average daily opening times are more than 16 times.
So, what is the commercial prospect of this kind of LGBTQ platform? We can look at the prospectus of Blue City brothers, the parent company of blue.
Although the value of a single user is large, the realization method is single
Speaking of it, you may not believe that LGBTQ group has higher education and more money than ordinary people.
According to Frost & Sullivan data, the proportion of LGBTQ undergraduates is 43%, and that of the general population is 30%. 8% of the graduate education accounted for more than 4% of the general population.
High education means high income. According to an industry report published earlier by blue, the income of LGBTQ people is about five times that of the general population.
In addition, most LGBTQ groups are unmarried and have children, which makes their purchasing power higher than ordinary people. The annual consumption expenditure of LGBTQ group is about $3120, higher than that of the general population of $2920.
The “Duojin” characteristics of homosexual groups are also reflected in the business of Blue City brothers. At present, the scene of Blue City brothers is relatively single. From the perspective of revenue structure, live broadcasting business is the largest, accounting for 88.5%.

It is worth mentioning that the paid user penetration rate and arppu of the company’s live broadcasting business are far higher than those of mainstream live broadcasting platforms.
In 2019, the pay user penetration rate of Blue City brothers live broadcasting service is 13%, while that of mainstream live broadcasting platforms is about 8%.
In terms of arppu, the arppu value of Blue City brothers in 2019 is 2059 yuan, and the nearest Momo is 1323.3 yuan. In terms of growth rate, the gap between the two may be further widened. In 2019, the growth rate of Blue City brothers arppu is 61%, and that of Momo is 16.8%.
(Note: the annual arppu value of Momo is obtained from the arppu value of single quarter of paying users × 4 for different disclosure caliber of financial report.)
Although the live broadcasting business is very popular, whether it is the penetration rate of paid users or arppu value is not low, whether it can maintain a high growth rate is a question?
The single income structure also makes Blue City brothers have been looking for more cashing scenarios besides online entertainment.
In fact, the initial commercial exploration of Blue City brothers was to make self-made programs and realize advertising. However, the realization path of home-made programs is long, and it is difficult to copy them on a large scale quickly. Moreover, it is difficult for popular works of small circles to land on mainstream video platforms, which also limits its charging space. And advertising is a traffic business.
Therefore, before the launch of Blue City brothers live test, it has not formed a large-scale income.
After the success of the live broadcast business, Blue City brothers made commercial exploration in games, community e-commerce, finance, big health, member value-added services, etc. But with the exception of the $37 million in revenue generated by membership services, most of the other businesses have not been found in the prospectus.
In addition, Blue City brothers have made some achievements in exploring the segmentation needs of gay people, such as surrogate counseling services, HIV testing counseling services and gay theme tourism services. But at present, these services also stay in simple diversion services. In 2019, the total income of this part is only 15 million.
In terms of the results, Blue City brothers’ diversified commercial exploration is hard to say successful, and it has never found a large-scale realization scene outside the live broadcast. The reason is that LGBTQ is similar to the consumption of the public in retail, catering, games and other fields that are easy to realize.
In other words, the Blue City brothers as gay social software can cover very limited scenarios.
The limited realization scenario is the second, and the growth of the number of users is undoubtedly more important for social companies such as blue city brothers. But user growth is not easy.
The growth of users is lower than expected,
What’s the next story?
Due to the domestic attitude towards homosexuality, it is far from open to foreign countries. Going to sea has also become the inevitable choice of Blue City brothers.
Blue City brothers began to go to sea around 2015, and Asia is the first stop of Blue City brothers. It’s no surprise that the Blue City brothers chose Asia. We should know that the number of lgbtqs in the Asia Pacific region is as high as 300 million. So far, blued has become the largest online LGBTQ community in India, South Korea, Thailand and Vietnam.
It seems that blued’s going out to sea is going well. But from the data, it’s far from optimistic.
In the past few quarters, the growth of users of Blue City brothers was regular, and the growth rate of Mau in the past five quarters remained at about 20%. You know, compared with the potential target user group of at least 10 million levels, the company’s Mau is only a few million. Such a growth rate is obviously not satisfactory to investors.
More importantly, in the process of user expansion, the user retention rate is also questionable. From the data point of view, the company’s Mau and dau data deviated.
At the same time of Mau growth, the company’s dau growth rate decreased from 15% in Q1 2019 to 8.7% in Q1 2020. In the first quarter of this year, the number of dau dropped by 100000. You know, the company’s dau is only 2.5 million.
In my opinion, there may be two reasons: over commercialization and low stickiness of overseas users.
In the prospectus, Blue City brothers said that the company focused on attracting and transforming users with higher consumption intention and consumption ability, and allocated more resources for the marketing of new functions. In the process of commercialization, too much privilege is often given to users, which will affect the user experience of ordinary users, and then affect the retention.
As a result, the excessive commercialization of Blue City brothers also caused problems in the retention of users. In addition to the month on month decline in dau, the number of paid users of live broadcast service also decreased from 358000 in 2018 to 326000.
In addition, Blue City brothers also indicated in the prospectus that the company is in the early stage of consolidating its user base outside China, and the substantial growth of overseas Mau has also reduced the retention rate of users.
More importantly, the decline in the retention rate occurred when the company did not carry out large-scale commercial liquidation of the overseas market. We should know that at present, the overseas Mau of Blue City brothers has reached 49%, but in 2019, the overseas revenue of the company only accounts for 6.6%.
This goes back to a problem faced by all domestic offshore enterprises. Due to the different habits of users in each country, in the process of internationalization, how to achieve business localization has also put forward higher requirements for Blue City brothers.
For social companies, the core logic is always in the huge potential users. Once the growth rate of users slows down, no matter how good the cash flow method is, it will not stop the collapse of growth logic.
I don’t know. What’s the next story of Blue City brothers?
(statement: This article only represents the author’s point of view, not Sina’s position.)