Meitu sets out mon­e­ti­za­tion plan

Com­pany also re­veals some of its busi­nesses can break even by 2017

China Daily (USA) - - BUSINESS - By MENGJING mengjing@chi­nadaily.com.cn

Young women love to take self­ies and they love to look great in those self­ies, hence the grow­ing pop­u­lar­ity of im­age op­ti­miza­tion apps de­vel­oped byMeitu Inc.

But whether or not the tech firm, which is seek­ing one of the largest ini­tial pub­lic of­fer­ings in Hong Kong in nearly a decade, can suc­cess­fully turn women’s de­sire to look good into real cash re­mains doubt­ful, said an­a­lysts.

In a doc­u­ment filed to the Hong Kong ex­change onMon­day, Xi­a­men-based Meitu out­lined a di­ver­si­fied mon­e­ti­za­tion strat­egy, try­ing to use not only smart hard­ware and in­ter­net value-added ser­vices, but also on­line advertising and e-com­merce to make money.

“Our business model is to fo­cus ini­tially on en­gag­ing a large user base with in­no­va­tive prod­ucts and ser­vices free of charge, fol­lowed by the im­ple­men­ta­tion of var­i­ous mon­e­ti­za­tion strate­gies when we reach sig­nif­i­cant scale,” said the com­pany in the doc­u­ment.

Meitu’s apps have gath­ered about 456 mil­lion monthly ac­tive users by Oc­to­ber by help­ing them ap­pear more at­trac­tive in pho­tos and videos via slim­ming faces, buff­ing skin, length­en­ing limbs and even ap­ply­ing makeup.

Founded in 2008, the com­pany had about 97 per­cent of its rev­enue com­ing from smart hard­ware by the end of Septem­ber.

Meitu’s col­or­ful-look­ing smart­phones, priced be­tween 1,500 yuan ($210) and 2,000 yuan, are de­signed to ap­peal to women who want to take flat­ter­ing pho­tos.

James Yan, re­search direc­tor at Coun­ter­pointTech­nol­ogy Mar­ket Re­search, said that fe­male smart­phone users can be a promis­ing niche mar­ket forMeitu.

“But a broad­ened­mon­e­ti­za­tion strat­egy is nec­es­sary for Meitu be­cause the smart­phone business alone can­not bring big prof­its due to fierce mar­ket com­pe­ti­tion,” Yan said.

Meitu said it will up­grade its on­line advertising plat­form by the end of 2016 and launch an e-com­merce plat­form en­abling users to shop for fash­ion­re­lated mer­chan­dises in mid2017 in its lat­est ef­fort to broaden its mon­ey­mak­ing chan­nels.

The com­pany also re­vealed that it is ex­pected to break even by the end of 2017 for some of its busi­nesses. With an in­vest­ment of more than 176 mil­lion yuan, its e-com­merce business is ex­pected to break even be­tween 18 months and 30 months after its launch in July 2017.

Lu Zhen­wang, an in­ter­net an­a­lyst based in Shang­hai, said own­ing a large user base does not equal a suc­cess­ful e-com­merce business.

“What Meitu pro­vides are es­sen­tially tools to help peo­ple make nice pho­tos. Meitu’s apps are not like WeChat, in which peo­ple spend a great deal of their so­cial life. Most of Meitu users spend one or two min­utes op­ti­miz­ing their pho­tos and then leave the apps when they are done with their pho­tos. You can hardly mon­e­tize them into a big lu­cra­tive business,” he said.

Pre­vi­ous re­ports said that Meitu is seek­ing a$710mil­lion IPO in mid-De­cem­ber. Mor­gan Stan­ley, Credit Su­isse Group AG and China Mer­chants Se­cu­ri­ties Co are joint spon­sors of the of­fer­ing, ac­cord­ing to a prelist­ing fil­ing with the Hong Kong Stock Ex­change in Au­gust.

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