On March 26, Betta released unaudited financial reports for the fourth quarter and full year of 2023. According to the data, Betta's revenue for the fourth quarter of 2023 was 1,296 million yuan, gross profit of 126 million yuan, gross profit margin of 9.7%, and adjusted net loss of 5 million yuan. Looking at the full year, Betta's revenue in 2023 was 5.53 billion yuan, gross profit was 684 million yuan, and adjusted net profit was 154 million yuan, successfully turning a loss into a profit.

For Betta, this annual profit is of great significance. This means that Betta's operating strategy adjustments based on the new industry environment have achieved obvious results, and the company has the ability to achieve sustainable development of the platform, and Betta may have entered a new stage of growth.

If we further analyze Betta's 2023 financial report, we can have a clearer and deeper understanding of its business resilience and true value under the adjustment of its business strategy.

Achieve high-quality development under severe business environment challenges

Since 2021, the development of the game live streaming industry has faced major operational challenges, which are mainly due to two factors. The first is the complex changes in the macroeconomy. Second, all internet companies, including the game streaming industry, have entered a new stage where traffic dividends have peaked, and competition in the game streaming industry continues to intensify due to the entry of new short video players such as Douyin, and Betta has inevitably been affected.

After entering 2023, in the face of potential business challenges, Betta is committed to achieving long-term healthy and sustainable growth of the platform in a new development environment. It has adjusted and tested the development of the business from two dimensions. The first is to adhere to the long-term principle, focus on quality and efficiency, and not pursue blind expansion, but instead put profit protection above maintaining growth. As a result, the company actively reduced its inefficient business within 2023. This is also the main reason for the decline in revenue during the period. However, after shrinking the inefficient business, Betta's cost structure continued to be optimized, and the platform's profitability was effectively improved.

Second, Betta actively promotes innovation and transformation of business models to create new growth points. During the reporting period, Betta successfully explored a new game+e-commerce model. The company made full use of platform game attributes to meet advertising needs from game manufacturers, established good commercial partnerships with many manufacturers such as Tencent, NetEase, and Miha Tour, and jointly explored more effective game marketing methods.

The Zhitong Finance App learned that in the field of traditional game props, skins, and peripheral sales, Betta has joined forces with game manufacturers and Taobao Innovation to launch the “Game Hi Shopping Festival” campaign. Eight leading anchors, including YYF, Dragon Master, and Luo Xin, brought goods to game products such as Genshin, League of Legends, CFM, and DOTA2. The live broadcast room had more than 12 million viewers, with cumulative sales of nearly 10 million yuan. The official Betta live broadcast room was even more successful on Taobao's live streaming list.

Thanks to the initial results of exploration in the field of game+e-commerce, Betta's advertising and other revenue in the fourth quarter reached 275 million yuan, an increase of 226.5% over the previous year. This revenue as a share of total revenue rose sharply from 4.4% in 2022 to 13.2% in 2023. This shows that Betta's non-reward innovation business revenue is exploding.

Judging from the results, the new development model that Betta has explored in the new industry environment has undoubtedly been successful. Adhering to the long-term principle of shrinking inefficient businesses has drastically narrowed the company's main business losses. The advertising business and other innovative businesses have already begun to contribute to increased performance, so Betta achieved an adjusted net profit of 154 million yuan in 2023.

Promoting community ecological prosperity in multiple dimensions is expected to help users stabilize and recover

More than that, Betta has deep thoughts on the competitive landscape of the game streaming industry, thus embarking on a development path with significant competitive barriers to differentiation.

Currently, competitors that put a lot of pressure on vertical game streaming platforms are short video platforms such as Douyin, but judging from the underlying logic of vertical platforms and comprehensive platforms, although short video platforms have user advantages, they lack depth of operation in the game industry, and ecological construction is a long-term issue for comprehensive platforms. This makes it difficult for comprehensive platforms to meet the strong demand of senior game users for deep and diverse game content. However, vertical game streaming platforms, mainly Betta, have a significant first-mover advantage in creating perpendicular content and vendor resources.

Based on the above logic, Betta insists on using games as the core to expand the diversification of the platform's content ecosystem, thus forming differentiated competition with short video platforms. Through the in-depth layout of the game industry, Betta has settled on medium to heavy high-quality user groups with higher stickiness to the platform, which can provide greater monetization capabilities.

During the reporting period, Betta further strengthened the ecosystem construction within the platform from multiple dimensions. In terms of e-sports events, Betta has selected the most popular events and has built a “pyramid” tournament layout to meet the spectator needs of users at all levels. In 2023, Betta broadcast more than 30 major official events, including the League of Legends S13 Global Finals, Dota 2 Ti12 International Invitational Tournament, Wang Zhe Rongyao Challenger Cup, and Championship Tournament; at the same time, Betta has more than 60 homemade tournaments, including the KPL Youth Training Tournament based on the KPL official tournament, the S10 Genting Game Goddess Invitational Tournament hosted around female anchors, and the continuous hosting of the original Kamikyu Fish Cup Abyss BP tournament. The advantages of Betta e-sports resources in protecting the city river are still obvious.

To support the official event, Betta has also created a spin-off explanation and review program to help senior players quickly understand the players' and team strengths, and added many new content such as the “Player Rating” section and “Join the League of Legends S13 offline game”, which not only provides players with a comprehensive e-sports content experience, but also greatly enhances the fun and atmosphere of watching the game.

In addition to the tournament, Betta has a large number of professional game anchors in various styles. In the 2023 Asian Games, Betta has signed team players selected for the national team in the Wang Zhe Rongyao and Peace Elite events, and successfully won gold medals on the international stage. It can be seen that Betta has accumulated a wealth of experience among anchors and team players.

At the same time, around professional anchor resources, Betta created Wang Zhe Rongyao's first and only professional IP competition, the Gemini Lucky Cup, and YYF, and also launched variety shows with the participation of anchors, stars, and teams such as “Grandpa Ge's Baby Bus” and “A Farm”, actively investing in platform resources to help the anchors increase their influence.

Creating diverse quality content tailored to games is also a key part of forming differentiated competition. Betta forms differentiated competition with other game live streaming platforms and short video platforms through self-made high-quality content, effectively reducing homogenization and further enhancing users' stickiness to the platform.

Meanwhile, in terms of promoting old and new games, looking at the whole year, continuing the popularity of the “Egg Boy Party” anniversary celebration, Betta integrated platform anchor resources and PGC production capabilities to launch the national competition live broadcast variety show “Eggboy Rush Forward”. The number of viewers on the official live broadcast room reached 9.14 million. During the “Mobile Game Against the Water Cold” public beta period, Betta's leading anchor group launched the “Share One Million Red Envelopes” game promotion, forming a multi-channel promotion matrix covering live broadcasts, fish bars, and off-site social media. The division also supports one-stop content services for live broadcasts, videos, and strategies to efficiently promote the volume of new game launches in a short period of time.

Based on multi-dimensional ecological content construction, Betta enhanced its differentiated competitive advantage and consolidated the company's comprehensive competitiveness and leading position in the domestic game streaming industry. This also enabled Betta to add and return some users. By the fourth quarter of 2024, Betta's average mobile MAU was 51.7 million, the same as the third quarter. The average number of paid users per quarter was 3.7 million, which remained stable compared to the third quarter.

Obviously, the number of monthly active users and paid users of Betta has stabilized one after another. As the company continues to increase its high-quality ecological content and adjust customer acquisition policies in the future, users of the Betta platform may be expected to pick up, which will further consolidate the company's basic market.

Through the above analysis, it is easy to find that under industry challenges, after two years of trial and exploration, Betta finally embarked on a path of high-quality development in 2023. The profitability of the platform improved markedly, and the gradual development of a new growth curve and the continued prosperity of the community ecosystem are expected to drive a steady recovery in the number of users.

This means that the “dark” phase of Betta under intense pressure may be over, and it is expected that it will usher in a “new life.” However, this expectation is currently not reflected in Betta's stock price; this is a typical “difference in expectations.” In the future, as Betta's long-term healthy and sustainable development strategy continues to advance, the true value of Betta will be reflected in the stock price.