From the consumer Internet to the industrial Internet, Meitu runs through new business models

“Free lunch” is the rule of the Chinese Internet in the early years, but any platform that implements a payment model will be scoffed at by everyone. However, with the rise of domestic copyright awareness, the game of relying on traffic to “enclose land” has gradually become obsolete, and the Internet “payment model” has begun to enter the public eye.

The “paid economy” first started overseas. The streaming media platform represented by Netflix and the e-commerce shopping platform represented by Amazon created a paid membership system to provide customized “membership services” to maintain the healthy growth of the platform.

Later, domestic video platforms such as iQiyi and Tencent Video also began to test the membership system under business pressure. Until the past few years, knowledge payment platforms such as Get and Himalaya have risen, and original news platforms such as Caixin and Huxiu have also started membership services, and the digital payment economy has entered a mature stage.

In recent years, the “face value economy” has also begun to embrace the paid membership system, and Meitu is a typical case in the paid development stage of this field. The mainstay of Meitu’s revenue was advertising. However, the latest performance report shows that in the first half of 2022, Meitu’s VIP subscription business revenue increased by 61.4% year-on-year to 339.2 million yuan, surpassing the 254.7 million yuan in online advertising business revenue, becoming the company’s largest source of income.

In the past few years, Meitu has done mobile phones, e-commerce, and social networking, but in the end it did not go out of the circle. Moreover, the public’s perception of Meitu is almost all focused on the difficulty of monetization.

At its core, as a tool-type application category, Meitu did not make use of its core advantage-image processing capabilities in the past when it was looking for commercial realization.

But starting in 2019, things started to look a little different. Meitu began to return to the advantage it relied on for survival - the monetization model with image processing capabilities as the core - VIP subscription business.

The core of the VIP subscription business relies on Meitu’s long-term leading image processing capabilities, which requires continuous upgrading of algorithm research and development, such as in-depth research on technologies such as portraits, face detection, body gesture recognition, and AI generation. The beautification and retouching track seems simple, but in fact the competition is fierce. In addition to the accumulation of image processing capabilities, it also requires product managers to have a deep understanding of beauty. Combined with their precise understanding of user needs, the product functions created can allow users Really get “beautiful” and distinctive retouching effect.

According to the data disclosed by the company from 2019 to 2021, Meitu’s VIP subscription business has been in a development trend of rapid growth since its launch: both revenue and the number of members have continued to rise rapidly.

(Unit: RMB)

As mentioned above, Meitu’s product features are tools. Tool-type applications are characterized by improving efficiency and solving problems. Users often want to be able to rely on tools to achieve perfect results, while using the tools for as short a time as possible.

From the perspective of business logic, subscription is a model that Meitu relies on its image processing capabilities to achieve commercial realization. This means that as long as Meitu can maintain its leading image processing capabilities, its products can continue to provide solutions and functions that impress users. In terms of improving efficiency and solving needs, users will rely on products, forming a virtuous circle.

From the perspective of financial forecasting, the latest monthly active users announced by Meitu is 240 million, and the current number of global VIP members is more than 5 million. The number of global VIP members is a very small proportion of Meitu’s existing users, about 2.1%. If the current growth trend of VIP members is followed, at least in the next few years, Meitu’s VIP members still have a lot of room for development.

In addition, according to the company’s disclosure, most of the functions of VIP members currently focus on solving the needs of photo editing in daily life, but in the future, Meitu’s development direction is to develop products in the direction of solving productivity needs, which will contribute to increasing single user income. Speaking, it is very important. This opens up room for revenue growth in the VIP subscription business.

At present, Meitu’s new business model has initially been successful. In the past, the market focused more on a few “big and comprehensive” companies, and paid more attention to “small and sophisticated” vertical companies like Meitu. It is relatively low, but in the new stage of the development of Internet companies, whether it is the blue ocean scale of the core track or its own moat advantage, the value of Meitu needs to be redefined. The VIP subscription business will be a unique advantage of Meitu’s business, and it will also be the beginning of a new story for Meitu. We also expect more Internet companies to identify their core competencies, transform traffic thinking into user thinking, and open up new opportunities in the vast Internet field. gold mine.