8month16On the evening of the same day, the State Administration for Market Regulation issued the 'Guidelines for the Operation of Blind Box Businesses (Trial) (Draft for Soliciting Opinions)', which make provisions on various aspects such as the products sold in blind boxes, pricing, after-sales service, and target customers.
What impacts will the introduction of new regulations for blind box products have on the pop culture industry? Popomart's performance has declined. How can it tell a new story? Disney and Warner Bros.IP addressWhat inspirations does the playing style offer to domestic trendy gaming companies? What is the outlook for the pop culture industry? What new growth areas are there after the blind box craze subsides? Frost & SullivanFrost & SullivanZhu Yiming, Executive Director of Frost & Sullivan Greater China, was interviewed by Titanium Media's 'Weekly Capital Market Observation' program to discuss the aforementioned topics.
Titanium Media
Q
8month16On the evening of the same day, the State Administration for Market Regulation issued the 'Guidelines for the Operation of Blind Box Businesses (Trial) (Draft for Soliciting Opinions)', which make provisions on various aspects such as the products sold in blind boxes, pricing, after-sales service, and target customers.
What impacts will the introduction of new regulations for blind box products have on the pop culture industry?
Zhu Yiming, Executive Director of Frost & Sullivan and Industry Consulting Expert, stated that all participants in the respective industries need to meet each requirement mentioned in the guidelines. Zhu Yiming selected several core contents from the guidelines and explained them one by one:
1Guideline 7 states: 'Blind box operators providing goods or services shall clearly mark prices and shall not sell goods at prices higher than the marked prices. They shall not engage in illegal activities such as not marking prices clearly as required, inflating prices, or engaging in price fraud.'
Article 8” The cost difference between the same set of products or services sold through blind box formats should not be too large. The price of blind box products should not differ significantly from that of similar non-blind box products of the same quality.
Zhu Yiming analyzed that from the perspective of consumers, the retail price of blind boxes is within an acceptable range for them. However, the transaction price range in the second-hand market is very broad, and this guideline does not specifically state whether it will regulate the blind box second-hand market.
If the second-hand market transactions are brought under regulatory scrutiny, it could have a very significant impact on the entire collectible toy industry. It is undeniable that the popularity of the second-hand market is one of the reasons driving the boom in blind box sales and even the entire collectible toy industry. It is also one of the core drivers stimulating consumers to keep repurchasing.
2Article 9: 'Blind box operators shall prominently display a series of information such as the product name, type, style, drawing rules, product distribution, quantity placed on sale, probability of hidden items being drawn, and value range of products, ensuring that consumers are aware of these rules before making a purchase.'
Article 10 "Blind box operators should establish and improve a product production and operation record system, retain complete records of the probability setting for drawing and the results of drawing, and use this as a basis for actual market placement and distribution of blind boxes to consumers. For sales conducted online, blind box operators should establish a tracking record system to ensure that the products drawn by consumers are distributed in place and to voluntarily accept supervision. The retention period for relevant records is generally not less than3year.
Zhu Yiming analyzed that, in fact, not only in the toy industry but also across various industries, we can see the emergence of blind box formats. Against this backdrop of popularity, we can also identify some unscrupulous enterprises that earn improper profits through non-standard blind box strategies. These two guidelines will drive such enterprises out of business.
3Article 11: 'Blind box operators are encouraged to establish a minimum guarantee mechanism, by setting upper limits on the amount and frequency of draws, to guide rational consumption. Blind box operators are also encouraged to voluntarily commit not to hoard inventory, not to engage in speculation, not to directly enter the secondary market, and to accept social supervision.'
Zhu Yiming said that currently, most of the revenue from blind boxes comes from high repeat purchases by core users. Take Popomart, for example, where2021The sales volume for the year is92%Coming from our members, the renewal rate has reached an astonishing level56.5%Although the guidelines do not explicitly specify what is the upper limit for consumption amounts and number of repeat purchases, if the upper limit is set below the current average level of the enterprise, it will inevitably have a negative impact on the company's short-term profitability.
Q
The interim report preview shows,2022In the first half of the year, Popomart expects its revenue growth rate to decline to30%Net profit decreased by nearly35%.
Popomart's performance has declined. How can it tell a new story?
Regarding this, Zhu Yiming stated that judging from the timing, the sluggish performance of Popomart in the first half of the year is not directly linked to the release of this guidance.
It is well known that Popcorn Mart is a high-growth company, and this is also the first time it has preemptively warned investors about unsatisfactory revenue growth. What is noteworthy is whether this phenomenon is accidental or natural. Considering its first-quarter performance data, Zhu Yiming initially believes that the decline in revenue growth rate of Popomart in the second quarter should be accidental. As for whether this trend will continue into the next quarter, he holds a relatively conservative attitude. If we look at the data for the first quarter of this year alone, Popomart has still maintained65%-70%The positive growth is not coming from any particular sector, product, or channel, but rather a very healthy positive growth across all channels.
Regarding the performance decline of Popomart this time, Zhu Yiming believes that the main reason is the impact of the epidemic. From the perspective of revenue, retail stores in many cities need to strictly comply with epidemic control requirements and suspend offline operations in relevant areas. In addition, the epidemic has also affected the timeliness of logistics, impacted the online sales of Popomart, and caused impacts on both online and offline operations. It can be seen from Popomart's annual report that the revenue from the four first-tier cities accounts for50%At the beginning of this year, the pandemic mainly impacted first-tier cities such as Shanghai, inevitably causing a significant impact on Poplar's revenue. From the perspective of profit margin, before the outbreak, Poplar still maintained the pace of store expansion and corresponding investment. Therefore, the decline in revenue in the second quarter, coupled with rising costs, led to a decrease in profit margins.
From the perspective of enterprise operations, Zhu Yiming believes that Popomart has been actively building in the past one or two yearsIP addressThe matrix, for which a large amount of capital and resources have been invested, is thus the primary expense, including design and authorization fees, which start from2019year4800Ten thousand yuan increased to2021year1.05yuan, but during this period, newIP addressFor various reasons, it has never shown strong profitability, let alone something likemollyphenomenalIP addressYes. From a singleIP addressAt the level of each,IP addressThe profit margins are also relatively low. If under normal circumstances, there ismollyWait for the strongIP addressDriving the entire group forward, the issue of low profit margins is not obvious, but if the macro environment is poor, in a strongIP addressWhen performance is not good, it will cause Bubble Mart's new business to singleIP addressThe issue of low profit margins has become even more apparent.
Zhu Yiming pointed out, excessive reliancemollyWait for a small amountIP addressIf this issue is not resolved, it will affect the performance of Popomart for the coming year and even several years. 2020In the whole group, mostIP addressAgainst the backdrop of rising sales,mollyThe revenue of this gold product line even saw a decline for the first time, from2019of4.5RMB billion decreased to2020year3.6Yuan, and the proportion of revenue also27.1%reduced to14.2%.mollyThe manifestation of fatigue has also led to2020The Group's overall revenue growth rate for the year was only49%.2021In 2019, under a series of operations by Popomart,mollyProduct line revenue rebounds to7.1Yuan, which also drives the group's annual growth rate to reach80%It can also be seen from this,mollythisIP addressHow important is it to the overall revenue of the Popomart Group, butmollythisIP addressHow long is the lifecycle exactly? WhenmollyWhen reaching the end of the lifecycle, if there are no other similarmollyphenomenal levelIP addressSo, where will the growth momentum of Popomart come from? This is an urgent problem that Popomart needs to solve, and it has also been a challenge that Popomart has been trying to address over the past.
Q
Disney and Warner Bros.IP addressWhat inspirations does the playing style offer to domestic trendy gaming companies?
Zhu Yiming said,IP addressThe importance of the pop culture industry is irreplaceable.IP addressIt is also the competitive barrier and key to victory for every trend gaming company. Japan's Bandai, American children's brands such as Hasbro and Mattel, Disney, etc., all possess massiveIP addressMatrix, taking Nintendo and Disney as examples, Nintendo has over100anIP addressPhenomenal series such as Gundam, Naruto, One Piece, Ultraman, Dragon BallIP addressDisney has created a unique “IP addressMetaverse ”.
Looking at Marvel and Disney over the yearsIP addressBased on the development process, Zhu Yiming has summarized the following points that domestic trend gaming companies can learn from:IP addressPlaying style:
1) Build a completeIP addressmatrix. Maintained by leading enterprises100+order of magnitudeIP addressAgainst this backdrop, unless the enterprise can ensure that there is5 - 10A very strong oneIP addressOtherwise, efforts have to be made at the order of magnitude level. The quantity is hugeIP addressThe matrix also reflects a bit -- ——eachIP addressThey all have their lifecycle, even for cross-era titles like Gundam and Dragon BallIP addressTherefore, we are constantly developing phenomenological-levelIP addressThis is something that every trend gaming company needs to do.
2ExploreIP addressMore possibilities for monetization. Not limited to toys, but withIP addressDisney has made a notable effort to enter other tracks with broad space or high growth rates by taking this as an entry point, and Marvel Games has also been actively deploying resources in recent years. According toLIMAData released by (International Licensing Industry Association) show that licensed toys only account for15%This means that there are actually many tracks with a comparable or even larger volume than it. Take Nintendo as an example; its main businesses are divided into three parts: entertainment,IP addressProduction and amusement units. Among them, amusement units mainly focus on game content planning, development, and sales. The latest data shows that their revenue has increased year-on-year.35%Profit year-on-year growth reached an astonishing150%.
Q
What is the outlook for the pop culture industry? What new growth areas are there after the blind box craze subsides?
Zhu Yiming believes that blind box sales are just one form of marketing in the pop culture industry, and incidents similar to blind box sales ceasing have actually occurred before. For example, early consumer goods represented by beauty products used internet-based traffic strategies to achieve very rapid growth in the short term. This is in the same vein as the sales model of blind boxes. Today, with the internet traffic dividend running dry, consumer goods need to slowly return to their product power.
Zhu Yiming summarized that after returning to simplicity, there are four potential growth points for the tide gaming industry in the future:
1) Innovation of the product itself. How to iterate and innovate accordingly around the ever-changing needs of consumers is an unchanging tenet for the pop culture industry and all consumer goods industries. Take PopMart as an example; it has launchedspace molly 1000%Such super-large-scale products are completely different from previous blind box products. From a commercial logic perspective, this innovation can enhance the group's overall revenue capabilities and also meet the collection needs of core consumers.
2) regional expansion. From the development of companies such as Bandai, Disney, Hasbro, and Mattel, a common point can be summarized: globalization is an inevitable path for tide-swap culture enterprises. For example, Bandai has expanded from Japan to North America and China; Disney has grown from the United States to Europe and China. For Chinese tide-swap culture enterprises, Japan, South Korea, Singapore, the United States, and other regions offer vast overseas markets.
3) Cross-border collaboration. The co-branding of two brands with similar consumer groups can quickly absorb each other's consumer bases, while also helping the brands build consumer awareness in a broader market. For exampleNikeIn the past two to three years, we have frequently collaborated with other brands, whetherLVSuch a luxury, and yetKAWSSuch a relatively civilianized brand.
4)IP addresstransform How to separate from the product itself, andIP addressBuild it more successfully and then enter other tracks. In addition to the international leaders mentioned above, many enterprises in our country are also making corresponding arrangements. For example, listed company OFE Entertainment produces companion toys that are more popular among children. Despite facing a younger consumer group, OFE EntertainmentIP addressThe layout transformation also started many years ago. Overall,IP addressTransformation is also the most important growth driver among these four areas.
*This article is reprinted from Titanium Media , Original title: The blind box model has cooled down, so how can the pop culture industry find new growth points? | Weekly Capital Market Observation ">
