Monday, 20 May 2019

What would Yeah1 have left following YouTube’s incident?

Updated at Saturday, 16 Mar 2019, 14:49
The Hanoitimes - No longer having the Content Hosting Agreement from YouTube means that Yeah1 will not be able to aggregate third party channels and share passive advertising revenue on YouTube, according to Viet Dragon Securities Company (VDSC)’s latest report.
The recent incident about YouTube terminating the Content Hosting Service Agreement (CHSA) with Vietnam’s media group Yeah1 will cause the company to lose its revenue share from its YouTube third party/partners’ channels, leaving the company to rely on its remaining businesses. 

​Youtube: Yeah1 Network

This segment is mostly based on advertising on YouTube platform, contributing 28% of revenue and 51% of net profit after tax (NPTA) for Yeah1 in 2018, including three revenue sources: Ads revenue received from YouTube by displaying ads on partners’ channels, on Yeah1’s owned and operated channels, and Direct sales revenue from Product placement, sponsored reviews, B2B partnership in content production.

No longer having the CHSA from YouTube means that Yeah1 will not be able to aggregate third party channels and share passive advertising revenue on YouTube. 

In 2018, total around 1,100 partners of Yeah1’s system accounted for 16.7% revenue and 12.9% NPAT (US$1 million) in 2018 for the company. 

The only 75 owned and operated channels (of which 11 channels are local channels), in contrast, contributed up to US$600,000 to the group’s net profit.

Non-Youtube: Yeah1 Publishing

This business includes two sub-segments: Netlink and WebFace.

Netlink: Operating as a publisher management on behalf of Google. Netlink is currently managing 1,300 publishing partner and more than 80% of its revenue coming from foreign markets.

As part of its global strategy, the company is accepting a lower than normal profit margin for the beginning period to attract premium publishing partners oversea. As a result, Netlink’s contribution to group’s revenue was 20% but in terms of gross profit, it made up only 5% of gross profit in 2018. 

The company is opening office in Pakistan, the second strongest developing country in Asia and haven’t had any Google Certified Publisher Partner (GCPP), with support from Google to explore this promising market.

WebFace: Contributed 8% of revenue and 14% of gross profit to the company in 2018. WebFace monetizes Yeah1’s owned and operated websites and Facebook fan pages as well as third party’s websites/ publishers. Currently, this entity has 69 Facebook’s fan pages with 63 million fans and over 60 websites with 450 million impressions under its network.

For publisher’s partners, WebFace plays not only publishing management but also optimization and content monetization. Therefore, this entity generates a much better profit margin for website than Netlink. 

In terms of its Facebook fanpages, the revenue comes from traffic drives from Facebook to websites where Yeah1 can earn revenue from Google ads and direct Facebook ads revenue with Facebook's Ad Break tool.

Traditional businesses

Although traditional business made up a half of Yeah1's revenue, profit share of this segment was still small and  was unstable in the past.

Yeah1-owned cable television channels contribute the most to the traditional segment with most of the revenue coming from advertising booking. The strategy for the coming years will still be to increase the amount of ads time and improve operational efficiency (i.e. ranking). 

Along with that, copyrighted music contents purchased from Universal Music Group are expected to enrich Yeah1’s channels with high quality contents, thereby increasing ratings, viewership and ads revenue.

Movie investment through subsidiary Yeah1 CMG, contributing insignificantly to Yeah1's business results. The level of involvement of the company in movie making focuses mainly on marketing for film. Yeah1 CMG plays more important role in promoting Yeah1’s brand and as a component of Yeah1’s ecosystem than  a significant factor in YEAH1's business results.

Ads agency (TNT Media) is a subsidiary acquired by Yeah1 since 2017 in order to expand its traditional arm. TNT Media acts as an intermediary between brands and TV channels, buying/selling ads and film copyrights. Revenue increased sharply in 2018 thanks to the company gaining the right to distribute ads for some central-owned TV channels. However, due to only being a middle man, along with high competition in the industry, its profit margin is getting thinner.

In general, Yeah1’s traditional media faces a very high level of competition as the industry does and thus, has a thin profit margin. Considering the trend of users gradually shifting from TV to digital (YouTube, Facebook, Instagram, Zalo, etc.), it is expected that the growth potential of Yeah1 in this segment is narrowed down.
Nguyen Tung
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