中国网络媒体消费调查：网络媒体消费的增长点在哪里.pdf

This report has been prepared by UBS Securities Asia Limited.ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 36.UBS does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Global Research 9 January 2020 China Online Media Consumption Survey UBS Evidence Lab inside:Where is the growth in online media consumption?Key takeaways from latest UBS Evidence Lab online media survey In October 2019,UBS Evidence Lab China conducted its fourth online media consumption survey,with 3,000 respondents in tier 1-4 cities.Key takeaways are:1)mobile internet daily average users(DAUs)have plateaued.As of end-October 2019,indexed DAUs of all tracked online social apps remained at 130(no growth YoY,versus 3.8%in 2018)while user time for Chinas mobile internet rose 8.6%during 2019,versus 23.1%for 2018;2)short video continued to gain DAUs/time share of 1.3/0.2 ppts in October 2019,slower than previous quarters;3)results suggest users are less willing to spend more time on digital games in the next six months.We are relatively more positive on Tencent and IQ because of secular sector growth and their leading positions,but more cautious about China Literature,Weibo and TME.What happens if long-form video returns in 2020?Respondents were less willing to pay for long-form video,with the average number of currently subscribed platforms declining from 1.42 in April 2019 to 1.31 in October.Long-form videos time-spent share was down 0.8%YoY as of end-October 2019.However,we expect this to improve in H120 as approvals of new dramas were gradually relaxed in early December 2019.Assuming long-form video platforms and emerging short-video/leading live-streaming apps such as Douyin and Kuaishou gain more user share in 2020E,other media categories will be under pressure.More positive on IQ and Tencent IQ continued to be the most often used long-form video platform.Although IQ lost some user share due to content delays in 2019,we think it could recover as relaxed regulation may lead to title releases reaccelerating in 2020.Tencent video should benefit from long-form videos recovery in 2020;the companys dominance of the social-network industry could provide sizable monetisation opportunities in the long run.Some concerns for China Literature,Weibo and TME Short term,free reading apps are likely to dilute China Literatures paying ratio and ARPPU as it is under margin pressure because of higher sales and marketing(S&M)expenses due to competition.According to UBS Evidence Lab data,Weibo continued to lose usage share and we only have limited visibility on its new initiatives(such as Oasis),while TME is facing up to rising competition risk from Netease Cloud Music.Figure 1:China online media companies Note:As of close of business on 8 January 2020.Source:UBS estimates,Reuters TPPriceMkt capTPPriceMkt cap(LC)(LC)(US$m)2019E2020E2021E2019E2020E2021EEPSSales(LC)(LC)(US$m)2019E2020E2021E2019E2020E2021EEPSSales0700.HKTencentBuy410.0382.00458,31432.7x27.6x22.2x8.4x6.7x5.4x21%24%MOMO.OMomoBuy43.036.317,18511.2x9.2x8.0 x2.9x2.5x2.2x18%16%HUYA.NHuyaBuy33.020.954,56842.6x24.3x15.8x3.8x2.9x2.3x64%28%BILI.OBiliBiliBuy21.023.847,434NMNM72.9x7.6x5.0 x3.6xNM45%YY.OYYBuy90.061.674,98615.1x10.2x6.9x1.4x1.1x1.0 x48%19%IQ.OiQiyiBuy25.524.0217,509NMNMNM4.2x3.6x3.1xNM17%TME.NTencent MusicNeutral15.012.4920,40029.8x26.2x19.8x5.6x4.5x3.6x2324%WB.OWeiboNeutral45.049.0610,72617.0 x16.6x14.4x6.0 x5.7x5.2x8%8%QTT.OQTTNeutral3.03.941,116NMNMNM1.4x1.1x1.0 xNM20%0772.HKChina LiteratureSell21.037.104,87936.6x33.4x31.3x4.9x4.2x3.9x8%12%Avg.26.4x21.1x23.9x4.6x3.7x3.1x30%22%Avg.26.4x21.1x23.9x4.6x3.7x3.1x30%22%PSPSCAGR 2019-21ECAGR 2019-21ETickerTickerCompanyCompanyRatingRatingPEPEEquities China Internet Services Zhijing Liu Analyst S1460515120001 [phone] Jerry Liu Analyst [phone] Corrine Hu,CFA Analyst S1460518100003 [phone] Curtis Li Associate Analyst [phone] Angela Xu,CFA Analyst [phone] Wei Xiong Analyst S1460518100005 [phone] Navin Killa Analyst [phone] China Online Media Consumption Survey 9 January 2020 2 China Internet Sector P2 UBS Research THESIS MAP a guide to our thinking and whats where in this report OUR THESIS IN PICTURES MOST FAVORED LEAST FAVORED IQ,Tencent China Literature,Weibo PIVOTAL QUESTIONS Q:Where are Chinas internet users spending more/less time online?Though there is still some room to grow traffic from underpenetrated user groups,such as lower-tier cities,we think Chinas online media industry is in a new-normal phase,with plateaued DAUs and slower time-spent-online growth.As such,we expect intensified user retention/acquisition competition and online media firms focusing more on monetisation in the coming years.more Q:Who are the potential winners in online video(short,long and streaming)?1)Douyin continuously dominated short video as the market had the strongest growth again over P6M.However,with rising user overlap,we think there could be more competition between Douyin and Kusihou;2)for long-form video,the results indicate weaker subscription willingness in the past six months(P6M),which we think can be largely attributed to content delays.Assuming title releases could reaccelerate with relaxed regulation in 2020,we expect subscription trend recovery in the coming few months;3)the outlook for live streaming is mixed.Results indicate moderate tipping willingness so YY,Huya and Douyu could be under pressure but we noticed that late comers such as Kuaishou and Douyin had strong growth in the past few months.more Q:Are there any potential winners in other online media segments?1)Online music:TMEs aggregate share was down 1ppt in October 2019 to 65%,compared with 66%in April 2019,while Netease Cloud Music gained more popularity,with a 3ppt share increase(22%in October 2019 versus 19%in April 2019),especially in higher-tier cities,backed by its strong presence in original music and more-advanced content-recommendation system;2)online readings average spend further decreased,due to dilution from free reading apps.Although we dont think the standalone,free reading model could ultimately work because of its low monetisation efficiency,these free apps will lead to short-term ARPPU and paying-ratio dilution for payment-model apps;3)online news:the UBS Evidence Lab survey again reflected Bytedances leading position,which could provide considerable monetisation opportunities for the company.moreUBS VIEW We think plateaued DAUs and time-spent share growth will lead to more intensified user-acquisition competition,and online media platforms will shift their strategies towards monetisation in the coming few years.We are relatively more positive on Tencent and IQ,and more cautious about China Literature and Weibo.EVIDENCE According to QuestMobile,the indexed DAUs of all the online social apps we track remained at 130 as of end-October 2019(meaning no growth YoY,versus 3.8%in 2018),while indexed time-spent-online grew by 8.6%,much lower than the 23.1%between January and October 2018.WHATS PRICED IN?We think the moderating payment trend for iQIYI,YY and Momo is already overly reflected in their current attractive valuations.Given this and their improving fundamentals,we are positive on these stocks.China Online Media Consumption Survey 9 January 2020 3 China Internet Sector UBS Research P3 OUR THESIS IN PICTURES return Short video:Bytedance dominated Long-form video:less willingness to pay because of tightening content regulationnumber of subscribed platforms currently down to 1.31 Live streaming:stronger tipping intention in 2020 because Kuaishou and Douyin have helped expand user base and boosted users payment awareness Fueled by robust short-video growth,China online video gained more DAUs and time-spent share in the past three years,with 21.4%time-spent share up to 31 October 2019 0.0%1.0%20%3.0%4.0%5.0%6.0%7.0%8.0%Feb-18Jul-18Dec-18May-19Oct-19KuaishouWeishiHuoshanDouyinXiguaHaokan VideoTime spent share of major short video platformsTime spent share of major short video platforms1.14 1.17 1.42 1.31 0.000.200.400.600.801.001.201.401.60Apr-18Nov-18Apr-19Oct-19Number of platforms subscribed11%12%16%15%0%10%20%30%40%50%60%70%80%90%100%Apr-18Nov-18Apr-19Oct-19YesNoNot sureIntention to buy virtual presents in next 6 monthsIntention to buy virtual presents in next 6 months13.3%7.5%0.6%0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Short VideoLong Form VideoLive StreamingTime spent share of video platformsTime spent share of video platforms China Online Media Consumption Survey 9 January 2020 4 P3 OUR THESIS IN PICTURES return Online music:Netease Cloud Music is catching up Online reading:less expenditure on online reading because of dilution due to free reading apps Online news:Jinri Toutiao maintained leading position Social network:no significant change of ad relevancy in WeChat Moments Source:2.5%0.5%0.0%-0.5%-1.5%-1.5%-2.0%-5.0%-6.0%-5.0%-4.0%-3.0%-2.0%-1.0%0.0%1.0%2.0%3.0%NeteaseCloudMusicKugouMusicAppleMusicMiguMusicBaiduMusicQQMusicXiamiMusicKuwoThe most often used platform(Oct 19 vs Avg.of Apr 18 and Apr 19)The most often used platform(Oct 19 vs Avg.of Apr 18 and Apr 19)110.7101.188.10204060801001200%10%20%30%40%50%60%70%80%90%100%Nov-18Apr-19Ovt-19I havent spent any on reading platformsRmb 20 or belowRmb 21-50Rmb 51-200Rmb 201-500Rmb 501 or aboveWeighted avg.spending(Rmb)0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%Feb-18Jul-18Dec-18May-19Oct-19Tencent NewsJinri ToutiaoQutoutiaoTianTian KuaibaoNetEase NewsTime spent share of major online news portalTime spent share of major online news portal0%10%20%30%40%50%60%Becoming more relevant tomeNo changeBecoming less relevant tomeNo comments since dontremember about the adcontentsNov-18Apr-19Oct-19Change in relevancy of WeChat Moments adsChange in relevancy of WeChat Moments ads China Online Media Consumption Survey 9 January 2020 5 China Internet Sector UBS Research Sector Q1 PIVOTAL QUESTIONS return Q:Where are Chinas internet users spending more/less time online?UBS VIEW Although there is still some room to grow traffic from underpenetrated user groups,such as lower-tier cities,we think the overall China online media industry is in a new-normal stage,with plateaued DAUs and slower time-spent-online growth.As a result,we expect intensified competition for user retention/acquisition and online media companies to focus more on monetisation in the coming years.As for media categories,short video gained the most time-spent share in the P6M but at a lower growth rate.In next six,respondents planned to spend more time on social media and short videos.EVIDENCE 1)According to QuestMobile,up to the end of October 2019,the indexed DAUs of all the online social apps we track remained at 130,with no growth for the year(versus 3.8%growth in 2018).Indexed time spent online only grew by 8.6%,much lower than 23.1%in 2018(from January to October);2)Among all media categories,52%and 47%respondents planned to spend more time on social media and short videos.WHATS PRICED IN?Most online media names experienced some sort of de-rating in 2019,due to:1)investors more cautious view on related companies user growth;2)short-video companies emerging as a core competition concern,for both traffic growth and monetisation.P6M:plateaued DAU and lower time-spent-online growth Chinas online media industry is in a new normal phase,with plateaued DAU and slower time-spent-online growth.We expect this new normal to continue and more intensified competition surrounding user retention/acquisition and following monetisation over the next few years.-According to QuestMobile,up till the end of October 2019,the indexed DAU of all the online social apps we tracked remained at 130 for the year with no growth(3.8%in 2018)and indexed time spent online grew by 8.6%,lower than the 23.1%in 2018(from January to October).-The latest UBS Evidence Lab survey indicates weaker online media consumption trend.Although under-penetrated groups,such as younger users or those in lower-tier cities,spent more free time online(working/school days),overall leisure-time spent online on working days was flattish and time at the weekend dropped by 0.16 hours per day.We noticed more light users(using the platform once a month or less)in the latest survey for all media categories(Figure 8),indicating more fragmented user time in the P6M.China Online Media Consumption Survey 9 January 2020 6 Figure 2:Chinas total mobile internet DAUs plateaued Figure 3:and lower time-spent growth DAU:mobile internet DAU.Source:UBS Evidence Lab,QuestMobile Time spent:mobile internet time spent.Source:UBS Evidence Lab,QuestMobile Figure 4:Respondents spent less free time online on week days Figure 5:and also on weekends/holidays Based on weighted avg.number of survey results.Source:UBS Evidence Lab Based on weighted avg.number of survey results.Source:UBS Evidence Lab Figure 6:Lower tier city and younger respondents spent more leisure time online on working/school day(hrs)Different color stands for different respondents group Based on weighted avg.number of survey results Source:UBS Evidence lab 708090100110120130140Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19Jul-19DAU7090110130150170190210230Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19Jul-19Time Spent1.131.171.081.080.000.200.400.600.801.001.201.40Apr-18Nov-18Apr-19Oct-19Leisure time spent online-per working/school day(hrs)3.413.473.273.110.000.501.001.502.002.503.003.504.00Apr-18Nov-18Apr-19Oct-19Leisure time spent online-per weekend/holiday(hrs)0.00.20.40.60.81.01.21.41.61.8Apr-18Nov-18Apr-19Oct-19Apr-18Nov-18Apr-19Oct-19Apr-18Nov-18Apr-19Oct-19Apr-18Nov-18Apr-19Oct-19Apr-18Nov-18Apr-19Oct-19Apr-18Nov-18Apr-19Oct-19Apr-18Nov-18Apr-19Oct-19City Tier-Tier1City Tier-Tier2City Tier-Tier3Age18-24Age-25-34Age-35-44Age-45-54 China Online Media Consumption Survey 9 January 2020 7 Figure 7:No change in trends of time spent online on weekends/holidays(hrs)Different colours represent different respondent groups.Based on weighted avg.number of survey results Source:UBS Evidence Lab Figure 8:Time spent on each media:most respondents spent less than one hour per day Light user=visiting platform once a month or less.Source:UBS Evidence Lab Short video gained more DAU/time-spent share at lower pace Among all the online media categories,we observed that short-video platforms continuously gained more DAU and time-spend share in 2019.However,their growth has been slowing(Figures 13,14)due to higher penetration rates.Social messaging lost the most time-spent share in 2019(-2.5%).News portals and long-form videos time-spent shares also declined 1.0%and 0.8%this year.As of the end of Octob