Chapter 1 Industry Overview
The rich media industry is a rapidly growing field that encompasses a wide variety of media formats from video, audio, animation, and interactive content to virtual and augmented reality. What these media forms have in common is that they all provide a richer and more engaging user experience than traditional text and static images.
In China, the rich media industry is developing particularly rapidly. With the continuous growth of China's economy and the continuous improvement of Internet infrastructure, more and more Chinese consumers have begun to access and use rich media content. Meanwhile, Chinese technology giants such as Alibaba, Tencent, and ByteDance are also actively promoting the development and application of rich media technology, thereby further promoting the development of the industry.
In addition, the Chinese government is also actively promoting the development of the rich media industry. For example, the government has introduced a series of policies and measures to encourage innovation and investment, and at the same time is strengthening the supervision of the industry to protect the rights and interests of consumers and ensure information security.
The rich media industry has huge development potential and market opportunities in China. However, it also faces challenges such as copyright protection, data security, and user privacy. Therefore, for participants in the rich media industry, how to effectively deal with these challenges while maintaining innovation and growth will be an important issue they need to face in the future.
Figure communication media industry chain structure
Source: Qianji Investment Bank iFinD
Business classification and characteristics of the rich media industry:
- Message Cloud: Provide users with SaaS and API interfaces through the PaaS platform, and use the UMC deployed on the enterprise side as a comprehensive access method to provide users with cross-platform text, short links, pictures, audio and other multimedia comprehensive messages, and has a browser Functions such as access, quick application, and applet can effectively realize event promotion, message delivery, and user interaction, improve the flexibility and vividness of messages, and make advertisements, messages, etc. more socially recognizable.
- Terminal Cloud: The core product aggregates mobile terminal manufacturers to provide users with an efficient full-link, low-cost, and multi-interface A2P portal. This platform is used to provide users with personalized business operations and a terminal-based enterprise display portal, thereby improving customer satisfaction. participation to increase corporate profitability.
- Video cloud: Utilize technologies in the fields of high-definition video, cloud VR, cloud AR, and metaverse, and rely on large-scale video processing and carrying capacity to provide solutions such as cloud conferences, video ring tones, cloud live broadcasts, and metaverses, and make full use of high-definition video , multi-node writing and other advantages, providing real-time and vivid video interactive services.
- IoT Cloud: Through the intelligent IoT platform, integrating IoT technology and assisting with big data, AI, cloud computing and other technologies, realizing multi-subject intelligent communication, equipment management and application components, fully aggregating industrial production, and promoting the intelligence of traditional industries Transformation.
As of January 4, 2023, there are 30 constituent stocks in iFinD's rich media sector, and there has been a slow upward trend in recent years. The total market value of the enterprise has fluctuated greatly over the past year, with a downward trend in the early stage, and a stable trend in the near future. As of January 4, 2023, the total market value of the company is 294.07016 billion yuan.
Figure Rich Media Index Constituent Stock Total Market Value, Constituent Stock Quantity Statistics
Source: Qianji Investment Bank iFinD
Chapter 2 Business Model and Technology Development
2.1 Industry Chain of Rich Media Industry
The industrial chain of rich media can be roughly divided into the following links:
- Content creation: This is the starting point of the industry chain, including the creation of various forms of rich media content, such as video, audio, animation, interactive content, etc. The main participants in this link include independent creators, production companies, advertising companies, etc.
- Technology development: This link mainly involves the R&D and application of rich media technology, including encoding, decoding, compression, transmission, display and other technologies. Key players include various tech companies and research institutions.
- Platform operation: This link mainly involves the release, promotion, distribution and operation of rich media content. Key players include various rich media platforms.
- Service provision: This link mainly involves the service provision of rich media content, including cloud storage, CDN acceleration, data analysis and other services. Key players include various cloud service providers and data service companies.
- User consumption: This is the end of the industry chain, including user consumption and interaction with rich media content. Users can consume rich media content through various devices (such as computers, mobile phones, TVs, etc.) and platforms.
In this industrial chain, each link has its unique value and function, and there is also close connection and interaction between each other. At the same time, due to the rapid development of rich media technology and market, this industry chain is also constantly evolving and optimizing.
2.2 Business model
With the rapid development of my country's communications and media industries, the continuous innovation of related technologies has promoted the continuous innovation of downstream enterprises, and new rich media solutions that rely on video and short links to interact with users have been widely used.
From the perspective of the industry chain as a whole, the first is the production and construction of equipment such as transmission equipment, access equipment, optical fiber cables, and servers. The cost of production and construction is relatively high, but it is mainly for some traditional communication companies and enterprises with advanced technologies. After completion, the major companies will make profits by producing related equipment and selling it to midstream companies.
The second is the research and development and construction of the midstream platform and technology. Since it mainly relies on the advanced technology mastered by the enterprise, it is in an advantageous position in terms of price. Enterprises rely on advanced technologies such as big data, cloud computing, and Yuan Universe to build transmission platforms such as the Internet of Things, real-time high-definition video, and rich media message clouds. Make a profit.
Downstream enterprises mainly provide users with customized and personalized services directly, by providing users with integrated rich media news such as videos and short links, by providing platform-based enterprise portals, by providing real-time high-definition video platforms, etc., by providing users with services and products to earn fees.
Factors affecting the profit of the rich media industry:
- The price of upstream infrastructure equipment. The price of upstream basic equipment may be affected by technology and cost. By purchasing equipment from upstream enterprises to build their own foundation, it will directly affect the cost burden of the enterprise, and it is relatively rigid.
- Midstream technology R&D investment. The smoothness of technology research and development affects the profitability of enterprises.
2.3 Technology Development
The technical development of rich media has the following aspects:
- Encoding and compression techniques: As the quality of video and audio content continues to increase, such as 4K, 8K video, and high-definition audio, the need for encoding and compression techniques is also increasing. New coding standards, such as H.265 and VP9, and the upcoming H.266/VVC, strive to improve compression efficiency while maintaining or improving content quality.
- Transmission technology: With the popularization of 5G and Wi-Fi 6, the transmission speed and efficiency of rich media content have been significantly improved. In addition, new transport protocols, such as QUIC and HTTP/3, are improving the transport performance of rich media content.
- Display technology: New display technologies, such as OLED and quantum dots, and higher refresh rates are improving the visual experience of rich media content. Additionally, virtual reality (VR) and augmented reality (AR) technologies are changing the way we consume media-rich content.
- Interactive technology: New interactive technologies, such as WebRTC and real-time streaming media, make it easier for users to participate in the creation and sharing of rich media content. In addition, AI and machine learning technologies are also helping to improve the personalization and intelligence of rich media content.
- Cloud computing and edge computing: Cloud computing makes the storage and processing of rich media content more convenient and efficient, while edge computing can further improve the transmission speed and response time of rich media content.
In general, technological developments in rich media are driving improvements in the quality and experience of rich media content, while also creating new ways to create and consume it.
Through the statistics of the number of patent applications of various enterprises in the domestic rich media industry, as of January 4, 2023, the top ten rich media companies are: ZTE, Samsung Medical, Strike, Shenzhou Taiyue, Jiaxun Feihong , Beixinyuan, Jiadu Technology, Starnet Ruijie, Monternet Technology, and Yinzhijie.
List the top ten rich media companies with domestic patents (as of January 4, 2023)
Source: Qianji Investment Bank iFinD
2.4 Policy Supervision
Industry authorities and management system
The National Development and Reform Commission, the State Internet Information Office, the Ministry of Industry and Information Technology and the State Administration of Press, Publication, Radio, Film and Television conduct macro-control on the industry.
related policy
The rich media industry is an important starting point for the transformation of the service industry in the new era and under the new situation. It is an important content to fully activate the consumption potential of the main players in the domestic market under the economic situation dominated by the domestic cycle. Since the 19th National Congress of the Communist Party of China, in order to promote the development of new industries such as rich media and promote the transformation, upgrading and high-quality development of the service industry, a series of policies have been issued from the central government to the local government, providing a good guarantee for related technological innovations.
Chapter 3 Industry Valuation, Pricing Mechanism and Global Leading Enterprises
3.1 Comprehensive financial analysis and valuation methods of the industry
For a comprehensive financial analysis of the rich media industry, we need to consider the following key factors:
- Revenue: The revenue of the rich media industry mainly comes from advertising, subscription fees, paid content and services, etc. The analysis of these sources of income can help us understand the industry's profit model and income structure.
- Cost: The cost of the rich media industry mainly includes content production costs, technology development costs, operating costs and marketing costs. The analysis of these costs can help us understand the industry's cost structure and profit margins.
- Assets and Liabilities: The assets of the rich media industry mainly include content assets, technical assets and brand assets, while liabilities mainly include debts and future payment obligations. Analysis of these assets and liabilities can help us understand the financial health of the industry.
- Cash flow: The cash flow of the rich media industry mainly comes from operating activities, investment activities and financing activities. The analysis of these cash flows can help us understand the industry's cash flow and financial stability.
- Financial ratios: By calculating and analyzing various financial ratios, such as gross profit margin, net profit margin, asset turnover ratio, debt ratio, etc., we can more comprehensively evaluate the financial performance and risks of the rich media industry.
It should be noted that due to the characteristics of the rich media industry, such as high innovation, rapid change and high competition, we also need to consider the impact of these factors when conducting financial analysis. In addition, we also need to pay attention to the latest developments and trends in the industry, as well as changes in policies and regulations, because these factors may have an impact on the financial performance of the industry.
Source: Qianji Investment Bank iFinD
Figure Index PE
Source: Qianji Investment Bank iFinD
Chart Index Market Performance
Source: Qianji Investment Bank iFinD
Rich media industry valuation methods can choose price-earnings ratio valuation method, PEG valuation method, price-to-book ratio valuation method, price-to-cash ratio, P/S market-to-sales ratio valuation method, EV enterprise value method, EV/Sales market-to-sales ratio Valuation method, RNAV revaluation net asset valuation method, EV/EBITDA valuation method, DDM valuation method, DCF discounted cash flow valuation method, dividend discount model, equity free cash flow discount model, no leverage freedom Discounted cash flow model, net asset value method, economic value added discount model, adjusted present value method, NAV net asset value valuation method, book value method, liquidation value method, cost replacement method, real option, LTV/CAC (Customer lifetime value/customer acquisition cost), P/GMV, P/C(customer), Metcalfe valuation model, PEV, etc.
Figure comparison of valuations of major listed companies
Source: Qianji Investment Bank iFinD
3.2 Industry Development and Driving Factors
Technological innovation: A number of technologies have been put into use, effectively driving up demand
Continuous technological innovation in the rich media industry is the basis for the survival of enterprises. At present, a number of products such as rich media news, high-definition video live broadcast, and intelligent IoT platform based on 5G, big data, cloud computing and other technologies have been launched to meet market demand in a timely manner and fully grasp the dividends of industrial development.
Technologies such as the new-generation rich media message platform and video cloud platform have already been put into operation. For example, Montnets Technology has launched and implemented standardized products such as M-BOSS integrated management cloud platform, Nova high-speed information platform, and UMC unified message center. At the same time, a new type of communication network based on communication network and integrated communication technology has been formed. With the further development of transmission and access equipment and the further development of the virtual ecology such as Metaverse, the downstream demand will be further released, and the industry will usher in a period of development opportunities.
The commercial era of 5G news has begun, and the industry continues to expand
With the development of the rich media industry, the scale of the enterprise SMS market has increased significantly. The three major operators are all seeking to generate revenue from services and have entered the stage of stock competition. At the same time, with the construction of 5G base stations and the increase in coverage, based on the development of 5G technology, the current 5G rich media business has entered a stage of rapid development.
driving factors
(1) Technological innovation
The core of the sustainable development of enterprises in the rich media industry lies in technology research and development and product innovation. Through large research and development investment and market investment, timely follow up the innovation of various technologies such as cloud technology and big data, and at the same time innovate for the future trend of the Internet of Things and metaverse, build a mobile Internet and basic communication network and platform, and fully promote Integrating the development of communication technology will lay a solid technical foundation for the multi-subject and multi-platform linkage rich media model in the later stage, and provide more vivid and interactive rich media services.
(2) Policy support
With the establishment of the country's economic development pattern based on internal circulation, it is important to improve the quality of service industry development and fully stimulate market demand. Through the development of rich media, integrated communication and other fields, provide users with more interactive, more diverse and vivid rich media services, optimize the production and office process of enterprises through technical products such as video cloud, and realize the intelligent level of enterprise production and operation through IoT cloud , which is of great significance to the development of rich media. The State Council, the National Development and Reform Commission, and the Ministry of Industry and Information Technology are gradually promulgating and improving relevant policies. At the same time, local governments combine their own scientific research endowments and advantages to actively promote the development and innovation of local enterprises. Licensing support and other aspects to give policy encouragement.
(3) Event-driven
Figure Rich Media Related Concept News Index
Source: Qianji Investment Bank iFinD
3.3 Industry risk analysis and risk management
Table common industry risk factors
Source: Asset Information Network Qianji Investment Bank
(1) R&D risk
Research and development of communication technology and platform technology is a long-term investment project, which will consume a lot of research and development costs and occupy a large number of technical personnel. At the same time, due to the uncertainty in technology research and development, there may be problems and risks in the research and development process, and it is difficult to effectively evaluate the research and development results. In the process of research and development, enterprises have problems such as technical route errors and technical difficulties that are difficult to break through, which may cause large potential research and development costs, resulting in a significant increase in corporate research and development investment and costs.
(2) Information and data security risks
Because rich media products rely heavily on Internet technology and platforms, a large amount of information is uploaded to the platform during operation, which relies too much on the stability and security of the platform, and many businesses such as rich media advertising rely on big data, etc. Due to issues such as platform stability, user data and information are leaked, causing security risks.
(3) Risk of capacity release
At present, due to the rapid development and commercial application of 5G and other related technologies, facing the market's demand for updating traditional models, a large number of companies are engaged in business related to the rich media industry chain, and products such as platform construction and software services are emerging in an endless stream, which will bring about a balance between market supply and demand. big impact. A large number of enterprise-related services have been launched, impacting the rich media market.
3.4 Competition Analysis
After long-term R&D and development in the fields of communication technology and media, at present, China has formed some leading advantages in technology in the rich media industry, and at the same time formed a whole industry from upstream equipment production to midstream platform construction and technology research and development to downstream specific product services Chain, give full play to its own advantages.
In the international market, communication equipment manufacturing is mainly composed of companies such as Ericsson and Nokia, and the network communication field is composed of companies such as Vonage and LogMeln. Overall, Chinese companies still occupy an important share in the international market.
2022Q4 Rich Media Sector Fluctuations
In the fourth quarter of 2022, communication equipment and communication services in the rich media related sectors will all experience fluctuations, and the rich media index will also fluctuate as a whole.
The industry allocation ratio of institutional position holders
Source: Qianji Investment Bank iFinD
ZTE market review and financial status
Figure PE/PB Bands
Source: Qianji Investment Bank iFinD
Chart stage market data
Source: Qianji Investment Bank iFinD
Figure block transaction data
Source: Qianji Investment Bank iFinD
Figure Margin Data
Source: Qianji Investment Bank iFinD
3.5 Important participating enterprises
Chinese companies mainly include ZTE [000063.SZ], Samsung Medical [601567.SH], Xingwang Ruijie [002396.SZ], Montnets Technology [002123.SZ], ST Guoan [000839.SZ], Jiadu Technology [600728.SH] etc.
Major global non-Chinese companies include Ericsson [ERIC.US], Nokia [NOK.US], Vonage [VG.US], LogMeln [LOGM.US] and other enterprises.
Chapter 4 Future Outlook
The future of the rich media industry holds great promise. Here are some possible trends:
- Higher-quality content: As technology develops, we can expect higher-quality rich media content, including higher-resolution video, clearer audio, and more realistic animations. Additionally, new forms of content, such as 360-degree video and 3D audio, may also become more common.
- Richer interactive experience: The interactivity of rich media content is one of its core strengths, and we can expect this interactive experience to become richer in the future. For example, users may be able to participate more directly in the creation and sharing of content, or experience rich media content more deeply through virtual reality and augmented reality technology.
- Smarter personalized services: With the development of artificial intelligence and big data technologies, rich media platforms may provide smarter personalized services. For example, the platform may recommend content that is more in line with users' interests, or provide more convenient search and navigation functions based on the user's behavior and preferences.
- Wider application areas: The application areas of rich media content may be further expanded. In addition to entertainment and social networking, rich media content may also play a greater role in education, medical, business and other fields.
- Stricter supervision: As the influence of rich media content continues to grow, the government may strengthen the supervision of the rich media industry to protect consumers' rights and ensure information security. This may bring some challenges to the development of the industry, but it may also push the industry towards a healthier and more sustainable direction.
Generally speaking, the future development of the rich media industry is full of opportunities and challenges, and we have reason to expect that it will bring more innovation and value.
Cover Photo by Dollar Gill on Unsplash