Not even two months after its merger with spac firm Vertex Technology Acquisition Corp (VTAC), live-streaming platform operator 17Live announced on Jan 26 the resignation of its CEO Alex Lien. The company’s co-founder Joseph Phua then swiftly took charge, replacing Lien to manage 17Live’s day-to-day business.
On the same day of the release of its 1HFY2024 ended June results, 17Live announced yet another shuffle — this time, Jiang Honghui, the former CEO and executive director of VTAC, has been appointed as the executive director and CEO of 17Live, effective Aug 13.
In an interview with The Edge Singapore, Phua explains that the board of directors “did not have a lot of time to react” when Lien handed over his resignation. As the only board member with direct experience in running the company, Phua was the natural choice for a replacement to lead the company towards several targets — demonstrating profitability, showing positive growth trends and expanding its new businesses.
“We had to show profitability to the public markets given it’s the first time that we are announcing our first-half results [post-IPO]. Additionally, we have to display trending business growth and lastly we have to expand our new business lines, especially with regards to virtual live-streamers (V-Livers).
“Originally, I thought it would take longer for us to hit these targets. Come March and April, however, our performance seemed to align with these goals, so I updated the board accordingly and started talking about the possibility of [Jiang] taking over the leadership role,” says Phua.
He notes that he was working very closely with Jiang over the past two years, as the latter had been instrumental in the company’s Japanese expansion. The board, already familiar with Jiang from the despac process, agreed it was the right time for him to lead the company for the next phase, allowing Phua to return to providing strategic guidance.
See also: Interra Resources granted 12-month extension to meet SGX watch-list exit requirements
“I think the stars have aligned — perfect timing, perfect numbers and perfect candidate to lead the company for the next two to three years at least,” says Phua.
When asked whether he thinks shareholders would accept the shift with open arms, Phua points out that most of the company’s shareholders have been with it since before the despac transaction took place. The company also has minimal holdings from public shareholders. Based on the conversations the company has had since the announcement, Phua believes that shareholders are understanding and supportive of the decision made.
“But of course, I think the key thing to note here is that unlike the previous transition, I continue working with [Jiang] very closely, just not on a day-to-day basis. I remain the chair of the board, and I continue to act as a consultant to [Jiang] on various initiatives we have laid out,” he adds.
See also: First Sponsor Group ups stake in Dutch property firm NSI for $26.6 mil
Back in the black
Since its listing on the SGX, 17Live has become profitable — the company has reversed into earnings of US$1.9 million ($2.5 million), an increase of US$120.1 million from the US$118.2 million loss in the previous corresponding period due to the absence of a revaluation loss of US$128 million on financial liabilities in 1HFY2023. In 1HFY2024, there was a US$705,000 revaluation gain on financial liabilities. Notably, free cash flow remains negative as does operating cash flow.
On a q-o-q basis, 17Live reported an operating income of US$3.5 million for 2QFY2024, compared to an operating loss of US$2.1 million in the preceding quarter.
Phua highlights that the company has undertaken several operational changes this year. For one, 17Live has sharpened its focus on its core business units (BUs), which are live-streaming in Japan, Taiwan and Hong Kong, its V-Liver BU, as well as its live-commerce BU while deprioritising non-core units. This allowed the company to cut costs and reduce burn, which is now being reflected in its profits.
The company has also optimised its cost structure — particularly content costs — by encouraging effective content providers and phasing out less efficient ones. These changes will gradually impact its P&L over the next six to 12 months, with benefits already starting to appear in the second quarter, says Phua. “Additionally, we optimised our tech stack, including server and data costs, which will further improve our financials in the coming quarters.”
17Live’s operating revenue, however, was down 33% y-o-y primarily from liver live-streaming, which was down 37% y-o-y, as well as unfavourable foreign currency movement. Its revenue from V-Liver live-streaming, however, more than tripled to US$4.8 million 1HFY2024 from US$1.5 million in 1HFY2023.
For the uninitiated, V-Livers are live-streamers who choose to appear on screen as animated avatars instead of their images. The human actors behind the avatars have their movements, sounds and expressions reflected via motion capture technology or software. In contrast, liver live-streamers appear on-screen as themselves.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Forward strategy
To this end, the company has unveiled the “17Live Forward Strategy”, a strategic framework anchored on three pivotal pillars. The first pillar involves technologically enhancing its platform as well as providing a robust community of streamers; the second pillar involves diversifying its revenue streams; while the last pillar involves forging strategic and business partnerships to build a sustainable live-streaming ecosystem across Asia.
On the first pillar, Jiang says the company’s priority is to strengthen, stabilise and grow its core business — liver live-streaming, which remains its primary revenue and profit driver. As the company has identified that retaining and acquiring the right streamers and users is crucial, it has focused on providing operational, technological and product improvements geared towards supporting these live-streamers and user retention.
On the second pillar, the company is seeking to tap into the potential of live commerce. The company had recently launched cross-border live commerce from Japan into Taiwan, leveraging its strong local vendor network in Japan and its key opinion leader (KOL) base in Taiwan through its platform OrderPally.
Encouraged by its V-Liver revenue growth as well as the untapped growth potential, the company is seeking to further fuel its V-Liver business. While it may not be a market familiar to the average Singaporean, the virtual live-streaming market is huge and growing in North Asia, with brands like fashion retailer Uniqlo, electronics giant Razer and Octopus Hong Kong collaborating with the streamers for their ad campaigns. According to a report released by Yano Research Institute last year, the market is expected to generate JPY80 billion ($716 million) for FY2023, up 153.8% y-o-y.
Currently, the V-Liver space has players that either do a pure intellectual property (IP) play or a pure platform play. Japan-listed companies Anycolor and Cover Corp, for instance, only manage, produce and promote their own talents and IPs using YouTube as the streaming platform, while companies like Iriam and Reality only provide the platform for the V-Livers to stream. 17Live is in a unique position where it is able to do both, Jiang highlights.
The company already has two proprietary IPs — GanGun Girls and Bushilive — as well as other “smaller” IPs it is incubating on the platform. The company may grow this base by acquiring the IPs of V-Livers that are doing well on the 17Live platform or looking at acquiring available external IPs.
Enhancing shareholder value
The last pillar touches on strategic and business partnerships. On this front, Jiang says the company would have “something to announce” in the second half of the year relating to a merger and acquisition (M&A), should everything go as planned.
“We’re talking about really how we can work with our partners to expand into geographies or business sectors that we weren’t in yet, and also to strengthen the current core market proposition that we have in Japan and Taiwan. This is something we have been working on for the past seven months,” he explains.
Despite being listed on the Singapore Exchange S68 (SGX), 17Live’s footprint in Southeast Asia has yet to be strongly established. Phua says the company has recognised that it will be challenging to achieve its goals alone — especially considering the size of its Singapore office when compared to its offices in its key markets. Therefore, the company reckons that partnerships are the way to go.
Thus far, 17Live has formed two key partnerships in the region. One is with venture capital firm AppWorks through its Southeast Asia fund, where 17Live seeks to co-invest in companies within the content, media and entertainment industry. The other one is with fellow SGX-listco mm2 Asia 1B0 to also co-invest in good projects, aside from looking at opportunities to collaborate for live-streaming-related content.
In conjunction with the newly unveiled growth strategy, 17Live is also exploring strategic initiatives to drive shareholder value through innovative and forward-thinking capital market initiatives. These initiatives include but are not limited to partnering with and reviewing strategic options from various financial institutions to develop a feasible and sustainable capital market strategy to drive long-term shareholder value.
Aside from receiving insights from its existing shareholders, the company is also engaging professionals to help it think about how it can strategically position so that shareholders can gain more, Phua says.
“For the past year, we have been focusing on improving our fundamentals. Now that it is where we want it to be, it is a good time to reinvest in the business as well as look at the tools at our disposal in terms of maximising shareholder value,” he adds.
