On the evening of March 14, Zhihu (NYSE: ZH) announced its unaudited financial reports for the fourth quarter and full year of 2021. According to the financial report, Zhihu’s total revenue in 2021 will reach 2.959 billion yuan (RMB, the same below), a year-on-year increase of 118.9%. Among them, the fourth-quarter revenue will be 1.019 billion yuan, a year-on-year increase of 96.1%. In the fourth quarter of 2021, Zhihu’s average monthly active users (MAU) was 103.3 million, a year-on-year increase of 36.4%, and the average monthly paying members was 6.1 million, a year-on-year increase of 102%.
From the perspective of revenue structure, in Q4 2021, Zhihu advertising, paid membership, business content solutions, e-commerce and other business revenue will be 377.8 million yuan (59.3 million US dollars), 208.8 million people (32.8 million US dollars), 367.3 million yuan ($57.6 million) and 65.4 million yuan, accounting for 37%, 20.4%, 36%, and 6.6% of total revenue, respectively.
Despite the growth in revenue, Zhihu still has not been able to get out of the predicament of losses. According to the financial report, Zhihu will have a net loss of 1.2989 billion yuan ($203.8 million) in 2021 and 517.6 million yuan in 2020, a year-on-year increase of 151%. Net loss for the fourth quarter of 2021 was RMB 383.3 million ($60.1 million), compared with RMB 90.1 million in the same period in 2020, representing a year-on-year increase of 325%.
Zhihu’s cost of revenue in 2021 is 1.4054 billion yuan (US$220.5 million), an increase of 136.5% from 594 million yuan in the same period in 2020. For the increase in costs, Zhihu’s official explanation is the increase in advertising service execution costs and content-related costs. , and the rapid growth in user traffic in 2021 will also lead to increased cloud services and bandwidth costs.
It is worth mentioning that the market has been unfazed by the initial Internet strategy of “burning money for scale, and losing money for traffic”. After the earnings report was released, the US stock market opened soon. The decline also expanded to 30% at one point. As of the close, Zhihu reported $1.53 per share, with a total market value of $859 million.
In the earnings conference call, Zhihu founder and CEO Zhou Yuan said that the annual revenue growth in 2022 is expected to be 60-65%. As for when Zhihu will be profitable, Zhou Yuan has no answer.
Business Content Solutions Business has a ceiling
Undoubtedly, business content solutions have become Zhihu’s fastest-growing business, and the proportion of this business in annual revenue has further increased from 10% in 2020 to 33% in 2021.
This part of the income mainly comes from the service fee of Zhihu’s “Zhi +” solution. It is understood that Zhihu’s “Zhi +” platform, which was officially launched in May 2020, is mainly positioned to provide online marketing solutions for merchants and brands. There are mainly two ways of knowing + mutual selection and knowing + self-selection. Among them, in the mutual selection mode, the platform has stronger control. The whole service includes product budget, mutual selection platform, creators receiving orders, knowledge + mutual promotion and other links. The platform provides a bridge for brands and content creators to cooperate, and provides Corresponding traffic support exposure. Know + self-selection has a centralized function, and connects through the mode of brand distribution tasks and individual creators’ self-selected orders.
However, the essence of this business is still to sell traffic. From this perspective, there is no essential difference between this business and the advertising business, which may hurt the user experience in the long run. An intuitive experience is that today’s Zhihu answer area is full of advertisements.
This has also led to a lower and lower ceiling for this business. Although the year-on-year growth of Q4 in 2021 is as high as 617.2%, from a month-on-month perspective, the growth of business content solutions in Q3 and Q4 in 2021 will be 34.2% and 32% respectively. Its growth rate is declining.
In addition, while Zhihu is being aggressively commercialized, only a small number of content creators on the platform can enjoy dividends.
At the 10th anniversary conference of Zhihu, Zhou Yuan once revealed that Zhihu already has 100 creators with a monthly income of more than 100,000 yuan; there are 1,000 creators with a monthly income of more than 10,000 yuan. The Douyin platform has more than 22 million creators and has achieved more than 41.7 billion yuan in revenue. The gap is not the same.
Even compared with station B, which is also a community, during the same period, more than 1.3 million UP masters at station B earned income through creation at station B, while the number officially disclosed by Zhihu is pitiful. more than 15,000 content creators earn revenue from commercial content solutions.”
In addition, until May 2021, Zhihu will not officially launch the creator business service platform “Cheese”. For comparison, Douyin’s massive engine system was launched in 2019, and the Fireworks platform at Station B was launched in 2020.
Not allowing creators to profit from it means that their content base is at risk. Knowing the big V “MasterPa” once wrote that half of the respondents who answered the top ten answers in the must-see order can no longer be counted as active creators on Zhihu, which shows that their users are seriously lost. At the same time, the big V also said, “If the growth of the daily activity of the community does not necessarily imply an improvement in user experience, then in some cases this growth is not a good thing. This will make the operation of the community more disregarded. The importance of each of those users.”
It is worth mentioning that these big V may not leave for profit, but it is also true that Zhihu cannot nourish and retain high-quality users.
Is betting on video being the new growth curve?
From 2016 to 2018, Zhihu was betting on knowledge payment, and successively launched products such as “Worth”, “Zhihu Live” and “Zhihu University”. On this basis, in March 2019, Zhihu put knowledge payment section Upgrade and launch a new membership system “Salt Select Member”.
However, with the changes in the general environment, knowledge payment is ridiculed as paying IQ tax, which is no longer a promising business story. From a horizontal comparison, Zhihu’s membership system is not outstanding. According to the financial report, Zhihu paid membership income in 2021 will be 668 million yuan, accounting for 22.5% of total revenue, a year-on-year increase of 108.6%. In 2020, Zhihu paid membership income will be 320 million yuan, a year-on-year increase of 264%, accounting for 23.7% of total revenue %. This shows that at the same time of rapid growth, Zhihu’s paid membership business is declining in terms of revenue contribution and growth rate.
The lack of stamina of membership income is related to the decline in the quality of its community content. If you investigate the reasons, you will return to the problems that Zhihu has repeatedly mentioned in the past: user loss, poor community atmosphere, etc.
In this context, Zhihu will restart its video strategy in 2020. In the prospectus, Zhihu regards video as one of the important strategies in the future, and Zhou Yuan also said that he will continue to carry out the video strategy to further promote the growth of the content community.
The reason why it is said to be a restart is because users could upload videos as early as 2017. In June of that year, Zhihu published a question titled “If you could create videos on Zhihu, what would you expect?”. It also launched a video section in 2018, but it was offline due to user consumption habits.
It was not until October 2020 that Zhihu took the video strategy to a new height, launched a video section, and announced that it would launch an intense plan including 500 million cash incentives, 10 billion traffic support video tools, signing opportunities, etc. .
It seems that Zhihu is trying to find a new growth curve through video. But Zhihu’s videos are not pleasing. As a content community started with pictures and texts, it is not easy to cultivate users’ habit of watching videos to get answers.
Under the question of how to look at the increasing number of videos on the recommendation page of Zhihu, the first answer is: “I don’t see it, it’s annoying, I hope to block such videos. Zhihu seems to have made a mistake in its positioning and does not promote it. The advantages of your own high-quality text, but you want to use inferior videos to grab users from other websites that specialize in videos?” In addition, users troubled by videos also asked these questions – help: How to block the videos on Zhihu? And how to set the answer without watching Zhihu video?
In addition, in terms of commercialization, in the face of strong competitors such as Douyin, Kuaishou, and Station B, it is not easy for Zhihu to make videos to break through.
What is the contribution of video to Zhihu’s commercialization? In its financial report, there is only one sentence related to video, Zhihu said, “Our video strategy has proved to be effective, and the diversity of Zhihu’s content library has been improved. It has reached a new level.” How effective, Zhihu did not provide more data to support.Return to Sohu, see more