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Subscription SaaS: Mainly copyright protection and metering platform.
Copyright protection is easier to understand. Help customers to find illegal
use of the broadcast and feedback to the copyright owner. Metering is a
technical means to measure the promotion effect of advertising. Subscription
SaaS is a fixed service fee. Financial reports are reflected in contract
liabilities. Customers are mainly Disney, Warner, Universal film and
television companies with a large amount of high-quality copyrighted
content. These companies have a fixed budget each year.
In the era of content flow, content copyright and copyright protection are
both moats. Vobile Group, Direct To Consumer customers are Netflix, YouTube,
Disney+ and world-renowned film companies. The gross profit is as high as
80%.
Transactional SaaS: The difference from the subscription type
is that this belongs to the income segment. That is to assist the
copyright owner to distribute the video(Content monetization), then divide
a certain percentage of the service fee from the customer’s income.
The base of the percentage depends on the monetization form of the video
content. So there are two main types of transactions:
1) If the video content is monetized in the form of advertising revenue,
then the company will allocate a certain percentage of the advertising
revenue generated by the client’s content.
2) If it is C-end consumer on-demand payment, its divided from the user’s
payment.
This will spawn new businesses, that is to help customers realize the
video content better. For example, help customers manage platform
accounts, make the content better exposed, indirectly increase the video’s
advertising revenue.
The process of monetizing shares on YouTube is as follows:
The six major movies and TV shows, Disney Warner, etc, all use Vobile to
protect their films. It is becoming more and more difficult for us to find pirated movies
because Vobile has brought down these websites.
In the past, because Disney didn’t have Disney+, it didn’t really care
about piracy. After all, the movies were sold to theatres, but now
it’s different. They have Disney+ and they need to recruit new members
constantly. This requires Vobile to be very hardworking in suppressing
piracy. When users cannot find pirated content, they can only go to Disney+ to
watch.
With the development of DTC, the producers will also increase their
crackdown on piracy. A major catalyst for Vobile.
In terms of the short form video segment, It is possible to win the domestic business of Douyin and Kuaishou in the future. There is a lot of room for growth. At present, the market value is only 1.5 billion USD.
The global online video entertainment market is estimated to increase
from USD 54 billion in 2018 to USD 87 billion in 2021. Vobile Group is
expected to benefit from the growth of the global online video market in
the future. Together with the acquisition of Channel ID and Rights ID last
year, the Group can become a leading YouTube and Facebook (FB.US)
content monetization platform in real time, enabling the Group to
benefit from the global online video market growth.
The popularization of the DTC platform is one of the growth catalysts of
the group. The content protection SaaS service industry has also
benefited from the reform of the film and television DTC (Direct to
Consumer) platform. In the past, more and more consumers turned to
online entertainment platforms, making Netflix (NFLX.US) popular and
increasing demand for online content protection services. However,
several film and television production companies have recently announced
the launch of their self-built DTC platform, which has created a need
for additional content protection.
In addition, Vobile Group has many well-known customer bases, many film
companies, TV network companies and content owners in the world. In
addition, the Group is the only independent copyright management
provider that cooperates with YouTube, Facebook, Instagram and
SoundCloud and meets their requirements. The group's large customer base
and proprietary video AI technology coupled with their aggressive
M&A will help future business growth.
How do I view the authenticity of Vobile’s business? I think Vobile’s business should be real. The reasons are as follows:
1) Four major audits, the four major audits are relatively
authoritative, the authenticity of the business should be verified
during the audit.
2) Vobile is an Emmy Technology and Engineering Award recipent. This Emmy award is a
serious award given to them due to support by actual businesses.
3) Disney not only chooses Vobile as a supplier and be its customer.
Disney also invested in Vobile as a shareholder. I believe that if Vobile as
a supplier does not satisfy Disney. Disney will not be its shareholder
Vobile has a four years topline CAGR of close to 30%. That is assuming
its 2H2021 topline will be the same as its 1H which is highly unlikely
looking at its current trajectory growth. Because of the recent interest
rate scare, its share price has tanked 48% from the top at 48.45 to the
current 25.55. Assuming the same linear growth trajectory, current price
corresponds to 26 times PS in 2020 and about 10-15 times PS in 2021.
The business model of SaaS is better than Enterprise software:
Assume that the implementation cost and license cost of a software is
1million. The annual maintenance cost is 200,000. Then the
software’s 5-year revenue is 1 million+ 200k x 4 = 1.8 million in total.
1 million in the first year(Software install charge), 800,000 in the
next four years(Not paying generally does not affect the use so it might
even be optional)
Assuming that the subscription fee for the first year of a SaaS model is
600,000. Even if we do not consider additional purchases, 5 years of
income should be 600,000 x 5 which is 3 million in total(Can only be
used if payment is made so these are mandatory payments)
It can be clearly seen from the above analysis, the SaaS model is
significantly better than the old Enterprise software model. This is also why P/S is used for
SaaS valuation and PE for Enterprise software valuation.
Full disclosure, I have vested interest in this stock and I'm currently
up 6.7%
Snap shot of my portfolio performance as of today: Total profit for
2021: S$52,794.21
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