Video site: The end of the "burning" era

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In the financial crisis, whether it is a business, or individuals will experience a sense of loneliness, no one can help you, except yourself.

China has been affected by the turmoil in the Western financial crisis and may have just begun.

Since last year, the deteriorating international economic environment can not be improved in the short term, leading to exports, investment, consumption, such as 3 of the weapons to stimulate national economic growth, is one by one "virus" attack.

To ensure that cash flow becomes a top priority, cutting operational costs becomes an important means of implementation. More access to finance has expanded the number of small and medium-sized enterprises recruiting and relocating to new office buildings to start figuring out where to move their offices and reduce operating costs in the most direct and rapid manner. For example, TCL computers, layoffs, will also be the national headquarters from Shenzhen to TCL headquarters location Huizhou, to save operating costs.

In a letter circulated on the internet to CEOs, Sequoia wrote: "It is completely impossible to sell a company that has no profitability at all to Google for more than 1.6 billion dollars, as we did, and this era is over ..."

The first wave of internet companies that had been hit by capital was a video site that burned money and lacked a profit model. such as Yau Network, PPLive, six rooms have publicly announced the decision to lay off staff.

Expand in contraction?

The six-room video site decided to cut spending by cutting two-thirds of its staff. The size of the six-room 120-person team in its heyday could shrink to 10. It is understood that the current six rooms have been cut off the staff throughout the research and development, marketing, sales and many other departments, the new business has been canceled, the remaining personnel next goal is to maintain the main station.

Six rooms have already done various attempts to cut income and expenditure, such as the wedding video for users to obtain cash, is also entering a phased moratorium.

"Previously expectations were too high for the industry and now it is time to lower expectations." "Six room president Liu that after layoffs and adjustments, from next June onwards, six rooms will receive stable positive cash flow."

In fact, the situation may not be optimistic. Because the video site entry threshold is not high, in the past year has more than 300 video sites flooded. Industry insiders said: "Vicious competition in the industry is only one side, and the portal from the Olympic Games began to increase the input of the video field, and got a good flow results, this is the video industry impacted by the larger on the other hand. "At the same time, the entry of major portal sites also exacerbated the competition in the video field."

Companies that have just been funded may be more fortunate to have the opportunity to "expand in contraction". such as Youku, cool 6 or Tudou.

Since 2007 酷6网 won the DFJ, Germany and Baidu jointly invested 10 million U.S. dollars, 2008 UMC Capital, soft silver second round of financing, its CEO Shanyou began to plan to 300G bandwidth to 400G, recruit high-quality talent and technology, with long-term low-cost strategy to help customers winter.

From the current network video development, whether it is peer-to-peer (point-to-point transmission) site, or UGC (user upload video content) site, their competition is increasingly fierce, has produced a clear oligarchy. Youku CEO Koo that the industry will speed up the pace of Self-renewal as the capital winter approaches.

The searing capital left in the video industry has not been swiftly dispersed in the crisis. New competitors are cutting into the market in another way. November 26, Storm audio and video announced that its third round of financing 15 million dollars has been fully accounted for.

It is reported that the storm audio and video investors (Jingwei China, IDG and cast) now "shot" the original intention, is not trying to catch the last bus in the video investment boom, but the storm is a different mode of presentation: potatoes, Youku and other video sites from the site, in the form of web playback video services , and the storm from the video client, in the form of software to provide video services.

However, "financing success only represents the success and future expectations of the storm, but no one can say when the financial crisis will pass." In the financial crisis, whether it is a business, or individuals will experience a sense of loneliness, the enterprise has no money, the individual unemployed will find that no one can help you, except yourself. Storm CEO Fengxin admits.

"Blood" is blocked by import and export

For many companies, survival is more important than anything else. But investors, advertisers and so on, but have different views.

"There are no profitable sites for two or three years, and it is almost no longer possible to get financing. Said Souvit, managing director of Han Investment.

Mark Heesen, NVCA chairman of the American Venture Capital Association, is sympathetic to the difficulty of financing start-ups, and in the face of the challenge of shuffling the investment company, "oligopoly is not a good thing for US capital markets." If there are only a handful of investment companies, it will make it harder for startups to trade successfully. "As venture capital inflows are curbed, advertising revenue as a major source of income is shrinking," he said.

Analysys International analyst Li pointed out that the 2007 domestic network advertising scale of only 13.1 billion yuan, accounting for the entire advertising industry 10.6%, only with the United States in 2000 to 2002 compared to the scale of development. And the proportion of TV advertising in China is larger, advertisers if the need to reduce spending "winter", the first to reduce the cost of television advertising and print advertising, because advertisers spend little online advertising.

Su, general manager of the Internet advertising agency, Yang Lian, said traditional media advertising has been hit harder, especially next year.

According to the "October 2008 China video website brand Public Relations Communication Research Monthly Report," the comprehensive consideration of brand exposure, media relations index, Brand News report Total index analysis, October 2008, video site brand comprehensive communication Force ranking, YouTube still occupies half of the, and Youku , potatoes and cool 6 only have a slight difference and the competition is fierce.

The report says advertisers have tried to advertise on video sites for 2008 years, while many of the big brands have included video sites in their fixed-launch lists in 2009. Whether the winter, will become the key to survival.

The expansion of the Internet industry, represented by video companies, lights up the red light, which is the epitome of frost in the industry.

Microsoft, Cisco and PC makers may lose 4.3 billion of billions of dollars in orders next year because the credit crunch is forcing financial firms to cut spending to its lowest level since 2000, according to Larry Tabb, founder of Tabb Group, the US consulting firm.

How long is the winter?

"The fatigue of capital markets is the most important effect on the time of the IPO, such as the fact that there are 5 companies to be listed by the end of this year, and it is now postponed until next year," said one US venture capital partner. ”

The US venture Capital Association says the only goal of VC technology companies is to push small technology companies to go public or to be bought, and the current turmoil in the financial markets is making it harder to list, at least in the next 6 months, for small technology companies.

"For companies that have a stable and reasonable customer base and hold large amounts of cash, this is an excellent time to buy," said Roger Kay, analyst at Endpoint Technologies Associates, a market-analysis agency. The ' financial turmoil ' is certainly a disaster for startups with poor conditions and cash-flow problems. ”

In the aftermath of the terrorist attacks in the United States, Cisco used the economy to slow down, acquiring a number of small companies and maintaining a fast-growing impressive performance. Last year, Cisco and Intel acquired 15 companies, but only 8 were bought this year. Analysts believe that the main reason is the stock market downturn, resulting in a lack of acquisition funds. "Winter" has become a popular vocabulary for entrepreneurs and entrepreneurs.

"Our basic judgment on the global economy is that there will be big problems in the economy, and my view is that the overall economic situation is not optimistic and many domestic companies will face great challenges in surviving," Mr. Ma said in an open letter to Alibaba Group employees July 24. Next, the winter will be longer than everyone imagined! Colder! More complicated! ”

Rest in peace, Golden age.

Sequoia Capital held the CEO plenary meeting of all its investment companies in its Silicon Valley headquarters office on October 9, with slides titled: "Rest: The Golden Age." ”

At the meeting, the main partners of the Red shirt capital were pessimistic about the current situation, asking their companies to save money and cut costs, while warning the start-up companies they invested to invest in their reserves and maximize their cash income. For example, the company will not hire expensive office buildings, not extravagance and waste, to hire some young and intelligent immigrants, they have can-do and low salaries, the dissolution of Fat sales team, control base salary, to examine the market, to fight against competitors, to save cash and so on.