The troubles of Yeah1 are far from over as in the other half of 2019 the company expects to lose hundreds of millions of US dollars in capitalisation and has set nearly VND100 billion ($4.34 million) aside in provisions.
|Yeah1 is looking at a challenging second half in 2019 |
More than three months after selling US-based ScaleLab, Yeah1 most recently announced to set a provision of $3.6 million for receivables related to the capital transfer at the company. This decision has raised the total value of Yeah1’s provisions to VND91.4 billion ($3.97 million), including VND11.4 billion ($495,650) for Thailand-based SpringMe, in which Yeah1 owns 17 per cent of the shares.
In addition, Yeah1's total capitalisation has taken a dive since YouTube’s announcement of terminating their partnership in late March. Since then Yeah1 has been running into a series of misfortunes, with its stock closing the June 19 trading session at VND88,000 ($3.8), down 64 per cent against the time before YouTube’s announcement. This has led to a fall of nearly VND5 trillion ($217.4 million) in capitalisation.
At the latest shareholders' meeting, Yeah1’s chairman Nguyen Anh Nhuong Tong said that the ongoing upheavals may take Yeah1 at least six months to recover from. “Yeah1 uploads about 400 hours of video content a day, which equals all other Vietnamese channels combined. Fast growth brings huge risks – and the problem with YouTube is a valuable lesson for us,” Tong added.
Recognising the difficulties, the firm only set a 19 per cent revenue target for 2019, a marked reduction against previous years’ 60 per cent. However, it is estimated that Yeah1 may suffer a huge loss in revenue in 2019 due to losing the income from the global video platform, which accounted for 55.6 and 88.6 per cents of Yeah1’s revenue and profits in 2018.
The company's development plan is also considered to somewhat inefficient by local securities company Rong Viet. Accordingly, Tong revealed that Yeah1 will focus on developing its own platform and its own social network. In addition, Yeah1 will follow the global mergers and acquisitions trend among content makers and content distributors. In the short term, Yeah1 will provide video content for other YouTube channels in exchange for 50-60 per cent of the advertising revenue.
Assessing the plan, Rong Viet stated that Yeah1’s own content is not as impressive as the content for which it purchased the broadcasting rights: “Developing their own video contents will require huge resources and a long time. In short, its potential for growth on YouTube is still large, but its plan for growth is unclear.”
Yeah1 is working with France-based Something Big to produce video content for children. The firm is also partnering up with US-based Viacom to exclusively distribute Nickelodeon’s cartoon videos on YouTube and Facebook in Vietnam and Thailand.
In the middle of March, YouTube accused the multi-channel network SpringMe, that some of its channels violated YouTube’s policies. This led to the global video platform stopping work with all other Yeah1’s firms running YouTube AdSense like Yeah1 Pte., Ltd. and ScaleLab LLC.