migme (ASX:MIG) reported Monthly Active Users of 33 million at the end of December, up by more than 2m than expected. Part of the increase was due to a campaign with an Indonesian soap opera that delivered over 5m new users. The Company is restructuring its business, reducing costs and streamlining apps as it looks to ramp up the roll-out in 2017. The Company believes that it is on track to be cashflow positive in 2017.
Highlights: December 2016 Quarter (4Q2016)
- Monthly active users (MAUs)* grew to over 33m, more than 2m than budgeted and up from an revised 26m at the end of September**.
- Early strong results working with MNC Group’s Rajawali Citra Televisi Indonesia (RCTI) and Anak Jalanan, one of Indonesia’s most popular soap operas reached an estimated audience of over 20m viewers and converted to over 5m MAUs for migme during the quarter.
- Progressively refinanced the convertible note with the balance to be completed in 1Q2017.
- The Company has focused on operations leading with reduction in costs and a revised ecommerce model. In addition strong concentration on MAUs and operational and platform quality with a view of connecting the elements of migme’s audience to consistently converting traffic to sales.
- Grew the engaged audience of artists to nearly 400. Over 40 consistently engaged and monetizing artists with the highest monetizing artist at nearly $2,500 per month. Focus is now on replicating the top 40 monetising artists to a few hundred this quarter, and then growing to several thousand in Q2 2017.
- Launched Android games; Boat Rumble and Highscore Bingo. Results expected in 1H 2017.
- Started with Mobile Only Accelerator (MOX) and platform, with further improvements to user experience by March 2017.
Overview
migme is pleased to announce its fourth quarter 2016 results. The vision for migme remains substantially unchanged: to build and monetise a social entertainment platform for the next wave of Internet users coming online across South and South East Asia.
In spite of distractions associated with refinancing the existing convertible notes, the Company made substantial progress in quality of operations and being able to connect the dots between a corporate opportunity and financial results for the Company, and moving towards a lower operating cost profile. Results can be seen in better than expected MAU results, rising consistency between artists and audience engagement and monetization, and gaming results. Subject to market risks and business conditions, consistency and scale of each of the elements will be key to delivering a cashflow positive result in 2017.
A detailed overview of operations is as follows.
Audience development and engagement
The Company made three significant advances during the period:
(1) consolidated and simplified its audience strategy around 3 key assets (migme, alivenotdead and hipwee) and grew that to a higher than expected 33m MAUs,
(2) realized over 5m MAUs as a result of working with a full format programme Anak Jalanan, and
(3) reached a level of consistency and repeatability with its top 40 Artists and Content creators and is now looking to scale in the Company’s priority countries.
During the period, migme simplified its audience footprint and focus on migme, alivenotdead and hipwee. The Company grew its Audience reach from an estimated 26m MAUs at the beginning of the quarter to over 33m MAUs, 2m higher than anticipated. Minime, LoveByte, and other microsites have been removed and will be deprecated. The value of ecommerce is now implemented using an affiliate relationships and as announced, the Company is looking to divest shopdeca.
The Company has elected to rationalize the userbase given the constraint on migme’s resources and need to focus on moving to a cashflow positive basis.
The Company’s initial program with Anak Jalanan, one of Indonesia’s most popular Soap Operas and part of RCTI’s programming reached a viewership of over 20m and delivered over 5m MAUs to migme in December over a 3 week period.
The program costed migme around $130k in cash and prepayments for around 48 television slots for an effective $0.026 customer acquisition cost. During programming, migme ran a quiz to be answered with the next show, and had members of the cast on migme producing content.
The Company understands the reach was to over 20m viewers, and noted a >5m MAU jump during the 3 week programming period. More importantly the userbase has remained high for several weeks after the programmes involvement completed.
The Company is looking forward to repeating and expanding the programme with improvements, over the course of 2017 in Indonesia and other countries.
The Company continued to see success with its artist engagement program. In the period from September 2016 to December 2016, growing the number of active artists from 337 to 383. To date, the Company has been subsidizing some artists with minimum guarantees and other incentives to get to traction. Over the last 6 months, the value unlocked per artist has grown from a small handful to over 170 monetising and over 40 meaningfully (the top in December driving nearly $2,500 of value on the platform for the month). Through Product and Operations improvements, the Company is now looking to grow that core monetizing group from over 40 to a few hundred in 1Q2017 and being able to consistently monetize at several hundred dollars each.
If successful, then to look to grow to a few thousand artists and content creators in Q2 and substantially more in the second half of 2017.
From the success of the Company’s key assets migme, alivenotedead and hipwee and its marketing initiatives through large format TV programming in the December 2016 quarter, migme will look to formalize the acquisition and engagement processes to ensure repeatability of outcomes . This will lead to a higher rate of organic growth in acquisition and engagement when combined with the product enhancements as outlined below
Product integration, operations and enhancements
Over the quarter, there were four themes in product and operations:
(1) migme updated its mobile web and android clients, added games to the Funkey, and moved to reengineer many core systems,
(2) launched a further 2 games attached to the Funkey,
(3) commenced the programme with MOX (the accelerator and platform), and
(4) streamlined operations with a view of lowering the groups operating profile and posturing the business towards transforming audience engagement to meaningful revenues and ultimately profitability.
migme overhauled its mobile web client and android clients during the period delivering substantial reliability and speed improvements to each, and is looking to move the remaning web and IOS clinets to a common build framework in 1Q2017. Legacy support for Blackberry, Windows mobile has been deprecated and the Company will drop support for J2ME (ie, Feature phones) by mid 2017. As part of working with the MOX incubator and platform, the Company will update the UI/UX to a contemporary framework and is looking at delivering a range of video and other competitive services in 1Q2017.
Over 1Q2017, the Company plans to integrate Hipwee with migme. migme will be the chat, sharing and discussion platform. Hipwee is a content creator community in a Social News format with several thousand contributors and connected to other platforms. Integration means that conversations in other media means that through platform mechanics and product marketing, the Company can cross market to the audience various valuable experiences and build retained communities across the group.
As noted in prior announcements, migme had launched several games to increase engagement with users and widen the range of things to do on the platform and through the ‘Funkey’. Most recently, it released HighScore Bingo and Boat Royale with more games to be released in the coming quarters. The Company notes the rise of video streaming applications, and is currently evaluating a range of video chatroom options for 1H2017. Updates to the mobile Web and Android clients allow greater levels of tracking and testing, and the Company is now achieving a meaningful yield rate on converting usage to drive other applications and monetizing events.
The Company commenced working with the Mobile-Only Accelerator (MOX) in improving the platform experience and engineering, with a view of being able to systematically track the lifetime value per user. As part of working with the MOX Accelerator and Platform, the Company will trial a push to than 3 million Android mobile users in 1Q2017, and if successful, then a further possible 30 million users in 2Q2017.
In operations, the Company has moved from a constellation structure to a hybrid structure based on cross functional / cross country groups, and centralized common processes in Kuala Lumpur and Taiwan, moved to close the Singapore office. Savings are anticipated to bring the Company’s operating cost profile below $1m per month (down from over $2m 9 months ago), without a material loss of business functionality.
Over the next quarter, the Company is looking to results from the MOX Accelerator to enable the business to gain greater levels of repeatability in Artist, Full Format programming, and Games within the userbase, complete the integration of migme, AliveNotDead, and Hipwee, and further gains from streamlining operations and lowering the Company’s cost profile.
Social games such as Bingo monetize up to USD$50 per paying user per month in the countries migme is targeting and given the size of migme’s audience and reach, only a small percentage trialing, playing and playing games such as that may dramatically change the operating cashflows of the Company.
