Social media is ever-changing, particularly for younger people, and some Chinese companies seem to be coming up with increasingly imaginative ways of offering the demographic new opportunities to connect with their peers.
Newborn Town Inc. (HKG: 9911), which is active with apps like MICO, Yumy and YoHo, will become a prominent shareholder in BlueCity Holdings Ltd. BLCT, a provider of several health and social platforms for the LGBTQ community. BlueCity, which first listed on the New York Stock Exchange in July 2020, is soon to delist from the Nasdaq Stock Market, enabling Newborn Town to make the investment.
BlueCity’s domestic business is influenced by the unfavorable headwind in the live streaming industry in China, but its international business has grown over several years. In particular, its main social platform, Blued, now has approximately 49 million registered users in over 200 countries.
Newborn Town hopes to leverage its 10-year experience in the global market and localization capabilities to boost the performance of Blued. These capabilities have played an important role in its previous strategic investment of another social platform, improving the localized operation and monetization.
The LGBTQ Community Online
By 2023, the global LGBTQ online social market will be worth approximately $3.84 billion, according to a research report of Frost & Sullivan in 2020. LGBTQ groups have high stickiness to online social products, above average income and a strong willingness to pay, as the report says.
The market size of the global online LGBTQ market was US$261.5 billion in 2018, and is expected to reach US $580.3 billion by 2023, representing a CAGR of 17.3%, according to a Frost and Sullivan report. The increasing number of the LGBTQ population, a higher average disposable income of the LGBTQ population and a higher willingness of the LGBTQ population to spend across various categories have all contributed to the rapid growth of the LGBTQ market.
Dating app Grindr shows the potential of social media apps aimed at the LGBTQ community. Grindr has a presence in approximately 190 countries and 11 million monthly active users (MAUs) — 80% of whom are under the age of 35. It’s planning to list on a U.S. exchange with a potential valuation of over $2 billion.
In January, Newborn Town injected $50 million into a fund, which participated in the going-private of BlueCity. The whole deal of BlueCity is expected to reach about $60 million. In the first half of 2022, the company’s total revenue is estimated at RMB1.350 billion ($200 million) to RMB1.400 billion, of which the social networking business revenue is about RMB1.250 billion to RMB1.285 billion, an increase of approximately 50% year-on-year, the company says.
In the second quarter of 2022, the average MAUs of the company’s social apps reached about 23.09 million, an increase of approximately 27% year-on-year, according to Newborn Town.
Although the social media app world remains dominated by the apps offered by Meta Platforms Inc. META, owner of Facebook, WhatsApp and Instagram, Twitter Inc. TWTR and Alphabet Inc. GOOGL with its YouTube video offering, more players like Newborn Town are trying to gain market share in the sector.
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