Tom cat + AI begging for IP to "become popular"? Shareholders are busy reducing their holdings during the year

As the first mobile pet companion game, "Talking Tom" has accumulated a large number of fans around the world, and the Tom IP has also become a classic. In 2017, the A-share listed company Jinke Culture will be born from the income of overseas "Tom Cat". You may not know that Tom Cat has become a stock code in China's A-share market.

In the few years since Jinke Culture took over the Tom Cat IP, a variety of series of casual entertainment games have been launched, and it has also tried IP authorization and production of film and television works. 75%, relying on IP to attract traffic and "selling advertisements" is its main source of income. But the ubiquitous advertisements have made the Tom Cat series of games highly disgusted by users.

The user favorability of Tom Cat IP is being consumed day by day, followed by a shrinking share price and a decline in revenue. After the new wave of AI triggered by ChatGPT, a turning point appeared.

Tom Cat Company began to invest heavily in AI, claiming that it will enhance the interactive experience of the Tom Cat family series IP, focusing on companionship. The stock price, which had been sluggish for several years, finally jumped up. New products have not yet appeared, and after the upgrade of interactive capabilities, it is still unclear whether the operation strategy of Tom Cat IP can be adjusted, but the shareholders behind the company finally ushered in a turning point and took advantage of the situation to reduce their holdings.

Tom cat + AI plans to increase by 2.3 billion yuan

The first generation of smartphone users must remember the "Talking Tom Cat" pet game that was popular all over the world. This naive cat that can imitate human speech once occupied many people's mobile phones. do you know? The "cat" now belongs to a Chinese company.

More than 10 years have passed. Outfit7, the company that developed this game, "sold itself" to the Chinese consortium United Luck Consortium in 2017. After several rounds, Outfit7 was finally acquired by the listed company Jinke Culture. In July 2021, the name of Jinke Culture Company was changed, and the stock code was also changed from "Jinke Culture" to "Tom Cat".

This IP, which is popular all over the world, has completely become a "Chinese cat" since then. Compared with Disney, Universal Studios and other well-known IPs with evergreen trees, Tom Cat has been consuming popularity for a long time, and has become an outdated IP in many people's minds.

The "Tom Cat" IP that was popular all over the world

When the new wave of AI triggered by ChatGPT hit, Tom Cat saw a turning point. Since the beginning of this year, Zhejiang Jinke Tom Cat Cultural Industry Co., Ltd., headquartered in Hangzhou, has continuously released news about transforming Tom Cat with AI, hoping to use ChatGPT related technologies to change it from "talking" to "chatting".

On the evening of July 14th, Tom Cat issued the latest announcement announcing that it intends to issue A shares to specific targets to raise funds not exceeding 2,300.1142 million yuan. This new fundraising plan will be used for the Tom Cat family IP series AI Interactive terminal product projects, vertical field model development projects, high-density big data computing power infrastructure projects, and supplementary company liquidity.

Tom Cat’s official statement is that after this fundraising, the company can seize market opportunities, combine new technologies, iterate new products, expand product application dimensions, enhance the company’s core competitiveness, and ensure the implementation of the company’s business strategy.

Judging from the announcement, Tom Cat has a lot of battles. It needs to build its own large-scale model and build computing power facilities. The ultimate goal is to improve the interaction level of "Tom Cat Family IP".

Of course, the essence of raising funds by issuing new shares is still cash-strapped. After all, as the popularity of Tom Cat IP continues to decline, the company's revenue capacity is also not as good as before.

According to Tom Cat’s 2022 annual report, during the reporting period, the company’s operating income was 1.633 billion yuan, a year-on-year decrease of 15.89%; the net profit attributable to shareholders of listed companies was 440 million yuan, a year-on-year decrease of 37.87%; The net profit of sexual profit and loss was 404 million yuan, a year-on-year decrease of 42.81%.

In the first quarter of this year, Tom Cat achieved operating income of 341 million yuan, a year-on-year decrease of 26.48%; net profit attributable to shareholders of listed companies was 102 million yuan, a year-on-year decrease of 44.01%; The profit was 101 million yuan, a year-on-year decrease of 44.05%.

Judging from the financial report, the decline in Tom Cat’s revenue has continued to expand, so that a considerable part of the company’s new round of fundraising will be used to “supplement the company’s liquidity.”

Revenue mainly depends on advertising IP reduced to "capital tool"?

It is embarrassing that the situation of the once popular Tom Cat is going from bad to worse. The outside world is inevitably curious about how the "Zhejiang Jinke Tom Cat" company behind it operates this IP after acquiring Tom Cat under its command, and why is the cat's life getting worse and worse?

Judging from the introduction on the official website, Tom Cat has a pretty good data "resume".

Tom Cat said that its subsidiary Outfit7 integrates big data advertising distribution and Internet family entertainment and education, and its business covers most countries and regions in the world, including the European Union, the United States, China, Russia, Brazil, and India. Among them, the cumulative global downloads of APP products have exceeded 15 billion, and the monthly active users have exceeded 410 million; the "Talking Tom Family" series of cartoons have exceeded 72 billion hits on video sites around the world.

Looking back at the development of Tom Cat in the past few years, its core business is to continue to use the IP of the Tom Cat family to create games to make money. In 2018, the company launched "My Talking Tom 2", with the highest number of monthly active users reaching 86 million; in 2021, the game "Tom Cat Hero Parkour" will be launched. Its official website shows that the company's main games currently include "Tom Cat Story", "My Angela 2" and so on.

Turning IPs into games is also the way to monetize many well-known IPs. But Tom Cat’s monetization method is very simple. All kinds of dazzling advertisements all over the game are its main source of income in recent years.

The 2022 financial report shows that among Tom Cat’s revenue sources, advertising accounts for about 75%, and games, new business services, licensing, and media film and television businesses account for about 11%, 7%, 4%, and 2% respectively. Revenue accounted for nearly 80%. This data means that the main customers of Tom Cat are actually advertisers around the world, and only 11% of the revenue comes from the game itself. As for the proportion of making money from IP licensing and film and television, it is insignificant in the company's revenue.

Advertising is a relatively easy but difficult long-lasting path to monetize IP. For a period of time, relying on the relatively well-known Tom Cat IP, it has gained a large user base, and then obtained the placement of advertisers. However, the disadvantages of relying mainly on advertising for monetization are also very obvious. Too many advertising ratios continue to consume users' goodwill towards Tom Cat IP, and the game experience is greatly reduced. When users are increasingly lost due to advertising intrusion, advertising revenue is naturally difficult to maintain.

Accompanied by the decline in performance, in May this year, the Shenzhen Stock Exchange issued an annual report inquiry letter to Tom Cat, asking the company to explain the reasons and rationale for the continued sharp decline in operating income and net profit in the fourth quarter of 2022 and the first quarter of 2023. Whether the relevant downward trend is likely to continue for a long time, etc.

Tom Cat responded that the sharp drop in revenue and profit was mainly due to the budget reduction of advertisers in the domestic market, and the negative impact of geopolitical conflicts in overseas markets, and the overall decline in online advertising revenue; As well as new games such as "Tom Cat Entering Paradise", the company's research and development expenses have increased significantly.

It can be seen that the IP of Tom Cat is no longer attractive to advertisers.

In fact, in the past few years of operation, the Tom Cat series of games have been criticized for having too many advertisements, virtual props and other items that require payment.

The UP master in the game field, "Big Teacher Game", once released a video to complain that the game developer gave Tom a variety of "unexplainable" skins, some of which need to spend a lot of game gold coins, and some need to recharge 500 yuan to get them. Not long after logging in to the game, a pop-up window immediately reminds the user to purchase a 10 yuan novice gift pack. During the game, any random touch may trigger an advertisement. "The gameplay is still the same as it was 10 years ago, but with a lot of commercial things, Tom Cat has become a capital tool."

Tom cat "skin" needs krypton gold to obtain

In the major application markets, there are also a large number of users complaining that Tom Cat has changed its taste. "There will be an advertisement every once in a while, and the app will be automatically downloaded when it comes across a little bit. It will be really annoying if there are too many times."

Searching for "Tom Cat" on Baidu shows that many users have searched for "Talking Tom Cat old version", "My old version of Tom Cat", "Talking Tom Cat cracked version without ads", etc. wait.

Baidu "related search" shows that many people miss the old version of Tom Cat

Judging from these search information, many users who like Tom Cat miss the old version with fewer advertisements and better experience. To some extent, this is a negation of the market's IP operation strategy of Tom Cat.

Rip AI stock price first move shareholders to reduce holdings 6 times

The existence of Tom Cat IP is getting weaker and weaker, and its company’s stock price has also been falling from around 12.6 yuan at the beginning of the acquisition of Outfit7. In the more than three years from August 2019 to the end of 2022, Tom Cat’s stock price has remained at a low of around 3 yuan for a long time, and its market value has shrunk by nearly 80% compared to before.

Tom Cat, who has relied on advertising revenue for a long time, seems to have fallen into a downward spiral, and it is difficult for people to see the hope of "turning popular". The popularity of ChatGPT temporarily changed the dull status quo.

Since the beginning of the year, Tom Cat has caught up with the concept of AI, and has continuously disclosed the related actions of adopting AI technology. Initially, when Tom Cat was surveyed by the agency, the company tried to use the GPT-3.5 model to test the functional prototype of AI voice interactive products, and had already implanted the Tom Cat IP image into the product functional prototype, adding speech recognition, speech synthesis, Personality setting, content filtering and other functions have tested the product performance of voice interaction and continuous dialogue, and initially verified the feasibility of related technologies.

On March 16, Tom Cat announced that its "Talking Tom Cat" will continue to iterate into "Talking Tom Cat", using AI to deepen the interactive experience between Tom Cat family IP and users. At the same time, Tom Cat has repeatedly stated publicly that the core feature of the Tom Cat family IP is interaction and companionship, and it is necessary to realize a more fun digital companion IP with thousands of people and faces.

Immediately afterwards, Tom Cat announced that its subsidiary has obtained the API interface of Baidu Wenxin Yiyan, and said that the company is exploring the combined application of artificial intelligence and brain science. In May of this year, Tom Cat revealed that the company's overseas art team has used AIGC-related technology Stable Diffusion for art creation in some art creations; in addition, it also stated that it will actively connect with the large-scale model PaLM2 launched by Google.

In June, Tom Cat also stated on the interactive platform that the company has completed the modification and polishing of the script of the "Talking Tom Cat Family" IP movie, and has begun to cooperate with many world-renowned Hollywood film companies. Recently, Tom Cat established Tom Cat Artificial Intelligence Technology Co., Ltd., and strategically invested in the large-scale model start-up company Xihu Xinchen, making continuous moves in the field of AI.

The frequent disclosure of AI trends has made Tom Cat a star stock in the A-share market this year. Its share price rose from 3.16 yuan at the beginning of the year to 9.47 yuan on May 4, an increase of nearly 200%, creating a high point in nearly four years.

Tom cat stock price trend

But it is worth noting that during the period of stock rise, Tom Cat shareholders reduced their holdings 6 times in total, reducing their holdings by 107 million shares in total. Among them, "Shaoxing Shangyu Suzaku" reduced its holdings by 105,193,500 shares, and the second largest shareholder Wang Jian reduced its holdings by 1,960,500 shares.

As of the close on July 18, the stock price of Tom Cat was fixed at 5.95 yuan. Although there was still an increase of 88.29% during the year, it also fell 37.17% from the high point. Under the external environment where the concept of AI cools down, the market sentiment tends to calm down, and the momentum of hype has weakened. Tom Cat, which has not actually launched AI-related products, has also encountered investors' reduction in holdings.

As far as the current situation is concerned, although Tom Cat has made many moves in the field of AI, no official AI-related products have been released yet. People's Daily Online columnist Zhang Shule believes that the access to ChatGPT will not bring about substantial changes to Tom Cat's operating model in the short term, and it is still unclear what effect the access will achieve.

In February of this year, Tom Cat also mentioned when it released the "Announcement on Abnormal Fluctuations in Stock Trading" that the company does not directly own ChatGPT-like application technology, and the related work is still in the internal testing stage, and the scenarios related to commercial applications have not yet been clarified. , the official launch time of commercialized application monetization products is temporarily uncertain, and the current scenario will not generate new independent revenue contributions. There are still major uncertainties about whether related products can be launched and whether they can meet expectations.

On the other hand, whether its main “companion” scene has enough market demand and room for growth has to be questioned. After all, children account for a large proportion of the user base of the Tom Cat series of games. According to the "Notice on Further Strictly Managing and Effectively Preventing Minors from Indulging in Online Games" issued by the National Press and Publication Administration in 2021, all online game companies can only open from 20:00 to 20:00 every day on Fridays, Saturdays, Sundays and legal holidays. Provide 1-hour online game service to minors at 21:00.

This means that the main user group of Tom Cat has a limited time to use its game application, and the payment ability is insufficient. In this way, even if Tom Cat upgrades from "talking" to "chatting", the monetization channel is still vague. It is also difficult to change the business model with advertising as the main revenue.

With the addition of Tom Cat after AI, if the follow-up application is still full of advertisements and full-screen commercial atmosphere, will you still be as excited for it as you were 10 years ago?