As the reality show "Sisters Who Make Waves" dominates Chinese social media, its parent company Mango Excellent Media has seen its market capitalization surge past $14 billion. However, beneath this apparent success lies a harsh reality about China's competitive streaming landscape: Can a single hit program sustainably drive platform value? And how do valuation standards differ between Chinese and U.S. capital markets?
China's "News-Driven" Market Propels MangoTV
China's A-share market has long been sensitive to news catalysts. From Wuling Motors' stock doubling due to "street vending vehicle" concepts to BlueFocus's temporary limit-up triggered by unsubstantiated rumors about ByteDance's acquisition, the market's news-driven nature is well-documented. The recent success of "Sisters Who Make Waves" on MangoTV has similarly propelled its parent company's valuation.
Multiple securities analysts have highlighted Mango Excellent Media as a rare content platform in China's A-share market. Research reports from TF Securities, Guosen Securities, and others praised the show's record-breaking debut, projecting it could drive Mango's financial performance to new heights.
The Transient Nature of Hit Programs
Historical patterns suggest hit-driven valuations may be precarious. When MangoTV exclusively streamed "I Am a Singer Season 3" in 2015, the platform briefly topped Apple's App Store rankings, only to see engagement decline post-season. Currently, while MangoTV's market capitalization rivals iQiyi's, its user metrics remain significantly lower—highlighting divergent valuation standards between Chinese and U.S. markets.
Intensifying Competition in Long-Form Video
The streaming landscape has grown increasingly competitive in 2020. Xigua Video entered long-form content with "Lost in Russia," Bilibili expanded its content boundaries, while rumors swirled about Tencent potentially acquiring iQiyi. These developments indicate the industry's business models remain fluid, with competition far from settled.
Three Streaming Business Models
Video platforms generally operate under three overlapping models:
- Content-First: Platforms like Huanxi Media's streaming app rely on proprietary content from top filmmakers. While effective for initial growth, this model faces challenges in sustaining user engagement and bears high content costs.
- Platform-Centric: These services aggregate third-party content but risk becoming mere distribution pipes unless they develop differentiated original programming.
- Ecosystem: Platforms like Bilibili and Douyin create monetization systems for creators, fostering sustainable content economies. Major players like Tencent Video and iQiyi now blend all three models.
For content-first companies, hit-driven valuation makes sense. But platform-level operators require evaluation based on user retention, engagement beyond hit programs, and overall content libraries—a "barrel effect" where overall capacity matters more than any single component.
Valuation Disparities: China vs. U.S. Markets
The financial metrics reveal stark contrasts. iQiyi's 2019 revenue of $4.1 billion was 2.3 times Mango's, with 8.5 times the subscription income and over five times the paying users. Yet Mango's market capitalization nearly matches iQiyi's $17.9 billion valuation—a discrepancy reflecting different market expectations.
As China's only profitable major streaming platform after the collapse of LeTV and Storm, Mango enjoys scarcity value in A-shares, trading at over 90 times earnings. Meanwhile, iQiyi's lack of profitability would preclude A-share listing, but U.S. markets prioritize growth over immediate profits, albeit with more tempered valuations post-Netflix's growth slowdown.
The Future: Convergence and Cross-Sector Competition
Recent rumors about Tencent potentially acquiring iQiyi sparked speculation about industry consolidation. However, true monopoly remains unlikely given current market conditions. More importantly, the traditional segmentation between long-form, short-form, and other content types is breaking down as platforms converge to capture user attention across formats.
The next phase of competition will likely occur in each player's weakest areas, potentially creating new market disorder while expanding the industry's overall potential.