Factors That Led To Media Company Asian Boss’ Potential Shutdown
On January 25, Asian Boss CEO and co-founder Stephen Park revealed in a video that the company was months away from shutdown.
The South Korean media company produces free videos that showcase the stories of Asians to bridge social and cultural gaps.
In the video, Stephen revealed that he has so far laid off 40% of his staff and instituted pay cuts for the rest. They also moved to a smaller office to extend their lifeline.
Asking fans for help in keeping the business alive, they launched a GoFundMe campaign with a targeted amount of US $ 700,000.
The funds will provide enough lead for the remainder of this year. Stephen also explained that it will give them more time to improve their business model.
So what led to this dire cash flow situation?
1. Their videos have been demonetized by YouTube
As mentioned earlier, Asian Boss is a channel that brings authentic content highlighting sensitive issues in Asia that the mass media may not cover.
Stephen said the production of such content has led YouTube to demonetize many of their videos. Many may have been deemed inappropriate by YouTube’s advertising guidelines.
This likely hurts their chances of monetizing video ads which can take many forms. It looks like Asian Boss hadn’t prioritized monetization in any other way, so losing that revenue stream didn’t help their current situation.
It was my fault as CEO. I was too focused on creating great content and left little attention to monetization. We are now faced with the possibility of shutting down Asian Boss for good.
Stephen Park, CEO and Co-Founder of Asian Boss.
2. They relied too much on funding
Despite being demonetized on YouTube, Asian Boss managed to find investors who believed in their vision. But when the pandemic hit, it drove their investors themselves into bankruptcy. As a result, the company is now within months of running out of cash.
While financing can be good news, relying on it alone to run your operations is not sustainable. Funding is generally intended to help startups grow quickly to a point of profitability.
So, startups should be wary of relying only on funding, as companies cannot stay in business without making a profit. However, media companies in general can struggle to make a profit, but we’ll get to that later.
3. They didn’t run an Asian boss like a business
After years of scrambling from scratch and learning to film from scratch, the company has been able to grow.
They were finally able to bring back stories from 7 Asian countries to bring the audience raw information on cultural news and trends, posting several videos from different countries every week.
Running a business spread out with its own teams in different countries won’t be cheap and salaries should be considered. Additionally, it appears that the cost of running the business depended heavily on its investors, with little to no help through monetization.
Asian Boss raised over US $ 660,000 from their fans, but they went to various social causes. He admitted that they were so focused on taking care of the less fortunate and creating great content that he missed running his own business.
It’s not easy to profit as a media company
Besides relying on video ads, there are other ways for media companies to monetize on YouTube. One of them is to use subscription models such as offering channel memberships.
Here, members make monthly payments in exchange for special perks offered, such as additional behind-the-scenes content at Vox.
This provides content creators with a steady recurring revenue stream that can contribute to production costs.
Additionally, creators on YouTube can also sell products such as t-shirts and hoodies. It works as a two-pronged approach because it’s an easy form of marketing when fans use it in public. But of course, that means creators have to shell out funds to even produce goods.
It’s safe to say that people are less accepting when it comes to paying just for content, as there are plenty of free alternatives. This also applies to content outside of YouTube.
To justify a fee, media companies must ensure that their content must be of a high quality that cannot be found anywhere else.
But in order for their content to be monetized, they need it to be seen. As a result, some media companies may use a larger portion of their advertising budget to market their products directly to their customers. Note sponsored articles and videos on websites and social media.
By getting more people to see content, it results in a bigger audience, which leads to higher paying advertisers in the form of affiliate links, sponsored content, as well as banners or video ads.
This vicious circle of advertising is, of course, just one of the ways that media companies monetize. However, there are other ways that have helped some to achieve profitability.
In November of last year, it was reported that Media Prima Bhd reached a net profit of RM12.43 million. It was for its 3rd trimester which ended on September 30, 2020.
However, little of their income came from advertising, due to the pandemic. Other sources of income came from their small businesses, like their CJ Wow e-commerce store, for example.
Star Media Group Bhd (SMG) achieved net profit of RM26.9million for its 3rd quarter on September 30th.
However, their profitable year was also aided by a legal case compensation amounting to RM 50.5 million. Even with such results, these groups have had years of struggle.
Media Prima suffered a net loss of RM24.16 million in 2019, leading it to cut operating expenses by laying off more than 800 employees in June 2020.
SMG also laid off more than 100 employees in a downsizing exercise in December 2020, following its profitable third quarter.
To further diversify its revenue streams for years to come, The Star Online has launched a paywall for its articles.
This can help generate revenue for the group, as it did with Singapore technology in Asia which reached its first profitable year in 2019.
It came 7 years after their chief correspondent and former CEO, Terrence Lee, joined the publication in 2013. It was also after several difficult periods that led to layoffs that could not be saved with funds. .
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Each company will have its own difficulties and will have to go through pivots to get them out. Asian Boss is no different.
While the news is solemn, I hope their crowdfunding program will save Stephen more time to find ways to monetize and rethink his business model and approach as a media company.
The lessons he learned and shared can also be put into practice by other media companies who find themselves in a similar struggle.
- You can read more about Asian Boss here.
- You can read more about Malaysian startups here.
Featured Image Credit: Stephen Park, CEO and Co-Founder of Asian Boss
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