Cheer Holding Stock

Glory Star New Media Group Holdings Limited, through its subsidiaries, provides advertisement and content production services in the People’s Republic of China.

The company operates a leading mobile and online advertising, media and entertainment business in China. Major production from the company includes short videos, online variety show, online drama, living stream and Cheers series. After launching the company’s CHEERS app in 2018, it is fast becoming one of the leading content driven e-commerce platforms in China. The company focuses on creating original lifestyle content to monetize its advertising and e-commerce platform. The company mainly offers and generates revenue from the copyright licensing of self-produced content, advertising and customized content production and CHEERS e-Mall marketplace service, membership fees, and others. The company intends to capitalize on the immense growth potential of China’s live streaming and e-commerce markets while cultivating new, innovative monetization opportunities.

The company plans on further expanding its mobile and online business by introducing new apps to the market and thus creating a CHEERS ecosystem. In 2021, the company launched CheerCar, it self-developed onboard interactive entertainment app; in 2022, it launched CheerReal, its brand-new digital collection NFT app, which allows different cultural elements to coincide and brings a new immersive experience of digital arts; as part of its ongoing expansion of its CHEERS ecosystem, the company is also developing and testing CheerChat, its overseas social audio app, which will provide its users with individual and group matching functions, while connecting high-quality content communities that utilize intelligent voice translation technology, and is anticipated to launch in 2023.

In addition, as part of its long term retail strategy, the company plans to leverage its CHEERS ecosystem, blockchain technologies and strategic collaborations with various partners on AR and VR technologies, to develop a metaverse platform that features a virtual world containing immersive experiences in intelligent retail, video on demand, social networking, gaming and NFT. As a pioneer, the company’s strategy has always been committed to advanced technology, innovation and digital disruption in the media and entertainment industry.

The company provides advertisement and content production services and becoming a leading mobile and online advertising, media and entertainment business in China by creating professionally-produced content featuring lifestyle, culture and fashion. In 2018, the company expanded into e-commerce services by introducing its CHEERS App, which integrated its e-commerce services with professionally-produced content. The company continues to produce, create and add to its rich library of short videos, drama series, and live streaming, which it owns and streams on its mobile app, Internet Protocol Television (IPTV), and online platform, as well as for distributions and licensing to other mediums, such as Chinese television stations and third party online streaming platforms throughout China and the world. Leveraging the popularity of the company’s professionally-produced content and distribution networks, it drives viewing audiences to its CHEERS ecosystem to convert them as users of its online video streaming services and as customers to its e-Mall and online games.

Since its establishment, the company has focused on developing an ecosystem for its users that incorporates quality content, e-commerce, social networking, and gaming. These core elements have formed the basis of the company’s future metaverse platform and continues to provide it a strong competitive advantage in realizing its new strategic objectives. The company plans to continue to integrate its cutting edge blockchain technologies, massive user base from its CHEERS ecosystem, quality content offerings, and its e-commerce platform, with its strategic partners for 5G and AR technologies, NFT technologies, and VR equipment suppliers, to develop a metaverse boasting a wide range of online + offline and virtual + reality scenarios. The company plans to continue to develop and implement its new business initiatives by investing in ongoing research on the latest innovative technologies.

CHEERS App - Video Platform

The CHEERS video platform is a professionally-produced and curated media platform that engages users with high-quality videos featuring lifestyle, culture, and fashion, and continues to develop lifestyle short videos and interactive live-broadcasting. The company has continued to receive interests from users and content creators to join the CHEERS video platform and itupgraded the platform on December 1, 2021 to include UGC rights management system. With these upgrades, users has access and opportunity to co-build the platform and contribute to the improvement of the content production ecosystem. The company has made a new strategic plan of cultivating outstanding UGC creators and producing high quality UGC in the long run in partnership with it. The plan includes multiple initiatives such as traffic support and cash subsidies for UGC creators and guidance of trending topics to support the creation of high-quality videos. The company will also adopt NFT technology to help guard the copyrights of the platform’s original content. In addition, the company plans to attract influencers with a high number of followers/traffic to help accelerate the platform’s adoption.

CHEERS App - E-Mall Platform

Leveraging its brand, large viewing audience, and users of its CHEERS video platform, in April 2019, the company launched its e-Mall where it offers products to its users through third party merchants that it has screened and approved. The company charges third-party merchants on its CHHERS e-Mall platform a service fee and a commission for the sales of their products.

While the CHEERS video platform has maintained high business growth for the company, the e-Mall has also expanded its presence in video content-driven e-commerce industry and has become another growth driver for it. With the independent operation of the e-Mall, the company will look to deploy more resources to its e-commerce business, expand into the cross-border e-commerce market, and achieve greater business autonomy. The independent operation of the CHEERS e-Mall platform will allow it to be better integrated with other applications, leading to improved business performances and growth.

Furthermore, the newly independent operations of the CHEERS e-Mall and CHEERS video platforms continue to be key growth drivers for the company, through the complemental nature of the unique technology, premium content, and strong consumer data insight made possible by its content-driven ecosystem.

The following is a summary of the e-Mall platform of the company’s CHEERS App:

Live Streaming E-Commerce

Live streaming e-commerce is emerging as one of the most innovative and monetizable tools for content creators. To protect the interests of the company’s content creators, which is one of the values that it upholds in its ecosystem, it connects CHEERS e-Mall’s SAAS supply chain system to the platform, allowing content creators to choose relevant products to sell at their own discretion. Creators can earn commissions and receive related task rewards from their live streaming content. In addition, the platform utilizes blockchain technology to ensure each transaction is correctly ledgered. Through these measures, the company has built a substantial closed-loop business model and created additional value for clients within its ecosystem and enhances user engagement, which should help it continue to expand its revenue potential on the CHEERS ecosystem.

In June 2018, the company launched its first live streaming show called Shopping Genius. The company has ten (10) live streaming shows in production, each 90-180 minute segments, where users can interact with each other and the hosts, obtain discount coupons by participating in its real-time online games and quizzes, and make purchases in its e-Mall with these discount coupons. In addition, as requested by some clients, some live streaming shows are customized in order to lead the audience to make purchases in the clients’ online stores and/or in other e-commerce platforms, such as JD.com and Taobao.com. The company monetizes its live streaming shows by promoting products where its subscribers can purchase products through its e-Mall. In addition, the company’s e-commerce suppliers and distributors of its e-Mall have the option to enter separate advertising agreements with it to promote their products in its live streaming shows.

Since 2021, six (6) live streaming shows have been launched, including three (3) on external platforms to increase diversity in content output and enhance brand effect, which further consolidated the competitiveness of the company’s business. The following is a summary of the company’s live-streaming shows:

Shopping Genius: This show promotes various products for sale on the CHEERS e-Mall platform and provides an opportunity for viewers to participate in question and answer games for the discount coupons for the promotional products.

Bargaining Genius: This show promotes various products for sale on the CHEERS e-Mall platform and allows viewers to compete with each other for discount coupons for the promotional products.

Guessing Game: This is a live game show that allows viewers to win points that go towards discounts for purchase of items on the CHEERS e-Mall platform.

Unbeatable Lucky Card: This is a live game show that allows viewers to win points that go towards discounts for purchase of items on the CHHERS e-Mall platform.

CHEERS Foodies: This is an interactive, live promotion show that promotes the low-priced products on the CHEERS e-Mall platform through collaborations among celebrity influencers and viewers to create foods and beverages products which are based on customized recipes by viewers. Viewers are able to personalize their recipes using multiple products that are offered through the CHEERS e-Mall, including fresh fruits and vegetables, pastries, snacks and different types of drinks, and have their recipes created by the invited influencers during the show.

The Big Brand: This is a live stream show that promotes cosmetic products from top beauty brands while providing detailed advice and evaluation on various products to its viewers. Viewers are also able to purchase the showcased cosmetic products through the CHEERS e-Mall platform at low prices with significant discounts.

10 Yuan, Go!: This is a live stream education show that promotes various high quality and inexpensive necessities and day-to-day products, along with suggested uses in various situations for everyday life.

The Master Show: This show on TikTok talks about hot topics and shares tips in both life and business in each pre-recorded episode, and from time to time promote the CHEERS e-Mall offerings in live streaming events.

CHEERS Goodies: This live stream show on TikTok promotes premium products offered on the CHEERS e-Mall.

CHEERS Kuaishou Boutique: This live stream show on Kuaishou promotes premium products offered on the CHEERS e-Mall.

Online Short Videos

The company streams its professionally-produced content on its CHEERS video platform where it generates advertising revenues from traditional pre-video, in-video, banner advertisements, and pop-up advertisements. The company also generates revenues from soft product placements that are incorporated into its original video content. The company leverages its deep library of professionally-produced content, large viewing audience base, and big data analytics capabilities to help its advertisers target their specific demographics in China.

Online Games

The company has developed four (4) online games for its CHEERS e-Mall platform where players can play the games that it has developed in-house. The company monetizes online games through users’ in-app purchases of gift packages and game privileges.

CheerCar App

CheerCar is the company’s self-developed interactive entertainment app launched among the first batch on Tencent Auto Intelligence, an Internet of Vehicles ecosystem. As an onboard interactive entertainment app that was designed to provide entertainment in vehicles, CheerCar makes connections between passengers and in-vehicle infotainment systems closer and more efficient. As an app in Tencent’s IoV ecosystem, CheerCar allows users to set preferences and browse individualized content from the company’s library of high-quality videos that are available on its CHEERS video platform. CheerCar also uses a personalized intelligent algorithm recommendation system to recommend contents based on user’s preferences.

CheerReal App

CheerReal is the company’s self-developed brand-new digital collection NFT app launched in September 2022, which allows different cultural elements to coincide and brings a new immersive experience of digital arts that derived from the traditional field.

With efficient and close connections between artists, collectors, and the marketplace. CheerReal aims to accelerate the digitization of cultural and artworks, promote and maximize the value of digital assets, and create a new ecosystem of the digital asset.

CheerChat App

CheerChat is the company’s overseas social audio app which has entered the beta phase of testing since 2021. By leveraging the traffic and monetization systems of its CHEERS video and CHEERS e-Mall platforms, its CheerChat app will have strong and distinct competitive advantages in penetrating the social audio market. CheerChat will provide users with individual and group matching functions, while connecting high-quality content communities that utilize intelligent voice translation technology. The company’s innovative technology and business model will provide its CheerChat users with unique social scenarios and a more personalized entertainment experience for social audio networking. Launch of the company’s CheerChat app will be a key development in its progression into the metaverse.

The launch of CheerChat app was expected in 2022, but has been delayed until 2023 due to development and implement of AI technology, which will improve the overall user experience and development of the company’s CHEERS ecosystem. The launch of CheerChat demonstrates the company’s emphasis on continuing to apply innovative technologies to its business model and create further value through strategic investment in research and development. This long-term vision enables the company to maintain its leading position in the new media industry.

Metaverse Experience Centers

The development and launch of the Glory Star metaverse experience centers has been postponed. The company plans to develop the Glory Star metaverse experience centers that will give users the opportunity to experience the virtual world firsthand. Users will be able to create their own NFTs, make purchases in virtual shopping malls, interact in digital social connections, and enjoy immersive gaming experiences. The experience centers will be the true integration of reality with the virtual world, and through the right application of 5G, AI, AR and VR technologies, the comopany will make this a seamless experience to the real world.

Series TV Shows

In February 2017, the company started production of its series TV shows, which contain six (6) lifestyle shows, including Cheers Food, Cheers Health, Cheers Fashion, Cheers Baby, Cheers Space and Cheers World, each episode is 30 minutes in length. The company’s series TV shows are unique in the content creation and production, with trending lifestyle updates filmed both in-studio and outdoors. The company generates revenues from its series TV shows by licensing to TV stations with exclusive advertising times and charging advertising fees, and by displaying products of its e-Mall. The company distributes and promotes its series TV shows content on a variety of online video platforms, mobile apps, IPTV and television channels where it generates advertising revenues from traditional pre-video, in-video, and pop-up advertisements. The company also generates revenues from soft product placements that are incorporated into its series TV shows. The company produces and licenses its series TV shows for airing on local broadcast, basic cable television networks, and throughout China. The company’s shows can be seen on satellite stations, such as Anhui Satellite Television and Shenzhen Satellite Television, which are year-to-year contracts. The following is a summary of the company’s series TV shows:

Cheers Health

This TV program features and promotes healthy lifestyle.

Cheers Fashion

This TV program features high-end fashion and beauty, and is touted as the fashion bible in the fashion field.

Cheers World

This TV program is China’s only leading short tourism program that brings together the world’s best tourism destinations, sharing travel experiences from unique perspectives of the visitors and the cultural scene of the destinations. It has been fully recommended by the cultural centers or consulates of foreign embassies in China and has close ties and cooperation with embassies in many countries around the world.

Cheers Baby

This TV program is hosted by Cao Ying, who shares the parenting experience of parents in the form of question and answer format, and in-depth interviews. This is one of few programs of this type in China.

Cheers Food

This TV program centers around food and the stories between people and food from various perspectives. Since the launch of Shenzhen Satellite TV, its average ranking has remained stable within the top 8 in China.

Cheers Space

This regular weekly program focuses on home decor and interior design.

Drama & Variety Shows

The company has partnered with third parties to produce and license original online drama and variety show series for distribution on online video platforms. The company developed the following drama series and variety shows:

My Greatest Hero: This TV series explores the lives of a high school tennis team. This program is in partnership with iQIYI and has become one of the most popular youth TV series.

Hi! Rap Season 1: This variety show was developed in 2018 as a light-variety talk show.

Hi! Rap Season 2: In 2019, the company developed season 2 of this variety show. It is one of the most popular variety shows in China.

Hi! Rap Season 3: Hi! Rap Season 3 has become one of the most sought after online variety shows for millennials since its initial launch on August 22, 2020.

Star Makeover: Since premiering on May 5, 2021, the show’s ratings have skyrocketed and the Show has also continued to maintain top ratings for mainstream TV programs in China.

Depending on the contract with its partners, the company can either share revenues generated by the number of viewers, or share advertising revenues generated by the contents.

Advertising

The company distributes and promotes its professionally-produced content on its CHEERS App and on a variety of online video platforms, mobile apps, IPTV and television channels where it generates advertising revenues from traditional pre-video, in-video, and pop-up advertisements. The company also generates revenues from soft product placements that are incorporated into its original video content, including its online short videos. In addition, the company’s e-Mall suppliers and distributors have the option to enter into separate advertising agreements for displaying their products in its live streaming shows. All items displayed in the live streaming shows can be purchased in e-Mall. The company leverages its deep library of professionally-produced content, wide distribution channels, and big data analytics capabilities to help its advertisers target their specific demographics in China.

Production Services

The company provides brand advertising services to third-party advertising agencies by producing variety shows, short videos, and live streaming shows, according to customers’ needs, for a fee. The company also provides planning, shooting, and post-production services for a fee.

Content Licensing and Distribution

From time to time the company may also acquire rights to rebroadcast and/or distribute third-party film and television drama.

Proprietary PGC video content-driven e-commerce platform

A proprietary PGC video content-driven e-commerce platform is a segment of content-driven e-commerce platform, with in-house professional video production and proprietary e-commerce platform. When compared with other video content-driven e-commerce platforms, a proprietary PGC video content-driven e-commerce platform usually has a larger advantage in maintaining high-quality content production with dedicated professional production teams.

Segments

The company operates through two segments, Cheers APP Internet Business and Traditional Media Businesses.

Cheers APP Internet Business generates advertising revenue from broadcasting IP short videos, live streaming and APP advertising through the company’s Cheers APP and service revenue from its Cheers E-mall marketplace.

Traditional Media Business mainly contributes to the advertising revenue from the company’s Cheers TV-series, copyright revenue, customized content production revenue and others.

Research and Development

The company’s research and development expenses for the year ended December 31, 2022, included $1.3 million.

Competition

The company faces significant competition in China in various sub-markets it operates, primarily from Alibaba, Pin Duoduo, Douyu, Qu Toutiao, Mango Media, and TVZone Media.

Intellectual Property

As of December 31, 2022, the company owned 75 registered trademarks in the PRC, and 10 registered trademark in Hong Kong. In addition, as of December 31, 2022, the company had 59 registered copyrights in the PRC (including 50 software copyrights relating to various aspects of its operations and 9 artwork copyrights). The software and artwork are crucial to the company’s business.

Seasonality

Aside from fluctuations in the level of advertising spending resulting from changes in the overall economic and market conditions in China, the company’s revenues are affected by seasonal fluctuations in business and consumer spending that also affect the level of advertising spending over time in China. The company’s quarterly (year ended December 31, 2022) operating results have fluctuated in the past and may continue to fluctuate depending upon a number of factors, many of which are out of its control. The company’s operating results tend to be seasonal. As a result, detailed attention shall be paid when comparing the company’s operating results on a period-to-period basis.

Government Regulations

As an e-commerce platform service provider, the company is subject to the PRC Consumer Rights and Interests Protection Law, the Online Trading Measures and the Civil Code of the People’s Republic of Chins (PRC).

History

Glory Star New Media Group Holdings Limited was founded in 2016.