69: Chapter 69: A 20% cut at the bottom line forcefully pushed back the massive Tencent empire.

At the beginning of June, the height of summer baked the earth like a furnace.

But inside the top-secret conference room on the top floor of the Tencent Headquarters Building, the atmosphere was so oppressive and cold that the air itself seemed to freeze.

On the giant projection screen, various soaring data points of Jiyuan Technology's Xinghuo App over the past two months were listed in dense detail.

The head of the strategic analysis team stood at the front of the room,

clutching a top-secret intelligence report still warm from the printer, a hint of hard-to-conceal trembling in his voice.

"Leaders, Mr. Ma..."

The head took a deep breath and spoke with difficulty, "This is the summary of Jiyuan Technology's internal financial statements for the second month, which we just obtained.

After deducting the high costs of server expansion, broadband traffic channel fees, and all daily operating expenses,

the net income of Xinghuo in its second month of launch reached 350 million."

As soon as these words were spoken, the core executives around the conference table, who were well-accustomed to big storms, couldn't help but breathe a bit heavier.

In just thirty days, the net profit had directly tripled!

But this was merely the most insignificant appetizer of this presentation.

The head switched the slide, and a massive and complex industry chain map appeared on the screen.

"The platform's net profit of 350 million is just the tip of the iceberg above the water."

The head circled several core nodes heavily with a laser pointer. "What truly makes one's scalp tingle about this financial report is Xinghuo's 'incidental industry ecosystem.'

With the complete formation of the four major livestream sales factions within their platform,

and the frantic internal competition among over a million registered streamers,

Xinghuo has, in just one short month, carved out a super-large market covering various industries such as apparel, cosmetics, agricultural products, and high-end jewelry,

with a total scale directly reaching the tens of billions!"

A deathly silence filled the conference room.

Everyone realized that this was no longer a simple social or Short Video software.

On the wasteland of the mobile internet, Shen Du

had forced into existence a super business engine that generated tens of billions in cash flow, enough to dictate the livelihoods of countless physical merchants and streamers across the country.

"For such a massive tens-of-billions market, according to our usual traffic monetization logic, the platform operator could completely squeeze it dry."

The head shifted his tone, which became incredibly heavy. "But when we researched the top-level design of their profit distribution, we discovered a terrifying, almost anti-human decision made by Shen Du.

He only takes a twenty percent cut!

And that is twenty percent of the net income after tax!"

Facing this super-large cake of tens of billions, Jiyuan Technology possesses a unique monopoly on traffic in the market.

The Tencent executives present knew very well.

If they were in Shen Du's shoes, they would have the full capability and qualification to arrogantly take a thirty percent or even fifty percent cut of the profits.

To get traffic, those streamers would have no choice but to hold their noses and accept it.

"Shen Du is not doing charity; this is an extremely brutal, open commercial scheme."

The analysis head brought up a strategic deduction chart and said through gritted teeth:

"Shen Du is not after the short-sighted windfall of a few hundred million right in front of him at all.

The core of his strategy is just one word: 'Nurture'!

Nurturing user habits, nurturing streamer loyalty, and nurturing the entire indestructible underlying ecosystem of Xinghuo!"

He detailedly broke down the terrifying feedback effect behind this "low-commission profit-sharing" for the executives present:

For the streamers:

Because the platform takes so little, the sales teams have a sufficiently generous profit margin. They don't need to desperately squeeze consumers, let alone sell fake or shoddy goods.

For the users:

Merchants can comfortably lower their profit margins in disguised ways and engage in price wars.

The tens of millions of users at the bottom level get genuine benefits and extremely high product quality, ultimately forming an irreplaceable trust in the platform.

"Let's do a reverse deduction.

If Shen Du enforced a high-pressure 50% commission, streamers would have to pass off substandard goods as quality ones to avoid losing money, and users would inevitably detest and abandon the platform."

The head sighed, "But by actively giving up massive profits, Shen Du has exchanged them for the absolute, unwavering loyalty of streamers across the entire internet.

He has completely welded shut Xinghuo's absolute dominant position in the three-in-one field of 'social + Short Video + livestreaming'!"

"So, what is the conclusion?"

Mr. Ma, who had been silent all this time, finally raised his head slowly, staring at the head on the stage with eyes like torches.

"The conclusion is... the set of game rules laid down by Shen Du has left us with an absolutely unsolvable 'cost-benefit ratio' math problem."

The head swallowed hard and brought up the final slide, which had only two options.

If Tencent wants to enter the game now to get a piece of the pie,

even if they could technically copy a three-in-one software architecture in an instant, they would only face two dead ends:

Dead End One: Squeeze profits for a quick return on investment.

To seize the market as a latecomer, massive research and development, as well as promotion funds, must be poured in during the early stages.

To earn back the hard cash, Tencent would have no choice but to increase the commission rate.

But under the extreme temptation of Xinghuo's 'twenty percent cut,' no top-tier team would be foolish enough to betray Xinghuo and start broadcasting on Penguin.

Without high-quality teams, there would be no good products. Users wouldn't even look, and the money thrown in wouldn't even make a splash.

Dead End Two: Match the cash-burning and fight to the bitter end.

If they held their noses and copied Xinghuo's 'low-profit model,' Tencent, as a latecomer without even a basic user base,

would have to fight a price war against a dominant force that holds thirty million loyal users and an ecosystem of over a million streamers. Just how big would this bottomless pit be?

Burn a few hundred million?

Or several billion?

In the face of an endlessly distant payback period, the entire board of directors would be driven completely mad by this bottomless black hole.

"As long as Xinghuo stands firmly on this low-profit bottom line, if we force our way onto this track..."

The head's voice grew softer, "We will either burn through our funds in a long, hopeless war of attrition, or get deeply mired in the mud and never recover our capital."

After listening to the entire strategic review, Mr. Ma, who was always known for being calm and ruthless, leaned back weakly in his chair.

His face was covered in a deep regret that could not be concealed.

He clearly remembered that just sixty short days ago, when Xinghuo had just emerged, Tencent held its first internal response meeting.

At that time, because the executives did not fully understand this seemingly 'thankless' profit model,

they ultimately chose stability and made the conservative decision to 'wait and see.'

Just two months!

Just because of those sixty days of hesitation, Xinghuo's daily active users firmly locked onto the red line of ten million.

That ecological moat, built from extremely low commissions, a massive user base, and a vast number of streamers, had completely closed.

Leaving not even a crack for Tencent!

"This battle... can no longer be fought." Mr. Ma's voice carried a deep bitterness.

It wasn't that Tencent lacked money, nor that their team wasn't strong.

It was the fatal 'large enterprise disease' and the dilemma of a large ship being hard to turn around.

The scale of QQ was simply too massive.

Forcing their way into that bottomless 'low-profit mud pit' to compete in consumption would highly likely drag down their capital chain directly,

and even cause Tencent's existing social system to completely collapse.

After a long and dead silent weighing of options, Mr. Ma finally shook his head helplessly and let out a heavy sigh:

"Forget it!"

These three words, heavy as a thousand pounds, echoed in the conference room for a long time.

"No matter how popular Xinghuo gets, it is now Jiyuan Technology's moat."

Mr. Ma took a deep breath, forcing down the unwillingness in his heart, and issued the final directive for strategic contraction to all executives:

"Rather than paying such a high price—one that might even shake Tencent's foundation—to fight to the death with Shen Du,

we might as well gather our energy and focus on polishing our core gaming, office, and communication businesses."

The executives in the conference room lowered their heads in silence.

In this sweltering late June,

everyone knew very well that the peerlessly massive Penguin Empire could only stand aggrievedly outside the moat,

watching itself helplessly and irreversibly miss out on a magnificent new era.