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Crisis and Opportunity Coexist: The Battle to Defend the Survival of Online Entertainment in the Pandemic (Part 2) - Interview with Color Star Technology Co., Ltd. (NASDAQ: CSCW)

·13 min read

NEW YORK, Feb. 9, 2021 /PRNewswire/ -- Recently, Luke Lu, CEO of Color Star Technology Co., Ltd. (Nasdaq: CSCW) (hereinafter referred to as "CSCW"), accepted an interview with the HK Finet Group. Mr. Lu provided the following responses regarding CSCW's corporate breakthroughs and development in response to the COVID-19 pandemic:

Part 2: Continued from Part 1

Journalist: Next, let us talk more about the company's business plans for the second half of the year and future development. The initial success of CSCW has filled the company with hope for the future. From now through the second half of the fiscal year – from January 2021 to June 2021 – what are your plans and expectations for CSCW?

CEO: Our transformation is a new beginning. In the future, the company will move to an offline entertainment + Internet-based model, which is inspired by our online experience in the first half of the year. In fact, we have already begun work to realize this model and have formulated a work plan for the period from January 2021 to December 2021. There is a great demand for our business and many customers have made reservations for online activities. Our activities have been scheduled up to July and orders are still continuing. We pray that the spread of the pandemic will slow down soon and we are ready to respond accordingly when it does. To thank everyone, we are also in discussions with well-known singers to plan a charity performance for everyone later this year. It is our hope that we can help to give everyone a happier life this year. I personally also hope that CSCW will provide shareholders with a good annual report at the end of the year.

Journalist: The business development you are talking about here refers to the online business model, correct?

CEO: Covid-19 is still restricting and affecting our lives to a large extent. Although vaccines are being distributed in many countries, in the meantime, people still hope to have some fun and relief from the year-long pandemic. We are willing to help.

Our current business model includes online concerts, celebrity online education, celebrity peripheral products, and upcoming celebrity interactive videos, which will bring a whole new experience to fans around the world. The company will continue to dig deeper into the online model, increase its efforts to develop IR artificial intelligence and AR video effects and other sectors, and incorporate technology components based on our original business. This is not a simple matter of just watching the concert online - let me give an example. I look at the company's business report every day and the most popular and influential American stars today are among the stars of our online concert bookings. The previous, offline concerts of these top stars were watched by tens of thousands of people via live audiences, but now, the audiences and fans who buy tickets to watch these top stars number in the hundreds of thousands (and in some cases, millions). This broadcast volume is extremely large and cannot be supported by ordinary systems. Although the online business has the advantage of multiplying and expanding our consumer base, it also requires many technological resources from and functions of the IT system, such as how many servers are needed in which countries, data transmission and calculation methods, network security issues, etc. Now we have to consider these new issues and balance both technical reliability and costs.

Recently, there has been a lot of internal discussion within CSCW regarding IT development for our business, as we plan for the company's future. It also gave me a new and in-depth understanding of the development of the Internet. As we implement the entertainment + Internet model, our team has embarked on this journey with our audience and fans, and awaits the arrival of a new world that incorporates this new model.

Journalist: Mr. Lu, what is the current situation of CSCW's offline business? Amid the pandemic, the industry is mostly in a state of suspension – is CSCW also?

CEO: First of all, I want to note that CSCW did not abandon its original offline business just because it discovered this new online business. In terms of offline business, we have been working hard despite the pandemic and have a team that has now settled in Dubai, so that we can start our offline entertainment activities in the Middle East.

The International Jockey Club in Dubai, along with related entertainment services (such as Club and LIVE HOUSE), are big attractions in the local area. LIVE HOUSE's average annual sales total to about $16 million USD. We are now negotiating site selection with a number of local five-star hotels, and our LIVE HOUSE plans to open in mid-year. With Dubai as the center, we plan to complete the establishment of 2 or 3 LIVE HOUSE venues in the Middle East this year. The operating income of each house should be as high as the average annual sales notes above (possibly higher). After we have a physical Live House in the local area, we will integrate an online platform, as appropriate, to broadcast live performances of live artists. At the same time, our team has reached business deals with many companies in Dubai for TV programs and live music festivals. For more information about our efforts and operations in the Middle East region, interested readers can review the company's year-end annual report, under the offline entity business section of the financial report section. This income is a new source of business for the company, and with the potential market in the Middle East region, the scale of 2-to-3 LIVE HOUSE venues, 3-5 concerts, plus the income of TV programs, the company believes that it's worth doing business in this region.

Journalist: If this is the case, will CSCW achieve dual business channel operation of its online and offline businesses ahead of schedule within the year?

CEO: The company did not have a set schedule for expansion and as such, it will not operate offline until the end of the pandemic. We understand that many companies are also in the same situation. When we develop the Middle East business and land in Dubai, we aim to overcome many of the pandemic's effects as we continue to develop our offline physical businesses.

Journalist: Since Amazon started its Internet business, many companies such as Netflex, Uber, and Carmax have followed suit, and now there are more. As we all know, the valuation of Internet companies in the investment community is much higher than that of physical companies. Do you have any plans to transform CSCW into a purely Internet-based company in the future?

CEO: I have always believed that customers' needs should guide the development of a company, not revenues. Of course, a company cannot afford to stay unchanged and must adapt to the development of the times, and we are no exception. CSCW exists to serve our customers, which include audiences (online and offline), fans and students. Online channels are very important and because we also attach great importance to them, the company has increased its investment in online channels. What I do must be in line with the market to meet the needs of customers. As for the means of service, I do not have a final say in this. This is what the market/customers tell us, and we will then create it. Considering that the business of most entertainment + Internet companies in the market consists of music and video websites, etc., in comparison, we provide more diversified and unique offerings. CSCW's online business is both a sharing platform and a content producer, with offline performances such as concerts, TV variety shows, DJ parties, "cloud parties", etc., further enriching the online business. We also have copyrighted content and are in the process of developing artificial intelligence and visual scenes. In the future, we will provide additional offerings on the online platform, such as celebrity socialization and entertainment news, and partner with celebrities to shoot and produce online movies and television. This is our advantage. The pandemic did not defeat us, but has only made us stronger.

Journalist: CSCW has made some achievements in business development, both online and offline, including the development of the Middle East market. Can you talk about the more significant work that your company is doing?

CEO: We have made great efforts to develop our business this year, and we have achieved some results so far. You invited me to talk about these things today and I am very willing to talk about them, as they give me a great sense of satisfaction and accomplishment indeed! However, some projects that have a major impact on CSCW's future business (which can change the valuation of the company by investors) must go through formal channels and be reviewed by lawyers before I can announce them. But there is also good news for you – CSCW has several influential, major market projects and deals now entering their final stages, and will be announced in the next 2-3 weeks. So just wait a bit longer, and you'll hear more about those projects soon.

Journalist: I will pay attention to company news to see what the company will develop next.

My last question is about the capital market performance of CSCW. The company's business operations do not seem to be a major problem and one could even say that the company is in a position that many others would envy. Now CSCW has entered into the stage of business development and market expansion before its industry peers, simultaneously developing two business channels. But it seems that this success has not translated to the capital market. Why do you think CSCW's stock price performance does not mirror its business development?

CEO: I have said before that I don't care about using the stock price to measure the performance of CSCW's business and that the stock market is out of sync. I think most companies are in this same situation. This should be a temporary out-of-sync period caused by lagging capital market information, which will eventually balance itself out. While I did hear someone tell me that CSCW stock is undervalued, I will not comment on that. Our company has a clear division of labor – the CEO is responsible for the business and the company's overall strategic layout while our VP and CFO are specifically responsible for the capital markets. I personally think that if someone underestimates the stock price of a company, they must have their reasons. But at the same time, if investors are buying stock in large quantities, it also reflects that many investors think that this is their opportunity. The daily trading volume of CSCW is in the millions or even tens of millions of shares. It is said that this is a rare indicator for small-cap companies. This trading volume also proves that the company has a lot of investors and fans who treat CSCW as a star stock. While supporting their favorite celebrities, they have also paid attention to the company, proving that we have a lot of influence. I believe that professionals in the capital market, fund managers, and investment bankers understand our value. Every day, institutional investors contact our CFO and VP by email and phone, hoping to invest in us, which also shows that they are confident in the company's future development.

Journalist: Thank you Mr. Lu. Your company's story is very interesting. If possible, I would like to have a follow-up interview with you later this year, okay?

CEO: Thank you very much for your interest. I would be happy to have the opportunity to sit down and talk with you again and answer your questions.

The Journalist's closing comment: The scale of damage of the COVID-19 pandemic is unprecedented. It affects each of us, every business, family and individual. CSCW is a multi-faceted entertainment and online sharing platform with celebrities as its core asset. I'm interested in CSCW because I understand the story of the company and that they are fighting for their own survival. Not only can I see how CSCW embodies the survival of the fittest, but also through CSCW, we can see how superstars have adapted and changed their brand strategies during the pandemic. How do small and medium-sized enterprises survive the pandemic? The pandemic has changed the work- and lifestyles of many people, and even the top stars are no exception. There is no doubt that Covid-19 is evil and generally hated by us, but the irony is that it also treats everyone equally in life, and has nothing to do with our wealth and status. Albert Einstein once said: "In every crisis there is a huge opportunity." CSCW seems to have found its opportunity. But for all of us, what is our opportunity out of this crisis?

Forward-Looking Statement

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantee of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; the growth of the educational and training services market in China and other countries where CSCW conducts its business; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward–looking statements to reflect events or circumstances that arise after the date hereof unless required by applicable laws, regulations or rules.

For more information, please contact:

William Tu
Skyline Corporate Communications Group, LLC
One Rockefeller Plaza, 11th Floor
New York, NY 10020
Office: (646) 893-5835
Email: wtu@skylineccg.com

Cision
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SOURCE Color Star Technology Co., Ltd.