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Matthews Asia Weekly

An amateur pianist expresses surprise at receiving a generous "tip" in the form of a virtual yacht for a performance she live-streamed.

China's Age of Entertainment for All

Week of August 19, 2016

Taking selfies to share with friends is so “yesterday” for millions of consumers in China. The relatively new fad involves using live-streaming apps to spontaneously share your life—in a flourishing reality show-type industry—and in some cases, actually make money from it.

Live streaming apps in China allow streamers to distribute live videos and simultaneously interact with viewers. However, Chinese app developers and users have taken this to a new level. So what kind of content is broadcast? Pretty much anything you can imagine. Most times you will see young female streamers with nice makeup, dancing and singing. A big portion of the live streamers are video gamers, showcasing their gaming techniques or broadcasting live games. There are young guys doing hip-hop on the street or demonstrating how to eat corn on the cob using a drill, and even Buddhist monks are livestreaming spiritual wisdom from a temple. 

These live-streaming apps have integrated features that motivate people to stream more and try to generate profit. Viewers who like what they see can “tip” streamers with virtual gifts bought from the apps. The streamers can then trade in the virtual presents for cash. Usually, streamers and the apps split the income from virtual gift sales with 30% to 50% going to the content creators.

Why do users pay for virtual gifts at all? This appears to be a unique Chinese consumer phenomenon, perhaps a reaction to government censorship of broadcasts. Now, anyone with an app and an Internet connection can become a live-streaming star and find viewers happy to reward this direct engagement and entertainment. This dynamic creates an entire industry around such live-streaming apps. Many tech companies and entrepreneurs have rushed to create their own streaming app targeted at niche market segments. A quick search on popular Android app stores in China will turn up more than 100 apps. The leaders in this market could attract more than 100 million active monthly users and further monetization opportunities are vast. 

Talent agencies have also caught on to this wave by training professional streamers. Most of the talent never sees their popularity grow beyond the app. But a few lucky ones have actually become online celebrities and received contracts for TV shows and movies.

You don’t need to physically be in China to get a sense of the booming live-streaming industry. All you need is a smartphone and a few apps downloaded. But, being in the online content business in China means streamers also have to deal with the government’s strict content restrictions. Still, Chinese entrepreneurs are innovating and creating new business models in a parallel universe behind the “Great Firewall.” More importantly, this showcases that China’s new generation of smartphone users are quite unique in their own consumer and online behavior trends.

Weihao Xu
Research Analyst
Matthews Asia

The views and information discussed in this article are as of the date of publication, are subject to change and may not reflect the writers' current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. 

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