analyst opinion: the rise of livestreaming€¦ · july 2 5, 2017 deborah weinswig, managing...
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July5,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Inthisseriesofshortnotes,weexplorevariousaspectsofconsumerbehaviorasitrelatestotechnologyadoptionandretailintheUSandChina.Inthisreport,wefocusonlivestreamingasawaytomonetizeuser-generatedcontentbyinfluencersandkeyopinionleaders(KOLs).
1) User-generatedlivestreamsarenotnewinChina,noraretheyintheUS,but2016sawincreasingadoptionoflivestreaminginChina,asdistinctcontentmonetizationmodelsemergedaroundvirtualgiftsande-commerce.
2) ThelivestreamingeconomyinChinahassufficientcontentsupplyanddemandtoensureitsgrowthoverthemediumterm,withinvestmentflowingintonewcontentgeneration.
3) ThemarketcharacteristicsandconsumerbehaviorintheUSaremarkedlydifferentfromthoseinChina,butplatformsintheUSareexperimentingwithvirtual-giftfeaturesthatarecommoninChina.WethinkthesehavelimitedpotentialasmonetizationtoolsintheUS.
Deborah Weinswig
Managing Director,
Fung Global Retail & Technology
US: 917.655.6790
HK: 852.6119.1779
CN: 86.186.1420.3016
Analyst Opinion:
The Rise of Livestreaming
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July5,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
ThegrowthoflivestreamingwascertainlyoneofthebigstoriesinChinain2016,andthetopiccontinuestograbheadlinesin2017.Todate,therearemorethan200livestreamingplatformsthatcatertothemobile-firstChineseconsumer,someofthemostpopularbeingYY,Huajiao,Douyu,TaabooLiveandPanda.Thedifferentplatformshavegeneratedastaggeringamountofcontent,withChinesemediareportingthatTaobaoLivealonegeneratedover140millionhoursofcontentinthepastyear.Becauseofitspopularityandeffectiveness,livestreamingisnowwidelyadoptedbybrandsandretailersasawaytomarketandsellinChina.Beyondentertainment,gamingande-commerce,livestreamingisnowexpectedtofindadoptioninnon-entertainmentverticalsasdiverseaseducationandfinance.
FungGlobalRetail&TechnologyManagingDirector,DeborahWeinswig,livestreamedfromtheAlibabaGateway‘17inDetroitattracting26,000viewsonWeibo.
Whileuser-generatedlivestreamsarenotnewinChina,noraretheyintheUS,2016sawincreasingadoptionoflivestreaming,asdistinctmonetizationmodelsemerged.ThisledtotheproliferationofInternetcelebrities(wanghong)andthecreationofthe“cewebrity”economy,whichissettogrowto$17.0billion,accordingtoestimatesfromAnalysys.ThescaleandincreasingsophisticationofthelivestreamingeconomyinChinafaroutshinesitsequivalentintheWest,wherelivestreamedcontentisprimarilyconsumedthroughYouTube,Facebook,Instagram,Twitter,SnapchatandspecializedplatformssuchasTwitchforgaming.
ThisopinionnotediscussesthefactorsthathaveunderpinnedthesuccessoflivestreamingasacontentmonetizationvehicleinChina,andhowthishasledpopularlivestreamingfeaturesinChinatocrossovertosocialmediaplatformsintheUS.
Beyondentertainment,gamingande-commerce,livestreamingisnowexpectedtofindadoptioninnon-entertainmentverticalsasdiverseaseducationandfinance.
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July5,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Monetization:VirtualGiftsBeyondadvertising,whichisthetraditionalwaytomonetizecontentintheWest,livestreamingplatformsinChinahaveleveragedvirtualgiftgivingasawaytoalignincentivesbetweentheplatform,thecontentcreatorandtheviewer.Virtualgiftsarepurchasedbyviewersandpresentedtothebroadcasterinreal-timeduringalivestream.Thebroadcastercanacknowledgethegiftliveandperforminreturn,creatinganengagingexperiencefortheaudience.Thedigitalgiftsarethenconvertedtocashandtherevenueissplitbetweentheplatformandthebroadcaster.
Becausevirtualgiftsofferadirectrelationshipbetweenthequalityofthecontentandtherevenuegenerated,manyaspiringperformershavejumpedonthenumerouslivestreamingplatformstobroadcasttheirtalent,skills,oropinionsasawaytoearnpart-timeincome.Inmanycases,amateurbroadcastershavereportedsufficientcomplementaryearningstoincentivizethemtocontinuegeneratingcontent.Thishasledtotwointerestingoutcomes:1)thereisnowwhatseemstobeasustainablelong-tailofbroadcasterswithnichefollowingsforwhompursuinglivestreamingiseconomicallyviable;and2)theinteractivenatureofvirtualgiftgivinghasledtothecreationofcommunitiescenteredaroundbroadcasters,whichhasspurredthedevelopmentofrelationshipsamongtheirmembersinwhatcanbeconsideredanewformofsocialmedia.Asaresult,thelivestreamingindustryinChinahassufficientsupplyanddemandintermsofcontenttoensureitsgrowthoverthemediumterm.
MonetizationModels:E-CommerceTheotherbigmonetizationmodelforlivestreamedcontentise-commerce.BoostedbyplatformssuchasAlibaba’sTmallLiveandJDLive,contentcreatorshavebeenabletobuildbrandsandfollowingsthatallowthemtooperatee-commercestoreswhichyieldimpressivesalesfigures.Forexample,oneTaobaoKOL,Cherie,reportedthathere-commercestoregenerated¥100million(approximately$15million)duringAlibaba’sSingles’Dayin2016.
Inane-commercecontext,livestreamedcontentlooksalotlikedirectselling—similartoahome-shoppingchannel—whereprominentInternetcelebritiesshowcase,trialandsellproductstotheironlinefollowers.Insomecases,influencershavestartedtheirownlabelsratherthanmarketingorcuratingbrandedproducts.Theyareentrepreneurswhorundigitalbusinesseswithlargeenoughteamstosupportproductsourcing,distributionandafter-salesservices.Fromthisperspective,theinfluencereconomyenabledbylivestreaminghasbecomeadisruptortotraditionalfashionandbeautybrandssellinginChina.
LivestreamingplatformsinChinahaveleveragedvirtualgiftgivingasawaytoalignincentivesbetweentheplatform,thecontentcreatorsandtheviewers.
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July5,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
LivestreamingTrendsWhatisnextinstoreforlivestreamingandthecewebrityeconomyinChina?
Lastyear,wesawdramaticinvestmentfromventurecapitalinlivestreamingplatformsandintalentfrominfluencerincubatorswhichaimtogroomandrepresentthenextbatchofcewebrities.
Alreadyin2017,wehavewitnessedconsolidationdiscussionsontheplatformend,assomeofthe200platformsarenaturallynotexpectedtomakethecut,butthereisalsoanincreasedemphasisoninvestinginbettercontentandexpandingthescopeofverticalsthatarecoveredbylivestreams.Forexample,thepopularlivestreamingplatformcompanyYYisbranchingoutintonon-entertainmentcategoriessuchasfood,automobileandpets.Inaddition,virtualreality(VR)contentisviewedbysomeasthenextbigthingforlivestreaming,whichwillenableatrulyimmersiveuserexperience.And,whileHuajiaoLivereleasedVRZone,a3Dlivestreamingplatform,wearestillalongwayoutbeforemassadoptionofVRcontent,duetothemultipleimpedimentsofthetechnologywhichwillhamperadoptionintheshortterm.
Source:www.huajiao.com
WhatDoestheGrowthinLivestreamingMeanforCompaniesintheWest?Sincethebeginningof2017,wehaveseenseveralUSplatformsstartingtoexperimentwithsomeofthefeaturesthathavemadelivestreamingintoanindustryinChina.YouTubeintroducedthe“Super-chat,”whichenableslivestreamviewerstopaytohavetheircommentfeaturedmoreprominentlyinachatstream,andTwitteradded“SuperHearts,”whicharevirtualgifts,toPeriscopeinJune2017.Inaddition,therehavebeenafewentrantstothemarketthatoriginatedinChina,namelylive.meandlive.ly.However,weremainskepticalaboutwhetherthesefeaturescanbesuccessfullyadoptedintheUS.
WehaveseenseveralUSplatformsstartingtoexperimentwithsomeofthefeaturesthathavemadelivestreamingintoanindustryinChina.
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July5,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
OneofthereasonsthatdigitalgiftgivinghasbeensosuccessfulinChinaisdigitaltipping—thepracticeofsendingasmallamountofmoneytoapublisherorbroadcasterdigitally.Tippinghasbeenadoptedbyplatformsthatsupportcontentintext,audioorvideoformats,suchasWeibo,China’sbiggestmicro-bloggingplatform,whichaddedthefeaturein2014,andWeChat,whichfollowedin2015.Inessence,onlinetippinginChinahasintroducedanewwaytomonetizecontentthatissupportedbyconsumerbehaviorinthelocalmarket.Theubiquityofdigitaltippinghasledtoanincreaseinthenumberofconsumerswho“tip”forcontentandwhosendmoneyonlinethroughdigitalredpacketsasasignofgratitude,apracticethatisalignedwiththetraditionofredpacketgivinginChinaduringtheNewYear,andwhichismadeeasierwiththeincreasingpenetrationofmobilepayments.
Source:WeiboIOSApp
ThemarketcharacteristicsandconsumerbehaviorintheUSaremarkedlydifferentfromthoseinChina.Mobilepaymentpenetration(asmeasuredbymobilepaymentusersasapercentageofsmartphoneusers)isonly43.7%intheUScomparedto83.3%inChina,andgivingmoneyasasignofgratitudedivergesfromtraditionalsocialnorms.Fromthisperspective,themonetizationpotentialofintroducingvirtualgiftstolivestreamingplatformsintheUSseemslimited;however,itwillbeinterestingtoseewhetherthisfeatureleadstoincreasedengagementandinterestinlivestreamedcontent.
OnlinetippinghasintroducedanewwaytomonetizedigitalcontentthatissupportedbyconsumerbehaviorinChina.
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July5,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comKirilPopovSeniorAnalyst
HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,18thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com