In 2017, who will be the first to gain an oligopoly in the live streaming market?

At the beginning of 2017, the live broadcast market was very lively. First, around January 2017, relevant state departments conducted strict inspections on "unlicensed" and illegal live broadcast platforms . As many as 90,000 live broadcast rooms were closed and more than 30,000 anchor accounts were banned... Then in February, with the closure of Guangkong Live, negative words such as bankruptcy and loss also lingered in the live broadcast market. Apart from policies and chaos, we can be sure that the live streaming market, which has been hyped for several years, will undergo a reshuffle in 2017. So will the market be dominated by the "big guys" such as Yixia Technology (the parent company of Yizhibo), Huya (the parent company of YY Live), and Momo, which are backed by Weibo, or will there be up-and-coming companies that will catch up?

The live broadcast market is struggling due to internal and external difficulties

According to relevant statistics, there were more than 300 live broadcast platforms of all sizes in China in 2016. In the fierce market competition environment, hormone-stimulating elements such as "beauty" and "pornography" are the main means for many live broadcast platforms to "attract attention". The huge amount of live streaming also brings challenges to platform content supervision. From 2016 to date, pornographic, violent and even drug-related live streaming content on live streaming platforms has attracted the attention of relevant departments. From the second half of 2016 to date, a number of regulations targeting the live streaming market have been implemented one after another, including the "Notice on Strengthening the Management of Online Performances", the "Notice on Strengthening the Management of Online Audiovisual Program Live Streaming Services" and the "Internet Live Streaming Service Management Regulations".

At this point, the problem has been brought to the table - those live broadcast platforms that once skirted the line of "pornography" have seen their pornographic economy drastically reduced, and their income is single. How can they continue to rely on tips?

On the other hand, most participants in the live broadcast market are in a swamp of losing money to gain publicity . The most recent event was in mid-February this year, when Guangquan Live, a live streaming platform that had received RMB 12.5 million in angel round financing as early as September 2015 and was valued at RMB 500 million, suddenly went bankrupt. The reasons behind this are thought-provoking. More importantly, the collapse of Guangkong Live is not an isolated case. According to incomplete statistics, among the more than 300 live broadcast platforms in China, 1/10 of the platforms have died, such as Weibo, Wangju Live, Maoer Live, Curry Live, Ainao Live, Qu Live and Meigua Live, and dozens of other live broadcast platforms have disappeared. The situation in foreign markets is similar. In October 2016, the "pioneer of live streaming," Meerkat, died, much to one's regret. It once had millions of users and was valued at $40 million when it became popular, but after being acquired by Twitter in 2016, it still couldn't survive being sandwiched between Periscope and Facebook Live.

Under such a situation of internal and external difficulties, many people in the industry believe that if the live broadcast industry cannot make a breakthrough in commercial monetization, it is very likely to be left in a mess after the hundreds of broadcasts compete with each other.

In addition to losses and bankruptcies, the beginnings of oligopoly are emerging

That’s right, all signs indicate that 2017 is likely to be a period of reshuffle in the live streaming market . As of November 30, 2016, a total of 31 live broadcast companies in the country completed 36 financings, involving a total amount of RMB 10.832 billion. However, in 2016, the overall revenue of the live broadcast industry was only 1/3 higher than the total financing amount. Such data is an abnormal development state in any industry. Therefore, it can be concluded that in 2017, those small and medium-sized live broadcast platforms with weak funds or inability to monetize will be swept out, while some live broadcast companies at the forefront of the market will have more say.

Looking at the current market, which live streaming companies have "oligopoly images"? We can get a glimpse of this from the three companies: Yixia Technology (the parent company of Yizhibo), Huya (the parent company of YY Live) and Momo.

Yixia Technology has three mobile video platforms: Miaopai , Xiaokaxiu and Yizhibo. According to the fourth quarter and full-year financial report for 2016 released by Weibo in late February this year, as of the end of 2016, Weibo's monthly active users increased by 77 million to 313 million, with mobile users accounting for 90%. At the same time, Weibo's profitability further improved, with non-GAAP operating profit margin reaching 35% in the fourth quarter of 2016. Weibo’s second rise is inseparable from the support of Yixia Technology’s mobile video business.

At the same time, Weibo is also the largest investor in Yixia Technology, and the two companies have a very close relationship in terms of both funding and business. Since 2013, Weibo has participated in four rounds of investment in technology companies, with a total investment of US$190 million. It is worth noting that the financial report also shows that Weibo's layout in video and live broadcast has achieved certain results. In December 2016, the average daily playback volume of Weibo videos increased by 713% compared with the same period of the previous year, and advertising and marketing revenue increased by 47% year-on-year to US$129.5 million. What this means is that the commercial value growth of Yixia Technology, which provides short video and live streaming services for Weibo, is also bound to be considerable. This is also the reason why it is said that technology has an "oligopoly" - with the support of Weibo, the content produced feeds back to Weibo, and its development momentum is strong.

Of course, such a large live broadcast market is destined not to be a carnival for one person. The company with the highest live streaming revenue in 2016 was YY's parent company, Joyy, which had net revenue of RMB 2.0898 billion and net profit of RMB 400.0 million in the third quarter of 2016. Its live streaming service revenue was RMB 1.7904 billion, accounting for 85.67% of the total revenue. In addition, Chen Zhou, CEO of Joyy, also said that from the fourth quarter of 2015 to the third quarter of 2016, live streaming brought Joyy a total of approximately RMB 8 billion in revenue. It can be seen that Huya has not only made money in the live streaming market, but its development momentum is also fierce.

Similarly, as a mobile social platform second only to WeChat and QQ, Momo's third quarter 2016 financial report showed that the live broadcast business generated revenue of US$108.6 million, accounting for 69.17% of Momo's overall revenue (US$157 million). It can be seen that Momo will definitely regard live streaming as the company's core business in the future.

In addition to these, platforms such as Yingke and Huajiao Live also have "oligopoly images" and have relatively large numbers of monthly active users. Among them, Yingke's monthly active users reached an astonishing 113 million in the data statistics in September 2016.

The live streaming market is stumbling. Where lies the problem?

Although the era of oligopoly is coming, it is undeniable that there are still many problems in the current live broadcast market. Even the above-mentioned live broadcast companies such as Yixia Technology, which have an "oligarch image", should not be happy too early, not to mention those small and medium-sized live broadcast platforms that are on the verge of losses and bankruptcy.

According to estimates by relevant media in the industry, the bandwidth costs of most live streaming platforms currently exceed RMB 30 million, not counting the labor costs of anchors and employees. Take Huya as an example. In the third quarter of 2016, the platform's revenue was approximately RMB 197 million, but its costs were close to RMB 270 million, and its losses exceeded RMB 72 million. By analogy, although the costs of small and medium-sized live streaming platforms have been relatively reduced, their revenues have also decreased, and their losses remain the same. Therefore, if the monetization problem is not solved and financing cannot keep up, the ending of the story can be referred to as Aperture Live.

Secondly, capital has been cold . The capital market has entered a cold winter, which is a dilemma faced by the entire Internet industry. No one can change this environment in a short period of time. In this environment, capital has become more cautious. It is predictable that subsidies for the live broadcast market in 2017 are unlikely to occur, and the number and amount of investments will also drop sharply. So what should live streaming platforms with poor monetization capabilities do?

Finally, the content of live streaming platforms is homogenized. As the live broadcast industry continues to evolve and differentiate, industry insiders divide live broadcast content into three mainstream modes: games , shows, and general life. However, these few three modes will often quickly cause users to become aesthetically fatigued and fail to provide a differentiated experience, which in turn seriously affects the development of the live streaming platform.

If you want to be the leader, where should you focus your efforts?

The prospects of the live broadcast market are unquestionable. According to the latest data from the China Internet Information Center, the number of domestic live broadcast users has reached 325 million, accounting for 45.8% of domestic netizens. Such a large user group will inevitably bring considerable economic benefits - the industry predicts that the total output value of the live broadcast market will exceed 100 billion yuan by 2020. Everyone wants to eat such a big piece of cake, but how can we eat it in an elegant way and get more cake? Perhaps we can start from the following three aspects.

1. Traffic monetization

How to deeply tap into the commercial value of huge traffic is a core demand of live streaming platforms.

(1) Hard advertising and soft advertising are the most direct and crude methods

Hard advertising is easy to understand. It is to insert advertisements in obvious positions on the live broadcast platform. In 2016, Yingke offered a content marketing package for a sky-high price of 20 million, which caused an uproar. The opening screen advertising rate was 26 times that of Weibo. Shifting the focus to commercial monetization is the main strategy of live streaming platforms in the second half of the game. However, the most important thing for brands about the price of hard ads is to seek cost-effectiveness. The sale of hard ads should not be the main focus of the platform.

Soft advertising relies on creativity. Through scene-based construction methods such as customized brand decorative walls in the live broadcast room and live broadcast reward gifts, the sense of advertising can be weakened and brand emotion can be increased. For example, during the 2016 Olympics, Yizhibo teamed up with Pulse to customize "Pulse Gold Coins" gifts, achieving strong brand exposure throughout the entire site. Taking advantage of the Olympic Games, Pulse Gold Coins appeared in many popular live broadcast rooms. Every time a user swipes a gift, it is an advertisement. The more views the live broadcast room has, the more exposure the advertisement will get. For brands, this is undoubtedly a better choice.

(2) Integrated Marketing

In fact, both hard advertising and soft advertising remain at the level of traditional advertising sales and do not reflect the unique advantages of the live broadcast platform. At present, integrated marketing is likely to become the main revenue source for live streaming platforms in the future. Using live streaming to create marketing events can accurately deliver product and advertising information to users, achieving a win-win situation for the platform, brand, and users. Perhaps many people’s general perception of live streaming advertising is that it is not feasible. Because live streaming is an attention economy, people naturally pay attention to the host, and no one wants to watch advertisements. Is this really true? Not really. In August last year, Liu Yan sold 20,000 walnuts, 4,500 lemon slices and more than 2,000 facial masks in a 10-minute live broadcast on Taobao. Similarly, on Yizhibo, comedy stars Shen Teng and Ma Li appeared on Yizhibo to perform scene marketing, and 30,000 Golden Dragon Fish products were sold out within 15 minutes. There were also examples such as Yizhibo selling the same amount of Midea air conditioners as it sold in one day in one hour, and 150,000 Dettol hand sanitizers were sold in one live broadcast. The list goes on.

In fact, for integrated marketing, what matters is platform resources. Looking back at the activities of Yizhibo and Olivilan, two couples, Sha Yi and Hu Ke, and Lu Yi and Bao Lei, were invited to live broadcast on Yizhibo to recreate the "Fengwei dishes". Online promotion was carried out through celebrities, Yizhibo, and Weibo, and offline promotion was carried out through minute-by-minute advertisements covering office buildings and apartments, integrating online and offline into a closed loop. Celebrities live broadcast on-site endorsement and shopping guides were used, and then traffic was directed to the sales platform, building a matrix of "live broadcast + celebrities + e-commerce + Focus Media + Weibo". The two live broadcasts received a total of 60 million fan interactions. For Yizhibo, there is another killer feature, which is the linkage effect formed with the two products of the same company, Miaopai and Xiaokaxiu. The parts with high viewing and comment volume in the live broadcast are automatically captured and edited to Miaopai and Xiaokaxiu through the background for secondary dissemination, which increases the brand communication effect exponentially.

2. UGC (User Generated Content)

The phenomenon of content homogeneity on live streaming platforms is well known, so is there any way to create content that is unique to the platform? In the live streaming market, in addition to games, shows and general life, the live streaming platforms actually have a large number of vertical content gaps to explore, such as finance, maternal and child care , venture capital, and tourism.

In fact, in the current live broadcast market, platforms such as Momo, Yingke and Yizhibo have already taken action in these sub-sectors. For example, Momo has been thriving in the live streaming market by leveraging its own social platform. Inke has invited celebrities such as Gao Yuanyuan, Liu Tao, Wang Han and Tiantian Brothers to join its live streaming, which has also brought in considerable user traffic. In the first content list released by Yizhibo in 2017, through a multi-dimensional combing of the platform's content, it was found that among its more than 40 vertical content categories such as sports, astrology, entertainment, and education, users in areas such as sports and entertainment have stronger stickiness.

The content layout of the live broadcast platform seems to have no direct relationship with commercialization. However, it is indeed the foundation for the long-term existence of the platform . Only by retaining and expanding the user base with high-quality content can the subsequent business logic have a foothold. As for Yizhibo, it has excellent content providers such as Dong Lu and Lu Qi. The average viewing volume of the top ten content lists in January reached more than 1 million. Therefore, Han Kun, founder and CEO of Yixia Technology, once said: Yizhibo’s revenue exceeded 100 million yuan in the month of its launch, and currently half of Yixia Technology’s revenue comes from live streaming.

3. Business model

The first two points are strategic issues, while the business model rises to the strategic level. At the beginning of this year, Yixia Technology held business promotion conferences in Beijing, Shanghai, Guangzhou and Shenzhen, elevating commercialization to the company's strategic level. It can be said to be the most active mobile video company in commercialization. Liu Xinzheng, senior vice president of Yixia Technology, said at the meeting that the three products will be integrated to provide customized marketing solutions for brands and become a marketer in the mobile video industry. It is undoubtedly a smart strategy to sell the company's three products, Miaopai, Xiaokaxiu and Yizhibo, in a staggered and bundled manner, integrate resources across the entire platform, and point all three swords towards commercial monetization.

The most recent example is the cooperation between the "Miaopai Star Greetings" event and the Dabao brand during the Chinese New Year, which invited celebrities such as Lang Ping and Lin Gengxin to use Dabao brand customized templates to record "Star Greetings" videos, which triggered netizens to spontaneously imitate and forward them, achieving a good brand interactive exposure effect. In the end, the Dabao event had a total exposure of 530 million times, a total playback volume of more than 40 million, and more than 5,000 video engagements. Immediately afterwards, in mid-February, Miaopai launched the short video 6S pre-roll advertising, becoming the first platform in the mobile video field to launch pre-roll advertising. The first trial campaign advertising was placed on 50 top influencer accounts signed to Miaopai. In just two days, the video was played 130 million times, a remarkable achievement.

As a live streaming platform, Yizhibo, Miaopai and Xiaokaxiu are both independent and interconnected in coordinating each advertising marketing, making choices based on brand tone, target effects and other requirements, and ultimately customizing a complete marketing plan. This is Yizhibo's differentiated commercial monetization strategy, and it is also the most systematic business model in the current live streaming industry.

Finally, there are definitely some profit-making directions waiting for live streaming companies to explore, plan and compete. As for 2017, among giants such as Yixia Technology, Huya, Momo, Inke, Huajiao Live and BAT, which one will be the first to gain an oligopoly in the live streaming market, we just have to wait and see!

Mobile application product promotion service: APP promotion service Qinggua Media advertising

The author of this article @曾响铃Compiled and published by (Qinggua Media), please indicate the author information and source when reprinting! Site Map