Live streaming was extremely popular in 2016, what will be the highlight in 2017?

Live streaming itself is a very "lively" business, and the industry is becoming more and more "lively".

At the beginning of the new year, according to the People's Daily, relevant state departments have recently launched a strict investigation into "unlicensed" and illegal live broadcast platforms . 90,000 live broadcast rooms have been closed, more than 30,000 accounts have been banned, and some small live broadcast platforms will be cleared out. In sharp contrast, large live streaming platforms are gearing up to fight again in 2017. Momo and YY held year-end parties, and each company handed in a good report card. The live broadcast of the Spring Festival red envelope event on Weibo will be the highlight, and other live broadcast platforms will also follow up to launch the "Spring Festival red envelope offensive". The live streaming industry remains hot, becoming an outlier in the Internet industry which is still in the cold winter.

Why does live streaming continue to be so popular? If 2015-2016 brought dividends from technologies such as 4G networks, mobile payments and smart phones, then the dividend that live streaming will reap in 2017 may be the "rise of spiritual consumption" among the Chinese people. A few days ago, Apple started selling App Store recharge cards in China. The background is that in fiscal year 2016, Apple's revenue in Greater China (including Hong Kong, Macao and Taiwan) fell by 17%, but App Store sales increased by 90%. Mobile phones are not selling, but the applications in the mobile phones are selling well. From material to spiritual consumption, it is an important branch of consumption upgrading, and live streaming just caters to this trend.

The way to monetize live streaming is to rely on gaining attention and then monetizing through marketing , or to satisfy users' spiritual consumption needs and make them pay directly. The answer is clear: dividing the user's spiritual consumption budget and making users pay is the mainstream model. The live streaming + marketing or e-commerce model can work, but it must be closely integrated with the e-commerce platform, such as what Tmall and JD.com are trying. It is not difficult to find out from observing the performance of live broadcast platforms in 2016 that there were many explosions but few that made big money, and they were all concentrated on show-type live broadcast platforms, which verifies the above conclusion.

Only three companies have annual revenues in the 1 billion club

In 2016, the company that generated the most live streaming revenue was YY's parent company, Joyy, with Q3 net revenue of 2.0898 billion yuan, a year-on-year increase of 40.3%; net profit of 400 million yuan, a year-on-year increase of 155.8%. Among them, the revenue from live streaming services was 1.7904 billion yuan, a year-on-year increase of 54.5% from 1.1592 billion yuan in the same period last year. Live streaming accounted for 85.67% of the total revenue. The Q4 financial report has not yet been released, and the full-year live streaming revenue may exceed 5 billion. In addition to live streaming, YY also has a rich business matrix including music entertainment, games , education and dating.

Momo, which ranked second in terms of revenue, generated $108.6 million in revenue from its live streaming business in the third quarter of last year, accounting for 69.17% of its total revenue. Live streaming has become the undisputed king of revenue. In the first three quarters, its live streaming revenue was equivalent to approximately RMB 1.26 billion. It is certain that its live streaming revenue for the whole year of 2016 will exceed RMB 2 billion. Live streaming was a completely unexpected opportunity for Momo. Momo positioned itself as a stranger social network , then turned to interest-based social networking, and then prepared to become a music performance platform "live". After switching to show live streaming, it took the lead and became the big winner in the mobile live streaming trend. Now Momo's strategy is to use live streaming as a springboard for the "pan-entertainment" and "pan-social" strategies, and to focus on short video and other businesses.

Another live streaming platform with annual revenue exceeding 1 billion yuan is 9158's parent company Tiange Interactive. The company's net revenue in the third quarter was approximately 236 million yuan, a year-on-year increase of 49%. There is no doubt that its full-year revenue in 2016 will exceed 1 billion yuan. A few days ago, YY and Momo both held grand year-end celebrations, but Tiange Interactive did not do any similar publicity activities, which shows how low-key it is. In fact, this company is the originator of the live streaming platform. YY emphasizes that it is "the founder of the domestic online video live streaming industry." 9158 was established at the same time as it in 2005, and was initially positioned as an online video show. YY was engaged in game voice live streaming for a long time. As for the "pioneer of mobile live streaming" Meerkat, which has already fallen, it was established 10 years later. Tiange Interactive was successfully listed in Hong Kong in 2014, becoming the first stock in the show industry. Now it has completed the transformation to mobile live streaming, and has formed a matrix of Crystal Live, Miao Live, and Happy Live on the mobile terminal. It is also involved in diversified businesses such as games and financial technology.

Live streaming is very popular, but only these three companies have annual revenue exceeding 1 billion. Weibo Yizhibo is very popular, but monetization is not on the agenda yet. Two other well-known entrepreneurial live streaming platforms , Inke and Huajiao, have not yet announced their live streaming revenue data, but their revenue in 2016 probably did not exceed 1 billion. Unlike 9158, YY and Momo, which are making money quietly, these platforms are still subsidizing the content side, such as giving anchors a very high share of the profits. Not long ago, Yingke’s plan to charge a handling fee for withdrawals was resisted by the anchors. It can be seen that the anchors have been spoiled. However, 2017 will be the year for live streaming platforms to realize their revenue. Not only will it be inevitable to charge fees for withdrawals, the status of anchors may also change significantly.

The live streaming market after the reshuffle will compete on monetization capabilities in 2017

In 2016, the live broadcast market was very bustling, but there were not many platforms that made big money. While subsidizing the content and bandwidth, the live broadcast platforms were also spending more on content review costs. With the great reshuffle in 2016, players without strength have been eliminated, and the strong players have basically "run away". One type is the show platforms represented by Joyy and Tiange Interactive, which have completed the mobile transformation; the second type is the entrepreneurial platforms, with Inke, Huajiao and Meipai forming the first camp; and another type is the live broadcast services of social platforms, including Weibo Yizhibo, Momo Hani Live and QQ Now Live (there is news that WeChat is testing the live broadcast of friends, which has not been confirmed). In addition to these three categories of comprehensive live streaming platforms, there are also vertical live streaming platforms such as Douyu .

The live broadcast war in 2017 will be held on the above platforms, with the following highlights:

1. Live streaming platforms go to rural areas and overseas

The live broadcast users in first- and second-tier cities have basically been circled out. Third-, fourth-, fifth- and sixth-tier cities are the source of new mobile Internet users, and will also be the source of new users for the live broadcast market. Tiange Interactive CEO Fu Zhengjun once said in an interview that "China's population shows a siphon effect, and the population of third- and fourth-tier cities continues to pour into first- and second-tier cities, so Tiange chose to focus on third- and fourth-tier cities." Just like Kuaishou has taken root in third- and fourth-tier cities and rural areas for short videos, Tiange Interactive has taken the lead in third- and fourth-tier cities, but YY, Momo, and Inke will inevitably go to these places to expand the market. The move of live broadcast platforms to rural areas means that Tiange Interactive must fight a defensive battle. While occupying third- and fourth-tier cities, Tiange Interactive has begun to extend its tentacles to Southeast Asian cities. The globalization of the second half of the Internet is also an attempt by many Internet giants. Baidu and Cheetah have already launched live broadcast businesses overseas. Will YY follow suit?

2. Socialization of live streaming platforms

In 2014, before Momo went public, an investment bank analyst asked Huya CEO Li Xueling what he thought of Momo, which was founded by his former NetEase colleague Tang Yan. He said at the time:

"YY and Momo are not in competition, because YY mainly provides real-time content, which is similar to a show or party. Users participating in such activities is a form of entertainment in itself, which is different from the usage habits of Momo users."

What Li Xueling didn't expect was that a year later, Momo launched live streaming and became the biggest dark horse. After four quarters, it became the second in terms of revenue in the live streaming industry and was expected to become the first. The reason why Momo was able to take over the live streaming market is due to its inherent social attributes. The girls on Momo Live are willing to socialize by default, and users give gifts to the girls for the same purpose of socializing. Users on Momo will always encounter "photo scams" with severe skin smoothing and marketing accounts managed by men who pick their toes. Live streaming allows users to get to know strangers more realistically, which is the basic logic behind Momo's victory in the live streaming war. It is precisely because I see YY emphasizing the word "making friends" and Tiange Interactive is positioned as a "video social platform", and everyone emphasizes social attributes.

3. Refined operation of anchors

The live streaming industry rose in 2016. There were not many live streaming platforms that made a lot of money, but there were many anchors who made a lot of money.

• First, live streaming covers more users, more paying users, and users are more willing to pay, so the overall revenue has increased;
• Second, the platforms provide high subsidies to anchors. In the words of Fu Zhengjun, CEO of Tiange Interactive, it is a "life-threatening" way of playing. They give anchors a commission of up to 98%. The platforms must be operating at a loss. Only Huya and Tiange stick to the original commission ratio.
• Third, the advertising industry’s emphasis on live streaming has led to high premiums for anchors. The anchors’ rate of publication was raised every week in 2016 and was astonishingly high. These revenues have nothing to do with the platform.

However, in 2017, the number of anchors has increased significantly and is even a bit excessive. The number of anchors on large platforms has reached hundreds of thousands. Both top and long-tail anchors are no longer scarce resources. If an anchor wants to stand out, he or she must rely not only on talent, strength, and hard work, but also on luck. Therefore, the platform will inevitably reduce the share ratio and return to normal levels to ensure the platform's healthy operation capabilities. The operation of anchors has also changed from extensive competition in quantity to intensive cultivation in the form of "family head system" similar to Tiange and "MCN (agent) system" of Weibo, which feels a bit like returning to the traditional way of playing in the film and television entertainment industry.

4. Become a content distribution channel

In 2016, live streaming platforms were very fond of celebrities, but they mainly used the influence and appeal of celebrities to attract fans. For example, Meipai and Yingke had many operations based on celebrities. The competition for high-quality content such as celebrities, especially concerts, will continue in 2017, but it will be more of a monetization consideration. For example, helping concerts sell tickets through live broadcasts, as was the case with Faye Wong's "Fantasy Live," and collaborating with programs to help brands gain exposure on live broadcast platforms. In short, as the live streaming platforms expand their user base and build up their distribution capabilities, in 2017 they will no longer pay high prices to invite celebrities to live stream on their platforms, but they will definitely become distribution platforms for high-quality live content.

5. Acceleration of integration of VR and live broadcast

Faye Wong successfully tried VR live streaming at her concert late last year - Hu Yanbin analyzed that her off-tune was because the VR live streaming made "the effect too real." After that, Obama’s farewell speech also introduced VR live broadcast, and the Spring Festival Gala in the Year of the Rooster will also introduce it. VR live streaming has become a standard feature of major events and has been accepted by the market. This is not a new thing, but now the consumer end, that is, VR devices, are more popular than before. The terminal problem of VR content input has also been solved with the emergence of Nokia OZO. In the future, anchors will also play VR in daily live broadcasts. Major live streaming platforms will also actively follow this trend, and VR has gradually become popular.

6. Explore more monetization models

Judging from the most profitable live streaming platforms in 2016, user gift-giving, a method inherited from show business, is the mainstream method of monetizing live streaming. In 2017, this type of gameplay will still be the mainstream, so live broadcast platforms will pay more attention to two key data: one is the number of paying users, and the other is the user AR PU value. Compared with Momo, both indicators of Joyy and Tiange Interactive are still relatively low, and there is still a lot of room for development.

In addition to following the user gift-giving model, there will be more exploration of new monetization models. During last year's Double 11, Yingke cooperated with Tmall and received more than 10 million in advertising fees. More advertisers will realize the advertising and marketing value of live streaming platforms, and live streaming platforms or third parties will launch marketing tools such as live streaming red envelopes, watch-and-buy, and advertising platforms to satisfy advertisers.

The subsidy war is over, and making big money is the mainstream in 2017.

7. Live streaming platforms enter harvest season

Judging from the speed of financing , the live streaming market will be the fastest growing Internet market - even faster than the taxi app market. The listing of startups or their joining of large companies is a typical manifestation of the "harvest season" of every Internet boom. 2017 will be the harvest season for the mobile live broadcast market. At least judging from the US$500 million financing of Yixia Technology, it may not be far away from listing, provided that there is a breakthrough in monetization. In addition to the way out of going public, BAT often starts after startups "come out" and selects outstanding players. In 2017, there is a high probability that BAT will acquire live broadcast platforms. Listed companies that already have live broadcast licenses, such as YY, Momo, Tiange Interactive and Meitu, will try to make live broadcasts bring in more real money.

In short, 2017 will be the harvest season for the live streaming industry.

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The author of this article @罗超 is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!