Independent live streaming platforms have reached a turning point: Either they stand with the giants or they fall with the wind

"The situation is much worse than you said."

After Sina Technology published the report "Live broadcast and Q&A are accelerating their standardization and functionalization, how far can independent applications go?" last week , mobile live broadcast practitioner Hua Cheng lamented to Sina Technology.

Huacheng's live streaming platform received nearly 100 million yuan in round A financing, but within half a year, the entrepreneur who once hoped to grow independently had already lost his ambition - he had to compromise in the face of reality. He said that independent live streaming platforms have reached the most critical moment: either stand with the giants and continue to develop, or wait for the wind to stop and fall completely.

"This is a business after all. When the wind is strong, everyone is full of enthusiasm, but the wind will not blow forever," said Hua Cheng.

Return to the essence of business

The essence of business is to make a profit, but live streaming is still the most expensive industry in the field of Internet venture capital. As a large number of O2O projects "frozen to death" in the capital winter last year, the venture capital circle has started a new round of reflection on the behavior of burning money to subsidize the market, and the most iconic event of this reflection is Didi's acquisition of Uber.

"The endless subsidy war will be a huge blow to investors. Entrepreneurs have visions and a long-term goal and they don't need to compromise, but the natural mission of investors is to pursue returns, and to reap the returns within a specified time limit," explained an investor who participated in the Didi-Uber merger.

The subsidy theory that was once unimpeded is becoming ineffective. More and more investors are wary of models and projects that cannot break even.

Zhang Ying, managing partner of Matrix Partners China, even earnestly asked the invested projects to get rid of the loss-making status as soon as possible. In a letter to all employees of 330 invested projects this year, Zhang Ying wrote: "I have to admit that the world is completely different now. Investors want to know how you break even. Stop talking to me too much about growth and GMV. No matter what industry you are in, if you can handle growth and break even, you are a winner after that point."

However, it is too difficult for the current live broadcast market to achieve growth and balance. In an interview with Sina Technology, a live broadcast CEO backed by a social giant said that under current conditions, it is barely possible to break even between costs and revenues - and this is when the cost of acquiring traffic is very low.

The dilemma of cost and revenue is even more difficult for independent live broadcast platforms, which is related to the particularity of live broadcast. At present, the profit model of live broadcast mainly relies on advertising and profit sharing, but these two must be based on traffic and rewards. High traffic means an increase in new user acquisition and bandwidth costs, and high rewards require more anchor recommendation resources and publicity resources.

For example, after becoming famous for her "primordial power" at the Olympics, Fu Yuanhui received unprecedented attention on Inke's live broadcast. According to statistics, in the one-hour live broadcast, Fu Yuanhui received 3.2 million Yingke tickets, and according to the conversion of 1 yuan = 10 diamonds = 10 Yingke tickets, it generated a revenue of 320,000 yuan, of which Fu Yuanhui received 100,000 yuan according to the share ratio.

This is a revenue figure that was previously unimaginable, but if compared with the three-day promotion costs of the small tail of the advertising link on Yingke’s first screen and the endless publicity costs on social media, this revenue seems insignificant.

"After three days of being pushed on the first screen, the number of live broadcast viewers exceeded 10 million, and the final turnover was more than 300,000. This does not include the fake number of viewers and fake gifts. Do you know how big the bubble of live broadcast is?" He Fan, a senior reporter who has been paying attention to live broadcast for a long time, told Sina Technology after Fu Yuanhui's live broadcast data was released.

In fact, for independent live streaming platforms such as Yingke, anchor resources are becoming the key to traffic. On the one hand, they are used to attract new users, and on the other hand, they are used to retain old users. If platforms such as Yingke want to survive, they must build a community from scratch, and the anchor is the center point of this community building process. Therefore, these independent live streaming platforms are willing to spend high costs and countless resources on anchors.

If Fu Yuanhui's live broadcast is just an isolated case, a more common phenomenon can be seen from the actions of Inke's investors. After participating in Inke's multi-million-yuan Series A investment, Zheng Gang, managing partner of Zihui Venture Capital, currently has one of his main tasks to help Inke find anchors. He constantly participates in the live broadcasts of other live broadcast platforms, with the purpose of leaving messages for anchors, inviting them to live broadcast on Inke, or telling the audience who are watching the live broadcast that the anchor is also doing the same live broadcast in Inke's room number.

Guarding against "Zihui Venture Capital Uncle Gang" has even become part of the monitoring tasks of some live broadcast platforms. Ma Yue, CEO of Yanzhi Live, which mainly broadcasts live broadcasts of models and young celebrities, even posted a special message on WeChat Moments saying: We do not welcome Zheng Gang.

Pure live streaming is not a good business

It is rare for investors to personally go to the front line to fight, but it is not difficult to understand if we consider the difficulties faced by Inke and other companies. Live streaming is ultimately a traffic business, which means occupying as much people's time as possible for as long as possible.

But at present, this "as much as possible" faces three challenges.

First, there is an upper limit to the traffic scale. When the population does not change in a short period of time, the population size and smart devices determine the total scale of traffic. If Inke and other platforms were facing a brand new market when they first went online, then with the intensification of market competition and the intensification of live broadcast standardization, the user bonus period has not only ended long ago, but is also being continuously divided up.

Secondly, building a community is a long and arduous journey. The ambition of independent live broadcast platforms is to build a new community through live broadcast, retaining old users while attracting new users. However, as social platforms such as Tencent , Weibo , Momo and Renren enter the live broadcast industry, this ambition seems increasingly difficult to achieve. Even after the live broadcast, the most natural and real scene appears, where the anchors constantly call on fans to follow them on Weibo or official accounts - the anchors are very clear that only by keeping fans in their own "territory" can they have continuous value for this live broadcast platform.

Finally, the anchors want to get more, but independent live broadcast platforms have limited supply. Although many anchors think they are born at the right time and can earn a lot of money just by sitting in front of their phones with their looks and talents, in the eyes of most anchors, this way of making money does not bring a sense of accomplishment. For them, Internet celebrities are just a stepping stone to enter the entertainment industry. They hope to attract the attention of producers and directors through live broadcasts and become stars. Whichever platform can attract more attention, they will consider this platform more, including those Internet celebrities who have signed contracts with guilds, most of them have the heart to become variety show stars.

We-media person Lao Zhi jokingly talked about how to attract internet celebrities. This we-media person who often deals with internet celebrities and guilds said that the simplest and most straightforward way is to "prove" that you are a producer/director or a potential producer/director. "Nowadays, students from the directing department of the Beijing Film Academy are more valuable than before. At least if you say that you are studying to become a director, you may be able to successfully bring an internet celebrity home."

Therefore, in order to solve the above three challenges, independent live broadcast platforms can only pin their hopes on capital. In the face of almost fierce competition, only by spending real money to sign exclusive anchors, spending huge appearance fees to buy the "virgin broadcast" of celebrities, and subsidizing users to recharge and send gifts to create activity, can they maintain a thriving community atmosphere.

However, the revenue generated in the process is just running revenue, and has not yet formed a real profit, let alone the so-called "break-even point". In the past, entrepreneurs could tell stories to investors by showing the number of users and activity, in exchange for a new round of financing to continue to create data and running revenue.

However, with the downward trend of the overall economic environment and the increasingly tightening pockets of investment institutions, this story of cash flow and data is becoming less and less effective. Moreover, for those platforms with higher valuations, the amount required to seek a new round of financing is getting larger, and the pace of financing has become heavy and difficult.

The fate of independent live streaming is determined

How to break this dilemma? Back to Hua Cheng's lament: Either stand with the giants and continue to develop, or wait until the wind stops and fall completely. This independent live broadcast entrepreneur once had great ambitions and believed that a giant could emerge in the live broadcast field, but since the second half of this year, every step forward feels difficult.

He analyzed, "The essence of business is to make money, but now even at the best of times, we can barely break even, and that's not even counting the full efforts of the social giants. As a traffic business, independent live streaming platforms have to figure out where and how the traffic comes from, and how to retain and use the traffic that has already come in. In these two aspects, the social giants make independent live streaming platforms vulnerable."

According to Huacheng's idea, the fate of independent live streaming platforms has already been determined. The best case scenario is to rely on giants or become a part of their strategic ecology, which will not only solve the problem of traffic acquisition, but also realize the expansion of various business models; or develop in depth in a certain vertical field under the protection and support of giants.

There is also a final possibility, which is to rely on the continuous supply from investors to burn out the future. "But investors will not be so stupid. This is a business after all. If the wind stops and the wings are not grown well, they will fall down and be shattered."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.