Is winter coming for the live streaming industry? | odins gamble, lemongrass sing me to sleep

After Qudian, another star Internet company Douyu began to lay off employees.

On December 6, according to multiple media reports, Douyu Live conducted emergency layoffs. Employees of the Shenzhen team were verbally informed of the layoffs without receiving any emails. This involved about 70 employees in overseas operations. Douyu official responded that the Shenzhen team was just one of several teams in a certain business line of Douyu, and this time it was just a normal optimization and adjustment of the team.

The registered entity of the branch that was laid off this time is Douyu (Hong Kong) Co., Ltd., most of the staff are in Shenzhen, and its main business is to expand overseas business. It’s not just Douyu. From 2016 to 2017, with China’s Internet industry making rapid progress, all major Internet companies have embarked on the road to overseas, and the live broadcast industry has played a “vanguard” role.

Live broadcast of the tide

The past few years can be called the peak moment of the previous stage of China's Internet. Bicycle sharing, QR code payment, mobile live broadcast and many other innovative local Internet businesses have emerged. Many companies have shouted the slogan of going overseas. WeChat Pay and Alipay have spread the flames of war to the global market. Ofo and Mobike, the two major bicycle sharing players, continue to deploy bicycles to major overseas cities, and mobile live broadcasts have also become pioneers in going overseas.

In 2016, the number of live streaming users in first- and second-tier cities has been basically exhausted. How does the live streaming platform acquire new users?

Some choose to sink to third- and fourth-tier cities, and some choose to go overseas, copy the Chinese live broadcast model overseas, form guilds overseas, recruit anchors, and attract rewards from overseas users.

Live streaming goes to sea, and game live streaming takes the lead with the help of the big ship of Chinese games going to sea. However, from the perspective of Douyu's "optimization" of the international business team, internationalization is not easy for the live broadcast platform. Compared with tools, e-commerce, mobile phones and other businesses, live broadcast is cultural content, but each market has its own culture and high barriers, so it is not easy to go overseas. Strategic cooperation with local "local snakes" may be a wiser route.

Of course, another background of the Douyu optimization team is that the live broadcast industry is undergoing a major reshuffle this year.

Industry reshuffle

Since this year, virtual economy industries such as games, entertainment, film and television have become key regulatory targets.

The live streaming industry is no exception. On June 29, the Ministry of Culture shut down 12 online performance platforms, and 30 platforms including Huya, YY, and Miaopai were investigated for content violations. On August 20, six departments including the Ministry of Industry and Information Technology jointly issued the "Notice on Strengthening the Management of Online Live Broadcasting Services," which directly requires live broadcast platforms to use user real-name systems, strengthen the management of online anchors, establish live content monitoring, censorship systems, and measures to deal with illegal and harmful content.

In the context of macroeconomic pressure, capital has become cautious about live broadcasting.On one side, they are moving closer to the head platforms such as Douyu, Tiger Teeth, and Tentacles. Douyu received US$630 million in Series E financing from Tencent on March 8. On the same day, Huya announced that it had received US$260 million in Series B financing from Tencent. Chushou received financing from iQiyi and Google at the beginning of the year.

On the other hand,Capital is extremely cautious about live broadcast platforms in the mid-to-late stage. According to public information, Huajiao Live’s last round of financing was on December 22, 2017, Panda Live’s latest round of financing was on May 24, 2017, and National Live’s latest round of financing was on September 28, 2016. In other words, judging from public information, these platforms may not be able to raise funds this year.

It is precisely due to the problems of tighter supervision and tight funds that the live broadcast industry ushered in a major reshuffle in 2018, showing a significant head effect:

1. The head platform scenery is on the market.

Just like many industries, when first movers go public, they will have stronger financing capabilities, brand effects, talent and other resources, which will put unlisted companies under certain pressure.

Of course, the entertainment industry has always been relatively fragmented. There are also cases of unlisted companies in the live broadcast industry continuing to raise funds. For example, Chushou received money from iQiyi and Google. However, there will not be many such "lucky people", especially in the later stages, when the company valuation is very high and the investment threshold and cost are also higher.

2. Hug together on the central platform to keep warm.

It is precisely because of the difficulty of financing and the economic downturn that many live broadcast companies have chosen to join forces to stay warm. On June 27, the pan-entertainment live broadcast platform Huajiao announced a reorganization and merger with Liujianfang, with the new company's valuation not less than 8.5 billion yuan; on November 13, YY's parent company Huanju Times and Xiaomi Live reached a strategic cooperation, and YY Live became the exclusive strategic partner of Xiaomi's live entertainment show content. The two parties will carry out all-round in-depth cooperation in content, product technology, operations and commercial realization. This move is more like Xiaomi's move to use external forces in live broadcast. On November 28, at Sina’s third quarter financial report conference, Sina Weibo CEO Wang Gaofei announced that Weibo would acquire Yibo, a subsidiary of Yizhi Technology, and integrate the two products.

3. Tail companies have a hard time.

Some people are happy and some are worried.

In the past year, there has been constant news about the collapse of live broadcast platforms and wage arrears. On December 3, NetEase Mint Live announced on its official website that it would be shut down in December. Almost at the same time, Mashed Potato Live announced the suspension of its live broadcast service. Also in December, media reported that the official website of NetEase Mint Live was no longer accessible and officially declared bankruptcy. Previously, media revealed that the Shanghai registration location of National Live Broadcasting has been vacated, and many leading anchors and employees are asking for wages on social media.

From the development point of view of the live broadcast industry, first there was the Qianbo War, which was the most prosperous moment in the industry. There were many entrepreneurs, everyone was doing it, and financing was not difficult. Later, after a brutal reshuffle, there were more than a dozen powerful players left after a narrow escape. In 2018, the remaining players were reshuffled again, and there were not many left. The truly powerful players can be counted on one hand - five of them are listed companies.

So, where will the live broadcast industry go in the future?

The darkest hour has arrived

One year ago, the live broadcast of "Q&A" was the most popular. A year later, the live broadcast industry feels like winter is coming. In popular words, the "darkest moment" of the live broadcast industry has arrived.

Judging from the third quarter financial reports of platforms such as Momo and Huanju Times, even listed live broadcast platforms have been significantly affected by the development cycle of the live broadcast industry and the macroeconomic environment.

In the third quarter, Momo’s live broadcast revenue growth rate was only 34%. Last year, the growth rate was three digits. In the second quarter of this year, it was 50%. In the first quarter, it was 75%. The decline was obvious. The overall revenue ratio dropped from more than 85% to 75%. Instead, value-added services became the first growth driver. Coincidentally, the revenue of the live streaming business of Joyful Times in the third quarter was 3.8945 billion yuan, an increase of 35.6% compared with the same period last year. It can be seen that the industry has entered a relatively low growth stage.

There are exceptions. For example, Huya’s total net revenue in the third quarter was 1.2766 billion yuan (approximately US$185.9 million), a year-on-year increase of 118.8%. I think the main reason may be due to the slow commercialization process before listing, rather than the industry boom.

According to a report released by the China Academy of Information and Communications Technology, in the first half of 2018, the prosperity index of China's online live broadcast industry increased by 20.4% year-on-year. This shows that in an environment where policy supervision has become stricter, user dividends have disappeared, and payment capabilities have weakened, the live broadcast industry is tending to develop healthily and stably. The growth rate of 20.4% is the industry's growth rate.

Luo Chao Channel believes that the live broadcast industry will show the following trends in the foreseeable future:

1. The head effect is further intensified

When live broadcasting broke out in 2016, due to the relatively scattered platform resources, anchors and guilds had high bargaining power. Once they changed jobs, they could take away a lot of traffic and fans. The platform did not have much ability to retain top anchors. By 2018, as traffic began to concentrate on leading live streaming platforms, users became more and more willing to consume content on leading platforms.This made the cost of changing platforms extremely high for guilds and anchors, so they would no longer change platforms easily.

The show live broadcast platform dominated by Momo and the game live broadcast platform dominated by Huya already have the most extensive user and anchor resources.

In Momo’s financial report for the third quarter of 2018 released on December 6, the number of monthly active users on the Momo platform has reached 110.5 million, an increase of 17.1% compared with 84 million in the same period last year; in Huya’s third quarter financial report for fiscal year 2018 released on November 13, the number of monthly active users across Huya’s entire platform reached 110.5 million. It reached 99 million, a year-on-year increase of 14.6%; in September, YY Live announced that the number of signed star anchors exceeded 1.5 million, gold medal artists exceeded 19,000, and there were as many as 42,000 active guilds, including nearly 3,000 star guilds and gold medal guilds. The mature guild model has transported and managed a large number of anchors for YY.

In the future, users, guilds and anchors will further gather on top live streaming platforms. At the same time, due to strict supervision, many middle and tail platforms can no longer attract users through some sideline activities, which will lead to their further decline.

2. The continued impact of short videos

The traffic dividend of the Internet hashas disappeared, the duration bonus still exists.

When the total time users spend on mobile phones remains unchanged, product competition has entered a zero-sum game stage. Users spend more time on short videos, which means less time on live broadcasts. At present, short videos, live broadcasts, games, etc. are all competing for users’ usage time. Each content platform began to attract users by improving the quality of content and guide users to consume on the platform.

However, short videos are clearly the fastest growing form of entertainment. A report released by QuestMobile shows that in the first half of 2018, the number of users in the short video industry has exceeded 500 million, and user usage time has increased 4.7 times.

Live broadcasts have certain requirements for users’ viewing time, and they often require immersive viewing, so they have a higher consumption threshold (of course, they are more interactive). Short videos are faster, more accurate and fragmented, making them a more suitable entertainment method in the fragmented era.

Based on this difference in form, I believe that short videos will further seize the duration and traffic of the live broadcast industry in the future. And it should be noted that short video platforms are not just satisfied with short videos. Everyone can think of a path from short videos to live broadcasts. It is based on this judgment that live broadcast giants such as Momo have been vigorously deploying short videos to alleviate "live broadcast dependence".

3. High-quality content is key.

The main reason why I believe that the live broadcast industry will eventually return to stability is because live broadcast itself is valuable and the live broadcast market itself will not decline. Users have demand for entertainment methods such as online live broadcasts, especially time-sensitive activities such as e-sports, which cannot be replaced by other entertainment methods; There are also some live broadcasts that require high interactivity, such as "companion-style" live broadcasts and "question-answer-style" live broadcasts, which are also difficult to satisfy with short videos that lack interactivity; some live broadcast scenarios, such as live event live broadcasts, e-commerce shopping guide live broadcasts, etc., are also impossible to satisfy with short videos.

Therefore, live streaming cannot be replaced, and live streaming has stable cash flow. The reason why Douyin and Kuaishou have launched live streaming is because of its strong monetization ability.

The future of live broadcasting must be that content is king. At present, the online live broadcasting industry has formed subdivided live broadcasting platforms such as game content live broadcast, entertainment content live broadcast and corporate live broadcast. The key is to be able to meet the content needs of target users in the field. This requires them to delve deep into the vertical field and constantly create truly high-quality content. They can combine live broadcast with variety shows, dating, dating, games, and social chat rooms to form a strong IP, and ultimately tap the consumer needs and potential value of users.

4. 5G is another spring for live streaming

The Ministry of Industry and Information Technology has recently announced that my country's 5G will officially go commercial in 2020. Compared with 4G, the three biggest characteristics of 5G are: high speed, high capacity and low latency. The benefits of high capacity and low latency are mainly new applications such as the Internet of Things and self-driving cars. High speed has the most direct impact on the mobile Internet.

The biggest beneficiaries will be the entertainment businesses that are most dependent on the Internet, especially the gaming and live streaming industries. 5G can spawn more mobile "big games", for the live broadcast industry, 5G can not only eliminate lagging, but also make live broadcasts with better quality and stronger image transmission capabilities, and spur the innovation of live broadcast applications based on high-definition live broadcast, multi-channel live broadcast, VR live broadcast and other technologies. Therefore, I think 5G may be another spring for the live broadcast industry. (This article was first published by TMTpost. Tao Cheng also contributed)

[Source: TMTpost Media Author: Luo Chao]