Asia-Pacific Broadcasting (APB) @ConnecTechAsia Show News - Day 2 | Page 34

34 WEDNESDAY
27 June 2018
@ConnecTechAsia2018
www.apb-news.com
Silicon Valley to take a page from
China’s book to diversify online platform
BY WOO JUN WEN
& TEOH KIA LING
While Facebook and YouTube are
ahead of the curve in online adver-
tising, their Chinese counterparts
continue to diversify in search of
new cash cows. In March this year,
the Chinese Internet titan Tencent
announced an investment of US$630
million in Douyu, a Chinese live
streaming platform. At the same
time, it led a $462-million funding
for Douyu’s rival, Huya. The online
platform, best known for its messag-
ing app, WeChat, generates revenues
from various streams and online
advertising, which accounted for 24%
of its total revenues in 2017.
The booming live streaming busi-
ness in China has witnessed revenues
of companies skyrocketing last year.
Bilibili’s revenues quadrupled to $365
million and Huya doubled to $336
million. This year, Bilibili and Huya
started trading on Nasdaq and the
New York Stock Exchange respectively,
and Douyu is reportedly planning an
initial public offering in Hong Kong.
The burgeoning of live streaming
platforms started in 2016 when apps
like Tik Tok, Huajiao, Yingke and
Yizhibo were launched. Live stream-
ing, which typically includes eSports
and entertainment, is the bread and
butter of these platforms, contribut-
ing more than 80% of their revenues,
while advertising only accounts for a
fraction of them. China’s top com-
merce platforms, Taobao and JD,
have also launched live streaming
platforms in 2016 — Taobao live and
JD live — which allow merchants to
sell their products through these live
streaming apps.
Unlike advertising services, live
streaming allows the monetisation
of virtual items that users purchase
on the platform to tip or reward
their preferred live streamers. These
revenues are then shared among live
streamers, streaming platforms and
talent agencies. The success of live
streaming in China has also spread
to other markets in Asia. There are
the Naver-owned V Live in South
Korea and Thailand, Showroom in
Japan, M17 in Taiwan and Bigo in
Singapore. These players hope to
take the opportunity to duplicate the
success of the live streaming market
in China in their respective markets.
Westerners are not new to live
streaming. In fact, Amazon bought
Twitch for $970 million back in 2014.
Twitch’s business model includes
premium subscription, advertising
and partner programming with live
streamers. However, many major
online platforms rely on advertising
services for growth. For instance, last
year, advertising contributed to 98%
and 63% of Facebook and Google’s
revenues respectively.
Facebook has introduced live
video within its platforms and the
revenue is mainly from advertise-
ment. Facebook started to build its
own original programming last year
and since January this year, the com-
pany has also replicated the “tipping”
model of the Chinese live streaming
platform via the Gaming Creator Pilot
Program, in hopes of attracting more
professional gamers.
Many social media companies
have leveraged live streaming to
engage more users on their plat-
forms, and Asian companies are
pioneers in different types of monet-
isation models. Although the Chinese
live streaming business model is
lucrative and expanding rapidly, in
the long run, dependency of content
by live streamers and voluntary virtu-
al gifts from viewers as main sources
of revenue might hinder a platform’s
sustainable growth.
To address this, these platforms
must work to retain live streamers,
encourage innovations and sustain
its business model.
Teoh Kia Ling (left) and Woo Jun Wen are
analysts at analysis firm IHS Markit.