One popular video featured the nation’s richest man playing poker. Startups and web giants alike are cashing in by selling virtual gifts to people keen to reward popular live-streamers.
Pole dancing, bungee jumping, a woman eating maggots: at any given hour, millions of Chinese are live-streaming all of this and much more on their smartphones.
Crazes come and go at neck-snapping speed in the world’s largest online marketplace, but China’s live-streaming phenomenon shows staying power and is already a significant business. Tiny startups and internet giants alike are making money selling virtual gifts—flowers, cars, toys—to people keen to reward their favorite live-streamers. As the business matures, Alibaba Group Holding Ltd. and others may start selling ads on the most popular streams.
"This isn’t a fad that will disappear, as the business model has proven to be viable," said Zhu Xiaohu, managing partner at GSR Ventures Management Co., who invested in Inke, one of about 200 live-streaming startups that have attracted an estimated $750 million in venture capital. "But the amount of interest in this sector is so high, bubbles could be forming and many will fail."
In the U.S., tech companies are eager to make live streaming more popular. Twitter Inc. last year acquired the app Periscope and has integrated live video into its main product. Facebook has made it possible for users to stream live and has boosted the prominence of such broadcasts in its news feed. Mobile app YouNow has taken off among teens.
But the Chinese version of live-streaming has caught on much more quickly and broadly. Tens of millions of young people (many of them single men) live in soulless megalopolises far from where they grew up and are seeking human connection—even if it means watching and interacting with a stranger eating dinner. "China’s wide adoption of mobile phones and the loneliness brought on by a fast-paced migrating society means people are more willing to connect this way," says Jia Wei, who runs the live-streaming division for Nasdaq-listed social media app Momo Inc.
Many streams—known as showrooms—feature ordinary people doing remarkably ordinary things. Zhou Xiaohu, a 30-year-old safety foreman at a construction site in Inner Mongolia, is one of 10 million active users on Inke, a two-year-old Beijing startup. Like many Inke users, Zhou logs on after work and watches until bedtime. Zhou, who’s single and bored, flicks through other people’s showrooms and sometimes streams footage of himself eating dinner and watching television. He has plenty to choose from; as many as 60,000 people are broadcasting at the same time.
“It satisfies my needs,” says Zhou, who has spent about 700 yuan ($105) gifting people he follows and earned about 200 yuan in return. “Think of it as a substitute for TV shows and games.”
Li Wenqi, a 31-year-old Chinese hairdresser based in Kobe, Japan, takes followers to tourist attractions and dining spots. A tour of Tokyo’s red-light district is his most popular stream so far. More than 3,000 people watched as Li wandered the neighborhood for about six hours—even though he never ventured indoors. "I just have this urge to share," he says. "I want others who haven’t been to Japan before to know what it’s like here."
Li has delegated two trusted fans to maintain order in his showroom; they can silence or kick out viewers who use vulgar language or stir up trouble. Two months into his sideline, Li has earned about 15,000 yuan from virtual gifts sent by fans on Momo’s app.
The most popular streams attract as many has 400,000 people at a time. They often feature famous people. Wang Jianlin, founder of real estate colossus Dalian Wanda Group, streamed video of himself playing poker with associates on a private jet via an app backed by his son. More than 300,000 people watched, and many sent virtual gifts to China’s richest man. Many showrooms feature women wearing revealing clothes and doing pretty much anything that comes to mind—shopping, playing video games, seductively eating fruit.
Top streamers earn hundreds of thousands of dollars a month, according to Momo’s Jia. They get as much as 50 percent of the revenue generated from admirers’ virtual gifts; the hosting companies keep the rest. While streaming is a relatively small chunk of revenue for big companies like Alibaba and Tencent Holdings Ltd., the addictive videos are a useful way to keep users locked into their sites. Smaller companies are doing a thriving business. In the first quarter, Momo generated $15.6 million in gift commissions.
In an effort to stand out on camera, live streamers have been known to pull crazy stunts—drinking themselves into oblivion, say, or munching maggots. China’s regulators are watching and cracking down on anything deemed pornographic or a potential danger to the state. When dozens of young women popped up online suggestively eating bananas, the authorities were quick to kick them off the web. The official scrutiny has forced companies to hire teams of censors; at Inke 1,000 people screen every showroom for content that’s critical of the government, pornographic or violent.
Censorship isn’t much of a concern for Li since he focuses mostly on travel and leisure in Japan. "I enjoy interacting with other people this way," he says. "It’s much faster and more gratifying than other forms of social media."