Why China’s top hook-up app Momo is going into show business

Momo, the Chinese company whose hook-up app morphed into a hybrid of live streaming and social media platform, has moved into reality TV production to attract more broadcasting talent amid intensified rivalry for eyeballs in the country’s live streaming industry.

Momo’s first outing in professional broadcasting is PhantaCity, a music reality show co-produced and sponsored by the company. Since its launch in July, it has become the “most heavily discussed TV variety show” on the internet, especially among the young and well-educated audience, Momo chief executive Tang Yan said in a conference call with analysts after announcing its earnings results on Wednesday.

While Tang did not reveal the show’s direct contribution to Momo’s user base, he stressed that short-term user growth was not the key objective. Rather, he wants to use the show as a bigger platform for Momo’s broadcasters and promote live streaming as a respected career choice.

Aired on Hunan TV and also streamed online, PhantaCity features Chinese pop stars and directors in live musical performances, including pop diva Faye Wong. Four episodes of the 12-part series have been aired.

In the latest episode, two Momo live streamers appear as supporting characters alongside the celebrity performers. In future Momo’s broadcasters may also play leading characters in the show, while more will appear in advertisement videos, according to a Momo spokeswoman.

“By putting our top performers on the same stage as real world celebrities we are promoting live streaming as a new form of entertainment,” Tang said in the conference call. “At the same time, we are also hoping to demonstrate to the performers as well as the users that live broadcasting is a career worth pursuing, not just because they can make money out of it, but also because they can win real respect as a professional entertainer.”

The ultimate goal for Momo is to attract talented broadcasters to its live streaming platform, who would produce quality content and keep its users on the app, helping combat the challenges of fierce rivalry and slower user growth in the industry.

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Growth in the entertainment live streaming market has been flat in 2018, with a 0.8 per cent month-on-month dip in user numbers in January, and a single digit rebound for February and March, according to a June report by Beijing-based internet data provider Analysys.

Launched in 2011, Momo started as a hook-up app for young Chinese but entered China’s live-streaming market in November 2015 after spotting the shift to video as a new medium for young people to interact and share content. Momo had 108 million monthly active users at the end of June, up 18 per cent year on year.

Live streaming is now a prominent feature on the social app, and also the biggest revenue engine. Revenues from live video account for 83 per cent of Momo’s total revenues, reaching US$411 million in the second quarter of 2018, up 58 per cent year on year.

“As our live broadcasting revenues get bigger … we are committed to building channels and opportunities for the top live show performers to elevate their professional success, and take pride in what they do, so that more quality performing talent will be attracted to this business and to the Momo platform,” Tang said in the conference call.

Apart from PhantaCity, Momo has paved the way for its live-streamers to participate in other popular variety shows, including its contract broadcaster Da Zhuang to compete in the singing contest The Voice of China, and live streamer Zhang Xinlei to perform in girl band reality show Produce 101, according to the Momo spokeswoman.

Show production will also be a cash-generating business for Momo, with PhantaCity expected to bring in at least 100 million yuan in revenue in the upcoming quarter, Jonathan Zhang, Momo’s chief financial officer, said on the conference call. PhantaCity’s contribution will be mainly from shared advertisement revenues, according to the spokeswoman.

On Wednesday Momo reported second quarter revenue growth of 58 per cent to US$494.3 million, driven by its value added services revenue including virtual gifting sales. Net income increased 90 per cent year on year to $117.8 million.