China’s booming live streaming industry may have reached its peak

The party could soon be over for China’s booming live streaming industry, which saw revenue triple last year, as the tens of millions of yuan a year paid out to top presenters becomes unsustainable amid a decline in online viewer numbers.

The industry has seen explosive growth in the last two years, with the number of platforms growing to more than 100, while revenue surged from just 7.4 billion yuan (US$1.1 billion) in 2015 to 20.8 billion yuan in 2016, according to iResearch, which also forecasts it will more than double to 43.2 billion yuan in 2017.

But there are signs that viewer interest is waning, which could affect investors’ appetites for the sector. Monthly active viewers of live streaming with an entertainment element have been in decline since December 2016, said iResearch. Viewers of live streaming content via mobile devices fell from the peak of 141 million in November to 107 million in March this year.

Meanwhile, most live-streaming platforms still depend on voluntary virtual gifts from viewers as their main revenue stream, according to Cheetab Lab, the mobile internet research unit owned by Cheetah Data, and that is risky because there is not enough other revenue to cover the escalating costs of retaining the top presenters.

In mainland China, where more than 95 per cent of internet users are on mobile devices, live streaming, like social media, is seen as one way to interact with people who have similar interests and also be entertained without paying for it. But there are growing concerns among authorities over the type of content being produced in a new industry where top earners can make up to 40 million yuan a year.

US venture capital firm KPCB’s data shows that in China, hourly revenue generated from live streaming, which includes advertising and paid downloads, beats other media such as online gaming, TV and music.