(Chinese Version)

Nobody can tell why live video broadcasting suddenly becomes so popular this year in China, just like nobody knows why pink crystal and serene blue are so popular all of a sudden.

However, if we were to find some clues, we could still summarize the possible reasons into three aspects:

• Above all, it must have something to do with the fad for live video broadcasting in the Silicon Valley. Now that Facebook’s CEO is also excited about the service, it must be very promising, wouldn’t it? Internet tycoon, just like government officials, seemed to have similar effect on other internet companies and the capital market today.
• Secondly, I’d like to remind you of the success of show room platform, live video broadcasting app’s predecessor. I won’t bother to prove that as popular Chinese show rooms in the PC era such as 9158 all managed to list on the stock market. YY Language, which managed to survive even in face of Tencent’s dominant role in the social networking market, also contributed to the success of show room in the PC era. Now that show room platforms succeeded in the PC era, it is probable that live broadcasting apps will also succeed in the mobile internet era.
• Thirdly, the craze for live video broadcasting also might be the result of improvements on living standards and the rise of “idle” economy. There’s never been a time when people can get access to information so fast as today. Live broadcasting apps actually serve as platforms to meet people’s curiosity towards other people’s lives. Of course, there are also people who hate live video broadcasting like I do. But as I watch live videos and enjoy throwing harsh words at the broadcasters, a few hours just pass in a blink of time.

Owing to the above three factors, many companies started to focus on live video broadcasting. It is estimated that there are over 200 live video broadcasting apps in China. As far as I can remember, such craze can be only compared to the fierce competition among thousands of group-buying platforms a few years ago. Although the number of live video broadcasting apps is much lower than that of group-buying platforms, it’s already a huge number if we take into consideration that group-buying service is location-based, while live broadcasting is totally an online service.

As live broadcasting service is so popular, Chinese internet giants are certainly not going to be left behind. They have to do something in this area, whether to prepare for the worst, or to get ready for something promising. From this aspect, we may well understand why Tencent also joined the competition, as its American counterpart Facebook has already carried out its own live video broadcasting service.

That’s why we see Tencent has developed or invested in so many live video broadcasting apps. (Up till now, Tencent has developed several live video broadcasting apps including NOW, Penguin TV, Tencent TV, QQ Zone TV, Huayang TV, and invested in other live video broadcasting apps such as Douyu TV, Longzhu TV, Guagua TV.) However, now that Tencent has spent so much money and resources in this area, can it finally make profit out of such service? Will live broadcasting service grow to become another strategic product of Tencent?

Before any detailed analysis, we should first of all find out which kind of product has the potential to become one of the strategic products of internet giants. Take BAT for an example, strategic products should be one of the core businesses of internet giants (search engine for Baidu, e-commerce and finance for Alibaba, social networking and gaming for Tencent), be able to help them gain an upper hand in the competition than their rivals (social networking for Alibaba), or be very promising and cutting-edge (enterprise-level social networking and film for Alibaba, artificial intelligence and big data for Baidu, music, video and animation for Tencent).

From this aspect, live video broadcasting hasn't become a core business of any internet giant, and no platform can dominate the market yet. In this case, whether live video broadcasting market has the potential to thrive in the future will determine if it will become one of the strategic products for internet giants.

It is estimated that there are already over 200 live video broadcasting apps in China.

How large is the Chinese live video broadcasting market?

But what makes a service promising and a market thrive in the future? Well, there should be at least a market large enough out there.

It is estimated that over $25.76 million, $119 million and $359.16 million was invested in major live video broadcasting platforms in 2013, 2014 and 2015, respectively. So the annual growth rate has already reached around 300%. According to Founder Securities’ prediction, the market scale of the Chinese live video broadcasting market is to reach over $2.27 billion in 2016 and $9.09 billion in 2020.

Accordign to iResearch, the total number of users on Chinese live video broadcasting platforms has amounted to 200 million, the number of peak concurrent users could reach 4 million, and the number of broadcasters live broadcasting videos concurrently could reach over 3,000 on some large-scale live video broadcasting platforms.

From these figures, we can roughly draw a picture of the Chinese live video broadcasting market in 2016: the total number of users is around 2 million, and the total market value has reached $2.27 billion. It is expected that the market value will amount to $9.09 billion in the near future.

As of this year, 2 million users and a market value of $2.27 billion are certainly nothing compared to those of some large-scale platforms, such as e-commerce, search, game, ride-sharing, life service, etc., but already a great deal compared to the digital music market, which boasts a market scale of over $1.45 billion this year. In a word, live broadcasting does have the potential to become one of the strategic products for internet giants.

However, there’s another factor that will decide if live video broadcasting app will become one of the strategic products of Tencent. At present, no giant has emerged in the Chinese live video broadcasting market, so whether some platform could stand out will determine if Tencent will attach much importance to live video broadcasting.

Female broadcasters live broadcasting videos at the same conference

Can live video broadcasting service maintain popularity?

Whether a product can maintain its popularity is equally important for internet giants when deciding whether to spend resources on it or not. Products that can only stay popular for a short while are certainly not worthy of effort for internet giants to promote vigorously.

“Live broadcasting video apps are highly reliable of social networking platforms in order to gain traffic, so fundamentally, it should have been just a function inside apps such as Weibo, WeChat, MeiPai, etc. When people want to provide social networking service in a live broadcasting video app, they shall face huge challenge from social networking apps, because they shall cut the traffic from the very beginning, which will certainly undermine live broadcasting apps,” we media Penguin Ecosystem suggested in one report.

In this case, it is highly possible that live video broadcasting service will end up being a function on many social networking platforms. When “short video” and “scan” functions were so popular, lots of companies also emerged, but most of them didn’t survived the test of time.

So it is likely that live video broadcasting service might become one of the major functions for WeChat.

Strangely, however, Tencent hasn’t provided live video broadcasting service on WeChat and QQ, two of the core products of Tencent, yet. Instead, it developed several live video broadcasting apps at the same time. How come?

My guess is that Tencent did so because it is still not sure about the future of live video broadcasting. Once the live video broadcasting market became really mature and well-developed in the future, Tencent will have to not only decide whether to add live video broadcasting service to QQ or WeChat, but also figure out ways to promote other business of Tencent, such as game and entertainment, on these live video broadcasting platforms.

The good news is that Tencent has already been promoting one of its live video broadcasting app NOW on QQ. But it remains to see if Tencent will promote NOW on WeChat one day.

Screenshots of Inke TV

What choices do Tencent have?

The corporate management and rival prevention mechanism differ a great deal in the mobile internet era than in the PC era. Most obviously, to face up to new possible business trends in the PC era, internet companies should develop a product of itself; in the mobile internet era, however, internet giants might as well enter the market and avoid threat by maneuvering capital, since they are usually too large to develop a new product.

This rule applies well as can be seen in Tencent’s moves in the live video broadcasting market: on the one hand, Tencent invested in live video broadcasting apps such as Longzhu TV, Douyu TV, Guagua TV, etc.; on the other hand, it also developed apps such as NOW and Penguin TV by itself. Statistics suggested that the number of live video broadcasting apps that Tencent has invested in or developed has reached over 8.

Among these 8 apps, different apps have different target users. While NOW targets the general public, Douyu TV targets mainly game players, and Penguin TV targets sports fans.

In addition, Tencent also encourages competition inside Tencent’s ecosystem. For example, NOW, QQ Zone TV, Tencent TV, Huayang TV are all developed or invested by Tencent, but they all target the general public. What Tencent will do is just wait the see which one stands out at last. (As a matter of fact, internal competition can be sometimes more challenging than external competition. Imagine how hard it could be for today’s WeChat to stand out among all the competing developing teams inside Tencent)

At the same time, if live video broadcasting apps developed by Tencent itself didn’t quite work, Tencent could just sell them to live video broadcasting apps that it has invested in, so that Tencent can get rid of the product while not affecting its main business.

Although different developers of competing live video broadcasting apps inside Tencent don’t have to worry about capital, resources and traffic, which ordinary developers are most eager for, it doesn’t necessarily mean that they could finally stand the test of time. Will Tencent’s own live video broadcasting app NOW become another strategic product of Tencent? It’s certainly probable, but in a market of fierce competition, it will have to face up to all the competition, whether internal or external, finally stand out.

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[The article is published and edited with authorization from the author @yangjunjun420, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.