Million Dollar Baby – China’s Most Lucrative Profession

(Featured: “MISS (大小姐)” playing online games streaming live with famous Taiwanese pop singer Jay Chow, source: meili.cn)

What is China’s most lucrative profession today? Bankers? Football players? Actresses? The answer is negative for all just mentioned. The recent wave of investments in online games’ live streaming platforms have brought about a new championship of all professions: online game hosts. To become a successful online game host, however, requires more than just skills, you need some character, or some “flavor”, to be qualified into the shortlist.

Success of “MISS” exemplary of China’s online live game hosts

Take MISS as an example, she was a professional game player in the late 2000s, when she practiced on average more than 16 hours daily. She transitioned to become a game commentator when her team was dismissed in 2010, and became famous by regularly posting online videos of her progressing within League of Legends (LOL), the most popular online game in China. With a Sichuan accent and an unconventional way of commentary, She started to have millions of fan base and turned out to be one of the most recognizable hosts online.

(A normal MISS game video looks like below, where you can see her commentating and playing at the same time)

miss-video

It is widely reported that MISS now earned more than 20 million RMB per year solely from the gaming platform itself. US-listed Chinese video streaming giant YY’s Huya platform recently signed her in early February from its rival Longzhu (financially backed by Tencent), another major move to regain its status as leader in the industry. But MISS didn’t just have revenue stream from the platform itself; a “million dollar baby” means she has multiple revenue streams, with other streams independent or at least unattainable by the platforms for now: for one, as also indicated by the picture above, most game hosts with a sizable fan base have their own Taobao stores – MISS, for example, is selling sports shoes online among her fans, who are mainly male between 15 -30 years old. Game hosts can also get commercial endorsements, either directed by the platform or by other commercial sponsors, as the commercial value was purely driven by the number of subscribers and active users you could generate online. There were also private endorsements by fans, which were paid in virtual currencies but was in fact the main business driver of online live broadcasting platforms.

Online game streaming platforms all burning money…for a reason

Referencing the successful acquisition of Twitch.tv by Amazon, Chinese live streaming companies have been envisioning a great future cashcow ahead. But competition has intensified since. YY, the listed video streaming giant in the business, shocked the market when disclosing in the year-end analysts’ call of 2014 that it planned to invest at least 700 million RMB in the live game broadcasting segment in 2015:

With a planned budget of RMB 700 million in costs and spending in this business this year, we realize that the short-term impact will certainly affect our margins, but we believe our aggressive strategy will help us acquire more users and ensure our leading position in the coming years.

While projecting an overall loss of 400 million RMB, the aggressive move of Huya/YY didn’t come without a reason – it has already trailed behind Douyu.com, the leader of this particular industry. Douyu.com started from a low base as Acfun (a video website famous for anime clips)’s live broadcasting platform, but it gained success without much marketing cost. It is believed its success was due to its easy-to-use platform (YY’s old model needs to join a room, whereas Douyu applied the Twitch model), entertaining interaction mechanism between viewers and hosts, as well as aggregation of several famous game hosts online. Douyu has attracted the attention of the likes of Wang Sicong, China’s wealthiest guy Wang Jianlin’s son. He played from time to time on Douyu in 2015, attracting huge wave of attention online.

(Here’s what it looks like on live when Wang Sicong logged on Douyu.tv, a huge wave of fire curtain on the live commentary section, source: gamesky.com)

sicongwang

douyu-Wangsicong

Yet instead of backing Douyu, Wang started his own live broadcasting platform Panda (panda.tv), poaching several established hosts from Douyu and attracting key stars in the entertainment industry, such as AngelaBaby. The arrival of Wang in this market was a bad news for all players, as they have already struggled to pay hefty salaries of famous web hosts and even more daunting bandwidth costs. Now, a rich boy with a silver spoon is declaring war on them. Zhanqi, the third largest online streamers, is already struggling and its investors were looking for an exit at quite a low price. “The last man standing” strategy seems to be widely adopted by all players in this field, waiting for its opponents to be knocked out of the bound.

(Douyu.tv(in blue) has a clear lead in website flows, according to Baidu)

gamelive

“It’s a rich men’s game, not for us”  

While millions of dollars have been piled on this industry, its profitability has been always under scrutiny. High bandwidth and content cost already reduced the margins to single digits, which means any more dollars of marketing spend will take the business in red. “Nobody is profiting from this industry,” says a 10-year industry veteran who recently just left his job, pursuing his own dreams in a completely different field. “It’s a rich men’s game, not for us. If you want a stable salary, sure. But if you want to create something of your own, sorry, this is not an industry to go for.”

Apart from talents leaving this industry due to lack of upward mobility, game giants such as Tencent, has already been observing this industry for long. They invested in their own platform Longzhu, but the feedback so far has been quite mediocre (ranked no.4 in terms of overall flow). It is rumored that they want to acquire Douyu at a certain stage, but Douyu was clearly not the last men standing at the moment. YY, on the other hand, has “unlimited” fire power due to its status as a listco, but that has also laid a huge constraint on its commitment, as it has to disclose its results on a quarterly basis to its investors. But since it has been pursuing the privatization plans to delist the company and eventually get it listed back onshore, YY seems to have more than increased its financial commitment towards Huya, which indirectly leads to weaker results quarter after quarter.

What about these hosts’ future? There might be a mean regression of salary towards the norm for typical online hosts, but certainly not for the likes of “million dollar babies”, such as MISS. There is though, a nice quote summing up everything by one of the famous hosts on Douyu: “It might be the most lucrative years of my life as a Douyu host. I don’t know what this industry will be like in the future. Unlike some hosts, I won’t ask you (fans) to subsidize me or anything. I will sponsor some commercials when I am out of money. If worse, I will just sell vibrators.”

(Some “classic” moments of a famous online host Sol on Douyu.tv)

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