Two of the biggest recent trends in China’s digital media space today are live streaming and short video. In this article, we provide insights about their potential impact in South East Asia.
Live streaming and short videos are becoming increasingly popular in China initially driven by the tremendous number of people watching content on their mobile phones. Live streaming viewers in China grew 60% from 194 million in 2015 to 310 million in 2016. It is estimated to have reached 392 million at the end of 2017 which represents approximately 50% of the entire online population in the country.
Live streaming content is defined as content that is occurring live and being streamed to an end user over a video platform operating on an internet connected device. Live streaming can be the digital feed of a live event such as a music concert or sports match; eSports in particular is one of the most popular viewed genres on live streaming platforms. However, individuals or small groups of people can also live stream their activities. Revenue for live streaming platforms stems from 2 sources, advertising and virtual gifts.
The top six platforms by monthly active users are YY, Inke, Douyu TV, Hualiao, Huya and Panda TV. Exhibit 1 below provides a breakdown of the number of monthly active users and year-on-year growth by site for the top 6 most visited live streaming sites in China.
The number of viewers watching on dedicated short video platforms was expected to reach 242 million at the end of 2017 up from 151 million in 2016 and forecast to grow to 352 million by the end of 2018.
Short videos are often pre-recorded user generated content which can be filmed segments or stitched together clips from copyrighted videos. The content is diverse and can include snapshots of daily city life such as teenagers eating lunch to more rural scenes of farmers and their animals. While this type of content may not sound like it has mass appeal, QuestMobile, a data provider, estimated that in early 2017 users began to spend more time on short video apps, than they did on Tencent’s news and video offerings.
However, short form content production is starting to shift away from just user generated content to include professional generated content – there are reportedly over 25,000 professional short video producers in China vying for the advertising revenue generated from short video platforms which are derived from banner advertisements, product placements and ad insertions.
In terms of usage, online video viewers click on short video platforms an average of five to six times daily spending 44 minutes per day watching short videos. Exhibit 2 below provides the penetration rate of the top 10 short video sites in China and highlights that the vast majority of viewers are going to the top four sites after which there is significant decline in penetration.
One popular short video platform in China is Douyin, owned by Bytedance which also owns Toutiao, a video news aggregator platform in China. Douyin mostly serves repeating 15-second videos set to music which are very popular in China. Thanks to the success of its multiple platforms, Bytedance aims to raise approximately US $3 billion in 2018 at a valuation set at close to US $75 billion. If this happens, it would surpass Uber’s US $68 billion valuation, making it the largest privately-owned technology company in the world.
The phenomenal growth of the sector has caught the attention of B.A.T. who have all invested into various short video platforms. For example, video search and content aggregation platform Baidu Video completed a $100 million series B round in September 2018 led by its parent firm Baidu. Beyond investment into businesses, B.A.T. have also committed significant funds to short video content production for their existing video properties.
Live streaming and Short Video in South East Asia
Thanks to its success in China, Bytedance acquired musical.ly and launched a similar app to Douyin called Tik Tok for international markets. Tik Tok’s early traction has been touted as a success as it became the world’s most downloaded iPhone app (excluding games) in the first part of 2018 and is particularly popular in South East Asia.
Other short video and live streaming platforms have also moved into South East Asia, with platform launches by both native and traditional players. One such app is Singapore based Bigo, which was initially funded by YY Inc., one of China’s biggest livestreaming platforms, in exchange for a minority stake. In June 2018, YY Inc. announced a further $272 million investment into Bigo to become a majority stakeholder. Bigo has built a strong presence in Southeast Asia and already has a foothold in South Asia as well as the Middle East.
Tamago, another live streaming app launched in late 2017, was the product of a partnership between Astro, Malaysia’s leading Pay TV operator, and Huamao.com, a live streaming app in China. The platform targets millennials in Malaysia, Indonesia, Philippines and Vietnam with content that includes localised UGC content, exclusive live gaming and video content, content from television networks and reality shows. Since launch it has been downloaded over 1 million times from the google play store.
While the jury is still out on Tamago, the success of live streaming and short video platforms in China suggests these rapidly emerging areas should not be ignored by telcos, content providers, or investors looking to monetize consumer engagement in South East Asia. Whether the best next step for them is to buy, build or partner will require analysis of the market as well as an assessment of their internal objectives and capabilities but one thing is for certain, short video content will be hard to ignore.