Chinese online video services of all kinds, from TV and movie streaming websites to user-created live streaming platforms, now offer a variety of interactive features.
These features are not new. Danmu, translated from Danmaku, is a real-time commenting function originated from Japan, and virtual ‘tipping’ live video streaming had been popular in South Korea long before it spread to China. Voluntary voting during a reality show had been conducted by Chinese television programs through either internet or, in earlier days, text message.
However, the combination of these capabilities has inspired new ways to engage audiences and produce online-only interactive content; for instance, real-time polling is used to decide encore songs during a live streamed concert. Some features, such as virtual gift sending and tipping, have become significant revenue sources.
Virtual gift sales have also been a major revenue source for live video broadcasting services companies like YY and Tiange (or 9158.com).
Online-Only Interactive Shows
In late 2014 the online video streaming service of social network giant Tencent produced Hi Song (our translation), an adaption of Irish TV talent show The Hit. It was one of the first online-exclusive shows in China to adopt the above-mentioned interactive features. It showcased how online service providers were poised to tap these features in a way that no traditional TV network could ever hope to.
Winners of the Hi Song competition were determined by online voting and other user-engagement metrics. A celebrity contestant who loses in one episode would get another chance so long as he or she got enough votes. The final episode received more than 5 million votes.
Viewers are able to post Danmu comments, which are displayed on the screen and can be seen by all viewers. The final episode of Hi Song had some 30 million Danmu comments. There were also three sessions during the final for celebrities to chat directly with viewers.
Apart from voting, another major way for fans to show their support in these kinds of shows is by buying virtual flowers as gifts with real life money. One virtual flower costs RMB2 ($0.3). You can also pay RMB10 ($1.6) to have your ID attached onto a flower. There is a virtual flower chart that ranks the top gift buyers.
These shows naturally have some high-level sponsors. For example, a pop-up window (reminding viewers to vote) features an ad by a major smartphone brand. It is believed sponsorship advertising is the major revenue source of the show. For a platform like Tencent who produces original shows, the interactive offerings so far are utilized for user engagement rather than revenues.
User-created Interactive Shows
For many Chinese user-created video broadcasting services, these interactive features are part of the shows on their platforms, and they count on interactive features, especially virtual gifts, for revenue generation.
YY’s live video broadcasting platform is a typical example. Since revenue from virtual gift sales is their only income source from the platform, broadcasters on YY are motivated to interact with their audiences so to encourage them to buy gifts.
From YY Music, which is for amateur singers, the YY live video streaming platform has expanded to gameplay, e-learning and, more recently, dating.
Revenue from YY Music, primarily from virtual gift sales, surpassed YY’s revenue from online games, one of the most lucrative online offerings in China, in 2012. YY Music would maintain strong growth driven by an increased number of total paying users and average revenue per paying user (ARPU). Not only are more users volunteering to tip performers, they have also been paying more on average.
YY’s dating service has speed dating participants on a virtual stage with a host for each dating session. Despite being a form of online dating, the format is modeled the popular dating TV shows, meaning it also attracts a substantial audience. YY allows users to send gifts to anyone on the ‘stage’, including the host. The service has been growing rapidly in both popularity and virtual gift sales. Its revenue surpassed that from online games in the third quarter of 2015.
User-created live video streaming platforms like YY have had their own social structure. On these platforms there are different channels managed by users instead of platform operators. Platforms also share virtual gift revenue with channel owners. A group of agents has also emerged, some of whom are also channel owners, that help promote broadcasters who agree to work with them on various live video streaming platforms.
In the live gameplay streaming sector, a few superstar broadcasters have stood out, with their respective platforms depending on them heavily for revenue. To retain them, platforms have begun paying them annual fees or ‘salaries’ in addition of revenue shares. The annual fees have been driven as high as 20 million yuan ($3 million USD). Many celebrated broadcasters are also able to monetize their loyal audiences by selling merchandize through e-commerce platforms like Alibaba’s Taobao.