China’s live streaming sector booms, but looming challenges

China’s live streaming sector ushered in a boom in 2016. More than 200 live streaming platforms and apps are actively involved in the budding sector, which CreditSuisse estimated to have topped RMB 25 billion in 2016, attracting 325 million users, or nearly half of the country’s total population, local media is reporting (in Chinese).

Lured by the promise of the profitable market, investors have been bulking up their push into the sector. A flurry of live streaming platforms have secured funding rounds worth billion of RMB in aggregate in 2016 (in Chinese).

According to a 2016 ranking based on the popularity of live streaming platforms (in Chinese), top five performers were Huya (虎牙直播), Panda.tv (熊猫TV), Yingke (映客), YY Live (YY直播), Douyu (斗鱼直播) and Huajiao (花椒直播).

Among the myriad live streaming platforms, only 28 saw their Android app downloads top 10 million (in Chinese). And a bellwether has yet to emerge, as most of the nascent live streaming startups are at an early stage of series A funding round.

In addition, China’s live streaming sector can be roughly divided into three types by content — entertainment, e-sport, and verticals (including live streaming platforms related to education, business, e-commerce, sports and social network).

While 2016 is the first year of the country’s live streaming era, a turning point may be at hand for the sector in 2017.

The live broadcasting boom was accompanied a plenty of flak for vulgar and low-brow content, gimmicks employed by some platforms to woo viewers. As such, China’s cyberspace regulators have been speeding up the formulation of rules to regulate the sector.

Some weak players will be eliminated from the game, with the release of more stringent regulations and fierce competition in the sector.

A case in point is live streaming platform Guangquan (光圈直播), once valued at RMB 500 million, recently collapsed after burning through its cash. Plagued by similar content, limited business models, and huge operation costs, some live streaming platforms may be merged or shut down this year.