Digital Streaming Sales: A Multi-Billion Dollar Market

The Chinese Digital Streaming Market

The Chinese music and entertainment industries are experiencing rapid growth of more than 25% annually. Transactions models and revenue streams in the music and entertainment indusries are undergoing transformation. New Chinese laws have significantly reduced piracy. Downloads must be paid for and all payments made to artists. This is improving the quality and accountability of China’s collection society.

Live Concert Streaming: The Growth of Live House Venues

Live Houses in China are rapidly growing because they have proven to make money for artists and music companies. Live Houses in China are streaming their live concerts to large numbers of paying online viewers, greatly expanding their revenue. Recent market data shows:

  • More than 37% of mobile device users are willing to pay to watch unique, quality live concerts.
  • The live streaming market is growing by more than 25% per year.
  • Onsite ticket: RMB¥100 to RMB¥1,000 (US$16 to US$160).
  • Online e-tickets: RMB¥20 to RMB¥30 (US$3 to US$5).
  • Online e-tickets outsell onsite tickets by 100+ to 1.
  • Typical online ticket price strategy: RMB¥20 preregister, RMB¥30 at concert time.
  • Online advertizing generates revenue that is three to five times that of on site ticket sales.
  • The O2O (Onsite events drives Online sales) model is profitable and growing in China.

The Chinese government has restricted the number of large-scale stadium concerts, in part because of security and safely issues of dealing with large numbers of people and traffic congestion. The number of large onsite concerts has dropped dramatically because companies can't get the necessary licenses, security clearances and other required permits. Venues with 600 to 1,200 seating capacity are more easily managed, and security issues are minimal, so they can secure government permits.

Live Streaming and Live House Market in China

Live streaming in the U.S. hasn’t really taken off at the mainstream scale. Yet, as with previous new forms of mobile self-expression, it’ s taking off in China. For example: 57% of China’s Internet users used live performance streaming mobile apps in June 2016.

Huachuang Securities estimated the mobile live streaming market in 2015 was US$1.8 Billion and US$2.6 Billion in 2016; and is expected to expand to more than US$16 Billion by 2020. Credit Suisse stated in its September 2016 research report that it believes the Chinese personal live streaming market will be US$9 Billion in 2017, which is just US$2 Billion less than China’s movie box office total (US$7 Billion) and half the size of its mobile gaming market.

Gifting as a Major Revenue Stream

Live streaming, whether live concerts or amateurs on social media networks, have been generating revenue from a new form of virtual product sales, referred to as “gifting.” Live video streaming is generally considered more valuable than on-demand videos to advertisers, which pay higher advertising fees to reach these audiences.

Virtual gift sending is a large and rapidly growing revenue stream in China. When a viewer buys a digital gift for a performer, the revenue is split between the app store, the performer, and the live streaming platform. Through digital gifting, performers receive instant feedback from their fans; viewers receive acknowledgement from performers they like; and platforms earn money. And because performers see live streaming as a way to make money, they’re motivated to perform and stream more frequently. As a result, China live streaming apps have a steady supply of content—an issue that live-streaming apps in the U.S. have not overcome.

Streaming and Gifting for Independent Artists

More than 200 hundred streaming service companies emerged in the live streaming market in China during the last several years. Each service offers a central e-commerce “mart” site with the required licenses and business resources that individuals and small companies could not otherwise obtain. Clients set up their own entertainment “channel” where they can quickly and cost effectively stream live events and performances to national online audiences. The streaming sites also provide clients with interactive and virtual reality mobile apps allowing viewers to interact with the artists, which viewers pay to download. A streaming site typically has three to four million simultaneous viewers.

Numerous small Live House venues and individual performing artists have setup live streaming channels, representing a market of at least US$6 Billion in 2016. For example, a typical individual performing artist makes RMB¥30,000 a month streaming live and prerecorded performances. This represent a yearly income of RMB¥360,000 (US$52,000) compared to the average income of artists in China of RMB¥60,000 (US$8,700).

In another example, a part-time streamer with more than 10,000 followers on Panda TV streams 60 hours a month, earning about RMB¥10,000 (US$1,450) by cashing out virtual gifts that fans sent him. This represents income of US$27,400 per year from gifts only. Popular performing artists make more than US$150,00 per year. Recently a female performer broadcast a show about putting on makeup. The live show had 10 million viewers and generated RMB¥400,000 (US$58,000) in less than 2 hours.

General Digital Music and Internet Market Data

China’s Massive Mobile Media Markets:

  • 731+ million mobile consumers access digital music products.
  • 693+ million users are active in social media networks.
  • 90% of all searches on Baidu’s web site are for music and entertainment.
  • Chinese consumers stream 20 percent more music and video from mobile devices than their U.S. counterparts.

Nielsen’s 2016 China Music Market Report:

  • Consumer spending on music is projected to be $56 Trillion over the next decade.
  • 72% of the general population of China listens to music—for an average of 16 hours a week. This rises to 82% for the most affluent tier of Chinese consumers.
  • Music is largely consumed online, particularly by affluent consumers, with 66% of music listeners use a streaming service in a typical week, rising to 71% for affluent consumers.
  • For the affluent music listeners in China, live events are even more popular than they are in the U.S. 57% attend live music events compared to 51% of the U.S. population.

International Internet Comparisons

Figures from paper by the McKinsey Global Institute: “China’s Digital Economy: A Leading Global Force.”