Cost, inability to get license will impact small players: experts
The Chinese government's latest efforts to tighten management of live streaming will be a screening test for the fast-growing industry, with many small players likely to drop out, industry experts told the Global Times on Monday.
The comments were made shortly after China's media watchdog, the State Administration of Press, Publication, Radio, Film and Television (SARFT), issued a statement on September 9, stressing that domestic live streaming platforms must hold a special license to carry out their streaming business.
This regulation will have a great impact on the live streaming industry, which is currently growing out of control, Xiang Ligang, a Beijing-based telecom commentator, told the Global Times on Monday.
Companies that can apply for the license must meet a series of conditions, such as being a State-owned enterprise and having registered capital of more than 10 million yuan ($1.5 million), according to the SARFT.
An employee from a Hangzhou-based certification agency, who asked to remain anonymous, told the Global Times on Monday that currently, companies that do not qualify for the license can buy it from companies that hold the certificate, many of which are financially unsuccessful. However, as the government becomes increasingly strict about issuing the license, the ability to purchase the license off other businesses is becoming very scarce.
"Several live streaming companies have consulted us about buying the license recently, but we have run out of resources of potential sellers," he said.
He also noted that the price of transferring the license has been driven up to more than 10 million yuan.
Several domestic live streaming platforms, such as zhanqi.tv, display the license on their website, but others, including huajiao.com and douyu.com, haven't publicly posted their licenses.
A public relations representative from huajiao.com said the company doesn't accept media interviews when contacted by the Global Times on Monday, while douyu.com didn't respond to an interview request as of press time.
Mushrooming industry
According to experts, the government's tightened regulation arrives at a time when the industry is flourishing.
Wang Chuanzhen, an analyst from Analysys International, said that the domestic live streaming industry budded around 2008, developed fast around 2012 and went into a period of explosion since mid-2015.
There are about 200 apps whose main function is live streaming, but there are far more apps that have live streaming functions, Wang told the Global Times on Monday, adding that some mature live streaming apps have an active user base of more than 10 million people on a monthly basis.
"The live broadcasters are the ones that benefit the most from the business pattern," Wang said. "Some live streaming platforms pay 90 percent of the streaming rewards [paid by the audience] to the broadcasters, while others invite them to star in website movies," he said.
Guo Chengjie, an analyst from market consultancy iResearch, told the Global Times on Monday that most of the income channels for live streaming platforms are advertisement and audience rewards.
"So far, the cost of live streaming is still relatively high, and the competition is fierce, so it's very hard for those platforms to make a profit," he said.
Huya.com, a domestic live streaming company, made a loss of more than 380 million yuan in 2015, the Guangzhou Daily reported in August.
Wang said that the industry is still working on attracting users and that revenue is less important to live streaming platforms at the moment.
Industry management
The burgeoning industry has become a way of generating illegal content, which has prompted the government to take tighter management measures, experts noted.
In April authorities investigated and convicted 19 live streaming platforms over improper content, the China Business Journal reported on Saturday.
Xiang said that some content would impact social stability, and the government is justified in controlling such unhealthy content.
Wang noted that the license requirement would not be much of a problem for bigger players, but that small companies might be compelled to quit.
"The cost of buying a license is too high for the small players," Guo said. "They will either continue to operate without a license, or die out."
However, Liu Dingding, an independent industry analyst, told the Global Times on Monday that even without government regulation, the small players are subject to strong market elimination.
"The market of live streaming is a game between giants; small companies have almost no chance," he said.
