(Chinese Version)
In 2014, the split of Acfun marked the very beginning for Douyu. To date, the gaming livestream industry has undergone four years of development. In the initial period, Douyu, Huya, and Zhanqi emerged as the top three players. Panda and Quanmin TV, on the other hand, penetrated the market in the middle phase, displaying great competence. Mobile livestream platforms like Chushou and Penguin E-Sports etc. eventually appeared in recent time. There is no doubt that these four years of development are characterized by amazing twists and turns.
However, as the dust finally settled, it’s easy to tell that only Douyu and Huya remain competing players in the field with other players fallen with their very own issues. Even so, Huya is not so much of a competitor to Douyu in terms of gaming livestream either.
01.
The truth is, the livestream industry has always had this doubt: Is the livestream sector too similar to the video sector?
This doubt reached its peak when Panda TV emerged in 2015. According to Baidu Index, Panda TV’s popularity quickly surpassed the top three players in the gaming livestream industry at that time. Between September 2015 and 2016’s year end, it appeared that Panda TV was secretly challenging the top player Douyu.
But why the competition ended so fast?
One reason is that Panda TV poached a large number of top livestream influencers such as Ruofeng, Xiaocang, PDD etc. with great capital during its early phase.
This allows Panda TV to gain momentum fast, seemingly invincible. Quanmin TV later copied Panda TV’s model and attracted a series of major broadcasters to bring up the traffic.
Naturally, this model makes gaming livestream very similar to the video industry. In the video industry, the consensus is that data traffic can be acquired through buying lots and lots of quality content.
That’s why even today the top video giants, Youku, IQIYI, and Tencent Video, are still losing money continuously.
According to IQIYI’s statistics, from 2013 to 2016, IQIYI has lost a total sum of ￥7 billion. On another hand, Alibaba’s reports show the company’s digital media and entertainment business unit had lost ￥3.388 billion during April to June 2017.
The continuous loss is due to the high cost of content purchasing. According to IQIYI’s prospectus, in 2016 IQIYI’s revenue grew year-on-year by 113.1% to ￥11.3 billion, while its content cost jumped by 121.7% year-on-year.
With good content, users will be attracted to the platforms and purchase VIP membership, contributing to the data traffic that allows the video sites to sell advertisement placements at a higher price.
That’s why Leshi chose to withdraw from the fierce competition with the other three top players when it encountered cash bleed since the company no longer had the money to purchase relevant content to keep its users.
In the gaming livestream industry, it’s similar. The content here is contributed by gaming hosts. In this sector, top hosts mean quality content and great data traffic.
This was exactly the direction that Douyu took during its early phase. The gaming host contract model we have today is, in fact, the product of this period when everyone was busy signing top hosts. Douyu was, therefore, able to surpass YY’s gaming livestream unit. Zhanqi, Panda TV, and Quanmin etc. later all adopted this model and achieved fast growth.
02.
It appears that the gaming livestream industry shares the same development pattern as that of the video industry. In the case of the video industry, there are still three top players competing with each other in the arena. Leshi’s exit from the competition didn’t break the balance as PPTV, backed by Suning, entered the arena and signed up contracts with many top sports content providers. It seems such content-purchasing model will continue to be mainstream in the industry.
In the case of the gaming livestream sector, there are still several companies out in the arena with strong financial capacity. And it remains unknown if powerful investors like Alibaba and Baidu would enter this market through the content-purchasing model.
However, the facts do not match the hypotheses. They are quite the two opposite extreme cases. Alexa’s latest data show Douyu’s daily PV has reached over 80 million while the follow-up has merely over four million. We are seeing a 20-times gap here.
Why the fight in gaming livestream market finished so fast?
Let’s look at the mobile market. According to third-party research organization Analysys’s video livestream app leaderboard in August and September 2017, Douyu had a monthly active user base of 13.28 million and 15.25 million in the two respective months, making it the top leader in the industry. In comparison, the runner-up Huya had a monthly active user base of 9.07 million and 9.95 million, with a month-on-month growth of 0.65% and 9.68%. The third top player Panda TV only had a monthly active user base of 5.38 million and 5.14 million.
Baidu index also shows that in the second half of 2016 Douyu’s was already in a leading position that nobody could touch. Meanwhile, Panda TV was surpassed by Huya.
After acquiring data traffic fast, Panda TV and Quanmin TV then started to decline. If we were to say Quanmin TV was limited by the capital, the decline of Panda TV was hard to be explained.
On the other hand, Douyu has recently announced that the company is now profiting while maintaining its leadership in the market. In comparison, according to Huya’s Q3 financial report, Huya had lost only around 10 million, which is a sharp drop in loss.
The gaming livestream industry and video industry are showing two very distinct developmental patterns. At present, the simple strategy of money-pouring doesn’t seem to work anymore.
The very reason for this situation might lie in the fact that every content product that the video sites purchase is different from one another. There is a great diversity. On the other hand, after several years of development in gaming livestream, users have gradually realized that no matter whose gaming livestream shows they watch, the content is similar. For instance, livestream show hosts of League of Legends all livestream about League of Legends, while most of the viewers are fans of the game. No matter how many shows there are, all of them are about the same game.
What really sets gaming livestream platforms apart is the choice of the game instead of what livestream hosts they have. That being said, if Douyu bought the right to broadcast League of Legends, then no other platforms would be able to make similar contents. This is what differentiates these platforms.
The two industries are different from each other for their subscription models as well. Video sites』 contents diversify monthly, or even daily. However, gaming live streams are rather stable. In addition to that, gaming companies are still keeping the copyrights to themselves for the most of the time.
In this case, this decides the difference between the gaming livestream industry and video industry in the late phase. In the early development phase of gaming livestream, livestream hosts did contribute to the development of the platforms. These hosts are influencers that could attract users. However, their appeal lost momentum in the later stage, bringing only a limited amount of traffic. What really keeps the users on a particular platform are their social-networking habit and the fact that they watch multiple hosts』 shows. So the loss of some hosts would not shake the foundation of the livestream platform because users would continue to stay on the platform and watch other hosts』 content.
This is the difference between the content provided by the game itself and the content produced by the livestream hosts.
03.
Let’s look at Douyu for example. Douyu initially relied on poaching popular livestream hosts to bring about the surge in data traffic, but it didn’t lose momentum when other platforms were poaching hosts from Douyu. In fact, it was the livestream hosts that left Douyu lost popularity.
Many top influencers emerged alongside with Douyu, such as Wenjiangun and Cake etc. But these hosts didn’t have much of a smooth ride after leaving Douyu.
Such cases are not rare. In earlier time there were four female hosts that were equally popular, two of which eventually decided to leave Douyu. One female host that chose to leave was actually the most popular one among the four. However, the reality is the two who stay remain popular while the ones that chose to leave have lost some of their popularity.
The Hearth Stone section on Douyu is the most apparent case. Douyu almost lost all of its top hosts of the platform’s Hearth Stone section to other platforms, but ultimately the traffic of Douyu’s Hearth Stone section remained close to that of other platforms. Livestream hosts like Gouzei, Lalala, and Tao Mei etc. quickly seized the chance and became the new popular influencers, while the ones that left earlier had a slump in popularity.
It’s worth noting that every time some top livestream hosts choose to leave Douyu, Douyu would always have proper replacements. The hit star Dasima in the League of Legends section in 2017 is the perfect example that showcases Douyu’s strength in training new hosts, especially new hosts for the gaming sections. Douyu doesn’t lack new blood to satisfy the demand.
In the second half of 2017, other platforms once again challenged Douyu fiercely. However, besides Weishe, all the other livestream hosts that chose to depart from Douyu were all entertainment section hosts such as Mini etc.
That said, the livestream hosts on Douyu’s core game section recognize the platform’s contribution to their professional career as livestreaming influencers. That’s also why top livestream hosts like Shege, Hishi, Zhang Daxian etc. left their original platforms and joined Douyu. 「I have my own ambitions,」 Shege stated when leaving the original platform. The core reason behind it was the fact that Haishi feared that Zhang Daxian would affect his role as the top leader in Honor of Kings after Zhang transferred to Douyu. That’s why he joined Douyu and competes with Zhang Daxian on the same platform.
From the perspective of gaming, Huya can’t compete with Douyu directly either. Shege and Haishi’s transferal to Douyu already confirms the issues. In reaction to that, Huya poached Weishen from Douyu. However, it only shakes Douyu’s entertainment section. In fact, Huya poached two of the four most popular hosts from Douyu’s entertainment section. Hosts from Huya are natural entertainment performers who are relatively competitive in the entertainment section.
Therefore, Huya is becoming more increasingly similar to Douyu. However, the market Huya penetrates is already dominated by YY, while in the emerging gaming livestream sector, Huya no longer has the capacity to compete with Douyu.
The recent controversial incident of host White55 is another example that really makes us think about why a host on Douyu could stir up such social impact that’s more trending than celebrities, and why hosts like White55 are from Douyu.
As a matter of fact, when White55 was starting to livestream, he started from the same level as former professional e-sports players like Ruofeng and Strawberry did. But it’s White55 who eventually became the brightest gaming livestream host on Douyu.
The fact that Douyu was able to produce hosts like White55, who are almost as popular as celebrities, proves that Douyu does have core competence in nurturing gaming livestream hosts.
White55 might lose his popularity in the future, or he might not. But the next phenomenal livestream host like White55 would be coming from Douyu.
04.
How Douyu forged such momentum?
After fiercely acquiring traffic flow with capital in the initial stage, Douyu started a quick transition that brought about both talents and traffic. But more importantly, Douyu successfully kept the massive traffic it achieved during the initial stage.
Douyu established a series of user category system that built up its social function, making it harder for users to move to other platforms, as transferring to another platform would mean the users』 previous efforts on Douyu would become a waste.
This is very different from video sites. It’s also the very reason why Douyu could maintain its user flow to the maximum extent after acquiring a massive user flow, building up momentum.
Besides the user category system, Douyu also focuses on the social-networking mechanism on the platform. Users gradually became connected to the platform. The social function is a major element on the livestream platform, as users become connected with each other, and with the livestream hosts. As mentioned earlier, there is no inherent difference between livestream contents offered by different platforms. This makes the establishment of social connection essential for the acquisition and retention of users.
In comparison, video sites don’t really have such user category of social function system. And users could basically switch between different sites without worrying about losing anything. Even the VIP packages on video sites could be subscribed on a monthly, which is another way of lowering the transfer cost for the users.
Furthermore, as this overall dynamic of the platform climbed up, users』 use time of the platform also surged, which transformed Douyu from a gaming livestream tool to a livestream platform.
By diversifying the content operation and the platform ecosystem, Douyu’s users are no longer attached to any particular livestream hosts, but the platform itself. When this happens, users become more unwilling to transfer to other platforms.
As for the livestream hosts, the larger the platform is, and the larger audience base and industrial chain of the platform is, the more opportunities for profits they would have. Let’s think about this further using the example of the basketball industry. Usually, NBA stars would prefer to go to big cities like Los Angeles or New York when signing new contracts even if the offers they get are not that high in comparison. The reason behind it is simple. Big cities aggregate more resources, meaning more exposures. The integration of these resources can increase the commercial value of these professional basketball players.
the Matthew Effect exists in most sectors of the Internet industry. There will be only one dominating actor. This is the harsh reality in the Internet industry. Big platforms can provide more resources, which will bring about more users. And the increase of users can attract more resources.
That’s why Douyu was able to get D round financing and achieve profitability, stepping closer to its goal of listing. Douyu has already established dominance within the gaming livestream sector. The sudden entry of capital or the loss of some livestream hosts can’t really challenge Douyu’s leadership in this sector as Douyu has already built up a platform.
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The article is published with authorization from the author @DingpengGamewower, please note source and hyperlink when reproduce.]
Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.
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