Will beauty brands use China’s top live-streaming service YY?
When it comes to online video platforms in China, you can’t look past the popularity of live-streaming services. We take a closer look at the country’s video-streaming conglomerate YY Inc.
Live-streaming platforms in China can be broadly categorized into two areas, video games and all other entertainment. The champion in video game streaming is DouYu, with 33.75 million monthly active users as of March this year. As for other forms of entertainment, the live-streaming social network YY reigns supreme, with 28.55 million users. However, although DouYu has more monthly active users, its revenues do not match up with YY’s.
YY reported second-quarter 2019 sales of around 6.3 billion yuan (US$875 million) for 2019, up 66.8% from the same quarter last year. DouYu’s same-quarter report showed a 133.2% increase from last year, but which amounted to around 1.87 billion yuan (US$261 million).
YY founder and CEO Xueling Li had previously worked as a journalist after graduating from the Renmin University of China’s School of Philosophy. It was through journalism that he interviewed some of China’s top business executives, including Alibaba’s Jack Ma and Xiaomi’s Lei Jun. Inspired by these encounters, he went on to start his own business. At 31, he launched the game information site Duowan.com, procuring US$1 million in funds from Lei Jun, who is also an angel investor.
The year 2008 marked the birth of the YY brand name. Li’s company released a voice communication software for gamers known as YY, short for YuYin, which gradually grew in popularity. Two years later, it launched the live-streaming site YY.com, which went on to become what is now the foundation of the business. In 2012, YY Inc. listed on US stock exchange NASDAQ; since then, its aggregate market value has surpassed US$4.6 billion (as of 1 September).
‘Gifting’ brings in most of the profit
YY’s profit structure differs from other online video platforms, which mainly rely on advertising.
Most of YY’s live-streamers are so-called “net idols”, who perform for viewers by singing, dancing or chatting. Followers who take an interest in the live-stream can contribute or “gift” whatever sum of money they feel like, and this becomes the live-streamers revenue.
To gift a live-streamer, users must first purchase YY virtual currency. Users pay a small fee to YY each time they gift their virtual currency. The amount of money a live-streamer can keep from gifting differs from person to person. However, YY tends to take a cut of about half of their earnings via the user fees. In China, single giftings worth hundreds or even thousands of dollars are common, so YY’s revenue from user fees amounts to an enormous sum of money.
Similar to other video apps, YY presents its content in various categories, such as music, dance and “Making Friends”. But what differentiates the platform from others is live-streamed shopping, a service that’s similar to traditional TV shopping channels where products are introduced live on air. Most of the goods sold on YY are either precious stones or antiques. To ride on this market, YY introduced the e-commerce app Yijian in May 2017.
Female live-streamers for the male gaze
Live-streaming statistics paint a clear picture. The overwhelming majority of live-streamers in China are female whereas their audience is mostly male. About 61.2% of live-streaming users in China are male, for instance.
Previously, this demographic makeup took the industry in a less-than-wholesome direction. A live-streamers revenue increases the more fans they have, so live-streamers would compete to see who could expose the most skin, resulting in ever-more extreme content. A fair number of live-streamers in China were arrested and charged with indecent exposure. In 2018, the authorities launched a clean-up campaign targeting illegal websites, which resulted in the shuttering of up to 670,000 online accounts. Thanks to new regulations, live-streams in China now seem to be heading towards a less salacious future.
Can the beauty industry make use of YY?
Yet there’s the flip side of the coin. Even with most users being male, close to 40% of active users are female — that’s around 11.08 million users per month. Coupled with the initiatives to clean up the platform’s content, beauty brands could see great potential in promoting their products on YY in the near future,
P&G’s skincare line Olay released a commercial to coincide with International Women’s Day on 8 March this year. The ad featured a series of famous and successful women from different industries, among them YY Inc.’s Chief Operating Officer (COO) Li Ting.
Two months later, in collaboration with Coca-Cola and convenience store chain Meiyijia, YY promoted limited-edition Coca-Cola Zero labels that advertised the movie Avengers: Endgame. The event also featured a live-stream of popular YY live-streamer Xiao Shan Hu — with over 100,000 followers — working as a Meiyijia store manager for a day and visiting a Coca-Cola event booth. Within four hours, the live-stream received up to 900,000 giftings from 150,000 users.
This was a new marketing model, one with “advertising and tipping”, where giftings complemented a company’s promotional campaign. Collaborating with live-streaming platforms like YY and popular live-streamers is one area that still has room to grow — and certainly has practical use in the beauty and fashion industries.
Text: Denyse Yeo
Original text (Japanese): Team Roboteer
