Entertainment Meets e-commerce: the Blurring of Lines
My first proper encounter with the phenomena of Chinese live streaming took place two years ago. I was then in charge of producing a festival called Modern Sky Festival Helsinki. It was a music festival with special focus on introducing some of Asia’s emerging artists, organized under the brand of China’s leading festival producer Modern Sky Entertainment. The festival, although relatively small in scale, was significant as it was the company’s first festival in Europe and second overseas — with the first one had been organized some time earlier in Central Park in New York.
Already early into the production I was informed that the festival would be streamed live to China and that the stream would gather large audiences. It was, however, not until around a month before the festival that I realized something major was underway. That was when detailed plans of two and three-store glass and steel structures started arriving in my inbox. The plans were for two booths — one by a leading Chinese dairy company and one by a big Chinese online travel agency. Both of these companies wanted to pay large sums for the right to set up their booths on the festival grounds on top of paying for their construction. What seemed even more bizarre at the time was that the dairy company also wanted three people dressed as brand milk cartons to walk around the area during the whole festival. All this effort for a few thousand people festival in Helsinki and for products not even on sale in Finland? Not so. What I was witnessing was the power of live streaming.

Half excited about the new sponsorships, half dreading the potential comedy aspect of the three Chinese milk cartons walking around, I started asking for offers for the production of the costumes as well as the structures requested by the companies. However, eventually the two deals fizzled. It namely turned out that the price for building the structures would have been manifold in comparison to what they would have been in China. Moreover, the plans would have required inspection by local officials in charge of construction safety and there was no time to go through such procedures. As to live streaming itself, the original plan was also to use a local company, but also in this case it was eventually cheaper and more practical for Modern Sky to put its own team on the plane and fly it over to live stream the event.
Eventually, the Asia focus of the festival was not the big draw we had hoped it would be (for the time being at least), but we could comfort ourselves with the knowledge that the live streaming had been a success: 1,2 million people in China had tuned in over the weekend. The event was streamed live through Modern Sky’s own platform Modern Sky Now(正在现场)and various other partner platforms in China. The amount of viewers was actually bigger than that of the sister festival in New York’s Central Park — and this despite of their lineup of more prominent artists. The smaller time difference between Finland and China versus New York and China was apparently a key factor — possibly a small but permanent benefit for European live music events aspiring to attract a Chinese live streaming audience.
In the two years since the festival organized in Helsinki, the live streaming market in China has gone from popular into a massively popular gold rush. There are currently more than 150 different live streaming platforms operating in China. The market grew with an impressive 51 per cent in 2015 and then exploded with a growth of 180 per cent in 2016. In fact, the size of the live streaming market is now almost on par with China’s film industry. Some companies have also begun successfully exporting their knowhow overseas. Less commonly known is that the karaoke app Musical.ly — globally hugely popular among teens — is a Chinese company with headquarters in Shanghai. Similarly, another internationally popular live streaming platform Live.me has been founded by a Beijing based company Cheetah Mobile — a company specialized in developing services for the international market based on innovations initially tested on the Chinese market.
So what exactly is live streaming in China? As elsewhere it consists of gaming, entertainment, sports and increasingly also education. What sets the Chinese live streaming market apart from other ones is its huge popularity, advanced ways of monetizing content and its close connection to e-commerce. The live streaming of both domestic and international events has become the new normal in China. Within the music industry alone, major international festivals such as Glastonbury, Summer Sonic and Coachella are regularly streamed live for Chinese audiences and the number of such festivals is growing. Still, the live streaming of events such as entertainment, sports or marketing events forms only a part of the Chinese live streaming phenomena.
At the core of the live streaming industry are the individual live streamers — also known as KOL’s (key opinion leaders) or known in China as Wang Hong (网红). Their audiences on the different live streaming platforms can reach up to tens of millions during a live broadcast. During the shows the audience showers the KOL’s with virtual gifts each costing from a few RMBs to thousands of RMBs (hundreds of Euro). Giving gifts helps the fans to get noticed and occasionally credited by the KOL. Moreover, the contributions allow them to climb up on the fan charts visible on the streaming screen.
Advertising is as such globally at the core of monetizing social media. However, in China the virtual gifting and online retail form by far the biggest share of income. If you thought that piracy is rampant in the Chinese internet…. well there is still some truth to that, but at the same time the Chinese market is also leading the way in the using of subscriptions and micropayments in paying for content. The payment systems WeChat Pay and Alipay are embedded in most services and rather convenient to use — and the ease of paying online for news, blogs, music, events or in the case of live streaming — virtual gifts just for the appreciation of the KOL, is driving sales in content industry. Chinese consumers are now increasingly willing to chip out small sums for content, and in many areas more so than their Western peers.
Furthermore, live streaming is also a major driver for sales on the Chinese 750 billion e-commerce market — a market that now by far exceeds the second two e-commerce markets, that is UK and US combined. China’s largest e-commerce platforms such as JD.com and Taobao have their own live streaming channels with specialized TV-shop style KOL’s introducing products. The audiences that find their way to these channels are more modest in numbers but they are there already looking for something to buy, comparing products and prices. They are logged into the platforms with their Alipay or WeChat pay accounts, and if they like a product, it can be bought with just one click on the screen.
On the more popular entertainment live streaming platforms the shows direct the audience to shops on the e-commerce platforms that sell products by the program sponsors or the KOL’s. In this ecosystem various models of partnerships between the KOL’s, e-commerce, sponsors and live events are applied and new ones continue to surface. For example e-commerce live streaming channels on Taobao and JD.com now regularly broadcast from within live entertainment shows. Moreover, a growing amount of entertainment productions are organized that mainly exist for the sole purpose of selling products via e-commerce platforms.
The ease of turning social media traffic into direct sales has amounted to the KOL’s changing the brand landscape of China and becoming brands themselves — increasingly also challenging traditional brands. Out of the top 50 brands on Taobao, half are now run by the KOL’s.
RADII recently produced a live streaming campaign for three Finnish food brands to take place at Shanghai’s huge food industry trade show SIAL. The KOL called Demi we partnered with arrived at the location with a four person camera crew. With the crew following her, she walked from booth to booth tasting and introducing products and interviewing the staff responsible for the different brands booths. The sponsored content was only a part of her business as virtual gifts — small gift animations from bursts of hearts to speeding Lamborghinis were all the time flying across the live streaming screen. The execution was done in a style of professional journalists — which was quite unsurprising as Demi had graduated from a journalism school in Shanghai. Moreover, all of her team had a background in broadcast media. While Demi is not busy shooting content for her own personal live stream, she appears on scripted live streamed programs or introduces beauty products in her signature Taobao store .
Chinese live streaming is often spontaneous only on the surface. Many of the KOL’s — such as Demi — have a background in media or drama. There are nowadays even special schools where one can graduate as a live streamer. Behind the KOL’s there are agencies negotiating the deals with brands, developing program formats, producing scripts, hiring production teams and providing facilities such as studios. To get a larger share of the pie, the agencies and the industry are in general moving towards growing their own talents with many “KOL incubators” being launched around the country — a model initially pioneered by the Korean entertainment industry.

There are cultural factors underlying the popularity of Chinese live streaming. Unlike social media stars elsewhere, the majority of Chinese KOL are not so much opinionated influencers providing information. They are above all entertainers. Hundreds of millions of young Chinese people migrate into big cities and become detached from their family and previous friends. Working diligently in their often low paid jobs, they have little social capital and time for social life. There is thus a great demand for social life and human contacts — and this is precisely what the KOLs aspire to provide. These specific cultural conditions are therefore creating some online phenomena in China that are hard to imagine taking off in the west — such as the very popular live streams with people engaged in eating.
But the popularity of live streaming is also based on trends that you can see becoming increasingly prominent in the developed economies as well. For now, according to some recent studies Westerners first and foremost look for speed and efficiency in e-commerce and typically find the products they want to buy online through search engines. However, the Chinese expect online shopping also to be entertaining. They land at e-commerce sites through various different channels — through recommendations on social media, chats or via live streaming. Similar consumer behavior and demand is taking shape in the West as well, although there is still some way to go before we catch up with China.
Major current trend shaping the Chinese e-commerce space is the merging of traditional retail and e-commerce through M&A. Industry giants such as Alibaba and JD.com aim to enter and revolutionize the traditional shopping experience by connecting online payments, e-commerce and social media with the help of new technologies such as AI and AR.
The companies have recognized that for all of its fast growth and popularity in China, e-commerce still forms only 15 per cent out of the overall retail business. It appears that people still want the offline experience of shopping in China as well.
Another recent trend shaping Chinese e-commerce consists of cross-border e-commerce with Chinese consumers buying products directly from abroad. This can be seen in live streaming as well where many KOL’s on the e-commerce platforms are broadcasting and selling products from abroad.
Overall, these combined advances in technology and services with the willingness by Chinese consumers to engage in new ways of consumption has made China the undisputed global leader in e-commerce consumer trends. With online payment services are improving in the rest of the world as well and with consumers continuing to adopt them in greater numbers, other parts of the world will certainly aspire to catch-up with China. Some of the Chinese innovation such as new ways of connecting live events, trendsetters, creators and e-commerce will likely be copied and adopted, some will be brought overseas by Chinese companies such as Tencent and Alibaba. These two have already set their sights on gaining a larger market share on the international markets.
In addition to technology and services being imported, the power of the Chinese consumer will likely become increasingly visible in the overseas markets. The growing popularity of cross-border e-commerce is already making businesses elsewhere attach more attention to the Chinese demand: partnering with Chinese e-commerce platforms and engaging in Chinese social media marketing such as live streaming. The strong growth of Chinese outbound tourism will undoubtedly help companies such as Alibaba and Tencent to spearhead the adoption of payment services such as Alipay and WeChat pay internationally. The hospitality industry in particular will be the first to adopt new services that can help them extract more money from the worlds biggest spending tourists — the Chinese. The wider adoption of Chinese payment services will in turn open the gates to international markets for many other Chinese innovative services, built on top of the online payment systems.
The Chinese presence within the live entertainment sector overseas will most certainly continue to grow. Live streaming events into China will increase further and with that overseas events will add further online audiences in China. The growing Chinese outbound tourism and travellers growing more sophisticated in their tastes and expectations will for its part continue to bring more visitors to festivals overseas. Furthermore, Chinese online payment systems are becoming more accepted on the overseas markets, which in turn will make it easier for the entertainment producers to monetize the new Chinese offline and online audiences. In short, the opportunity offered by the Chinese markets is too big to be ignored. It might very soon be that Chinese milk cartons roaming around your local festival is not that strange anymore.
Ps. Together with Finnish and Chinese partners RADII is currently building solutions for bridging the Nordic and Chinese markets in the sphere of e-commerce space — entertainment and retail. More updates soon!

