Live streaming service is a fast-growing industry in China. Unlike traditional social media, live streaming service emphasizes on instantaneity and real-time interaction. But why does it attract Chinese audiences so much? How do people make money from it? Is the live streaming service sustainable?

What is Live Streaming Service?

Live streaming service is a social networking service that allows people to communicate with their audience instantly. Usually, during a live stream, there is a host and audience. The hosts use the camera on their mobile devices or laptops to broadcast, and people enter virtual rooms of the hosts through different live streaming apps to watch or even interact with the host, such as leaving comments and sending virtual gifts. While traditional TV live streaming is a one-way communication, the live streaming service now allows audiences to take more active and involving roles.

Among all the countries, the live streaming service in China develops the fastest. This is supported by some strong numbers. For example, “at the end of 2016, the China Internet Network Information Center estimated that approximately 344 million people in the country were consuming live-streamed content” (McMillin, 2017). Furthermore, “markedly, China’s live-streaming market grew 180% in 2016, which was estimated to be around 3 USD billion (Xiang, 2017)” (Long and Tefertiller, 2020, p. 1314). The most popular live-streaming apps in China include YY live, Huya, and Douyu. However, some other popular social media platforms, such as Douyin (the Chinese version of Tik Tok) and WeChat, also add the live-streaming feature to attract users and enhance user experiences.

The living streaming service in China is a lot different from the western counties. According to Long and Tefertiller (2020), “Unlike North American or European streamers, China has more professional/full-time streamers and content they stream is more diverse (Lu et al., 2018). In China, besides streaming live events or sharing among friends (Tang et al., 2016), SLSSs such as Douyu and YY live are enabling people to live stream almost anything they do to the masses – sharing thoughts and experiences with other people, chatting with audiences, showing off professional skills, playing online video games, or even just simply eating in front of the camera” (p. 1314). Clealy, the live streaming content in China varied significantly and can capture different interests of the audiences. In this essay, I am going to explore how people make money from live streaming services, how and why are the audiences being attracted and maintained, and the sustainability of the industry.

How do people make money?

To discuss the question of how people make money from the service, we must first recognize the people who are involved in and can potentially be profited from it. The most obvious group of people here is the hosts. The hosts can make money in various ways, including receiving virtual gifts from the audiences, advertising for brands to earn promotion fees, and selling products. Different types of hosts may make money in different ways. For example, for those who live stream themselves traveling, they might implement soft advertisement of their traveling gears. For the hosts who eat in front of the camera, they might put up links to the food that they are eating to encourage purchase.

For most of the entertaining hosts, such as gamers who live stream themselves playing video games, people who sing for the audiences, or people simply chatting with audiences, most of their incomes come from virtual gifts. This is also supported by Long and Tefertiller (2020), stating that “American live-streamers make money off of ads, endorsements, direct donations from the viewers, or subscription fees, but for Chinese live-streamers, most of the money comes directly from fans in the form of virtual gifts” (p. 1314).

The idea of the virtual gift is broken down by Long and Tefertiller (2020), who suggests that “in China, virtual items have long had an underlying monetary value, which is bought with real money by viewers and can be converted back into cash proportion by streamers, with the rest going to the platform” (p.1314). To be more specific, there are different icons for virtual gifts with different prices, such as a heart, a bottle of beer, or even a cruise. While a heart usually costs the audience 1 Yuan, (around 0.15 dollars), a cruise might cost 1314 Yuan (around 200 dollars). As soon as the audience sends the host a virtual gift, the icon that they send pops up on the screen instantly, showing to the host and the rest of the audience.

The second group of people who make money from lifestreaming services is the platforms. Different platforms split the virtual gift with the hosts into different portions. For example, Douyin (Chinese Tik Tok) supports a 50%:50% split, meaning that if the host receives a one-hundred-dollar worth virtual gift, fifty would go to the host and the rest would go to Douyin.

The third group of people who make money from live streaming services is the brands. Before the invention of live streaming, Chinese people preferred watching television or be on other social media platforms, and the brands mostly put up their advertisements in those places. However, the invention of live streaming provides them a new possibility. The brands can now cooperate with celebrities, popular hosts, or even open up their live-streaming accounts to promote their products. The revenue being generated even in just a single live stream can sometimes be unimaginable. Or at the very least, the brand can gain some publicity.

In fact, a new business model related to lifestreaming emerges in recent years. Live streaming E-Commerce, which is described as “promoting and selling goods through influencer streams on their own social media channels, most often housed on China’s online shopping malls. It’s like Home Shopping Network, but with charismatic, trendy anchors. It’s also been described as part infomercial, part variety show” (Greenwald, 2020).

The only thing that influencers in the Live streaming E-Commerce industry do during their live streams is to pitch products, from cosmetics to grocery to Rolls- Royce. The influencers are like agents because they select products that they want to sell in their daily 4-hour live stream and negotiate a discount price with the brands. Thus, they establish the image of only selling trustworthy, cheap, and high-quality products for their live stream channels. To further increase their channel’s popularity, the influencers would also invite famous Chinese celebrities to join their live stream. The audience follows these influencers because they know these influencers cooperate with the brand, and the audiences can purchase real products at a much cheaper price (comparing to the normal market price) in their live streaming channels. They can also get to understand the products more through influencers’ pitches,

For example, Weiya is one of the most popular streaming hosts on the Chinese e-commerce platform Alibaba Taobao. She sold 30 billion Yuan (around 4.7 billion US dollars) alone in 2019. According to Greenwald (2020), her monthly view figure is over 839 million. The most expensive product she has ever sold was a rocket worth 40 million Yuan (around six million dollars). This business model lets every party involved to win: the brands gain reputation and revenue, the influencers get dividends of the sales revenue, the audiences can purchase cheaper products, and the platforms gain more users.

Why and How are the Audiences Attracted?

The reasons that audience are being attracted varied. However, we can still categorize them into five main reasons. According to the survey conducted by Long and Tefertiller (2020), “the primary motivations for live streaming viewing were Real-life Communication, Escape, Fun Seeking, Partnership Seeking, and Social Interaction” (p. 1318). I think that when people want to escape from the reality, they might not necessarily want to enter something fake or virtual, like a video game. Instead, they might expect to enter another reality, a more perfect reality like live streaming. This is why live streaming becomes so special. To the audience, it seems like live streaming is not fake. Instead, they get the chance to interact with others. They get recognized, they feel less lonely, and they can be entertained, which are all crucial aspects to a more perfect life. Therefore, rather than thinking that audiences escape from reality through live streaming services, it might be more appropriate to say that they want to seek happiness in another reality.

More professionally speaking, the uses and gratifications theory can be applied to answer the question. The theory represents “‘represents an attempt to explain something of the way in which individuals use communications, among other resources in their environment, to satisfy their needs and to achieve their goals, and to do so by simply asking them” (p. 21). In other words, U&G theory highlights the subjective initiative of the audience, the initiative to make media choices and to interpret media effects” (Long and Tefertiller, 2020, p.1315). Since audiences often feel lonely, they tend to rely on social media. During the process, the audiences would consciously select a platform they like to gratify their needs of reducing loneliness. Due to the special characteristic of real-time interaction, the live streaming services become a bigger possibility that audiences yield to.

Besides the social needs of the audience, the way hosts run their channels can also attract audiences. First of all, the hosts would attract audiences by developing a standard time slot every day. In this way, the audiences can expect when and where to meet the hosts, decreasing the uncertainty and increasing audiences’ loyalty in a long run. Secondly, the vanity or pride that audiences develop when they send virtual gifts also secure the fan base. Just as explained by Chen and Xiong (2019), “when they send gifts to their favorite hosts, fans receive instant online recognition, namely, connection with the hosts, which can even lead to infatuation. Such social interaction improves viewers’ happiness” (volume 7).

The platform also tries its best to ensure the pride and vanity of the audiences, “Right after a gift is sent to the streamer, a notification is shown to all audiences of the stream announcing who is the gift-sender and the value of the gift. A leaderboard listing the top gift-senders is also shown constantly throughout the stream to encourage more rewards” (Long and Tefertiller, 2020, p. 1314). Furthermore, Chen and Xiong (2019) suggest that “Taylor Hartwell, who is a foreign host on a Chinese live streaming platform, argued that ‘higher-level folks enter streaming rooms with a shiny visual effect that essentially says, ‘Look, Mr./Ms. Important is over here’, which certainly makes their engagement with the host more likely to result in new followers” (volume 7).

All of these strategies are extremely important. Firstly, the audiences might want to send a gift out of vanity or the desire to show off their wealth, get more recognition and interaction with the host. Then this process implies to the audiences the importance of this particular host to them. Therefore, they start to develop loyalty. Even if the audiences don’t develop loyalty instantly, they might still remember the host well due to their prior money and time cost, thus they go back to the host once in a while. As a result, they become regular audiences of a particular host. Soon, this develops a cycle for live streaming services. The more they want to interact, the more money they invest in a host, and the more loyalty they develop. In this way, the audience is being attracted unconsciously.

The Sustainability of Live Streaming Service

The live streaming service is one the strongest social media services in China now, and it keeps on increasing in size. There is absolutely no sign showing any decline in the industry.

I think this is mainly because live streaming service provides a haven for those who want to escape or to reduce loneliness. People with this kind of need cannot resist live streaming because it is so much closer to reality compared to all the other social media apps, yet it is so much more perfect than reality because people get recognized and gain vanity in various ways. Therefore, until a new technology comes out, such as a new social media platform that shows stronger realism and allows more interaction than the live streaming services, the live streaming services would not be replaced or abandoned.

With all that being said, I still think that live streaming service is cruel in a way. This is because audiences are always seeking new and more interesting things. Although I have mentioned how the host can attract audiences in a long run using several strategies, the long run here is undefined. For some people, the long run might mean a few months, but for others, it might only mean a few weeks. When the curiosity or the interest toward a host is gone, the audience will eventually go find the next interesting host. Therefore, the host must not only get used to the uncertain online traffic but also continuously upgrade and enrich their content to keep the audiences as long as possible. Therefore, while live streaming service industry doesn’t have a particular competitor externally, internally speaking, it is a highly competitive industry with a lot of uncertainty for the hosts. One day you are the top, and the next day no one will visit your channel.

Overall, live streaming service is booming in China. It is a unique platform that cannot be replaced by any other current social media forms. The realism, the interaction with strangers, the happiness after being recognized, and even the bargain received in the live streaming e-commerce are irresistible to the audiences. However, while we are enjoying all these benefits, we must recognize the saturation of the live streaming service market in China, the extremely high competition between the hosts or the brands, and the tremendous influence it has on us that controls us in an invisible way.

Works Cited

Chen, Yasheng, & Xiong, Feng. (2019). The Business Model of Live Streaming Entertainment Services in China and Associated Challenges for Key Stakeholders. IEEE Access, 7, 116321-116327.

Greenwald, Michelle. (2020, Dec 10). Live Streaming E-Commerce Is The Rage In China. Is The U.S. Next?. Forbes. https://www.forbes.com/sites/michellegreenwald/2020/12/10/live-streaming-e-commerce-is-the-rage-in-china-is-the-us-next/?sh=6c99a6116535

Long, Quan, & Tefertiller, Alec C. (2020). China’s New Mania for Live Streaming: Gender Differences in Motives and Uses of Social Live Streaming Services. International Journal of Human-computer Interaction, 36(14), 1314-1324.

McMillin, David. (2019, Dec 19). What’s the Key to Success for Live-Streaming in China?. pcma. https://www.pcma.org/live-streaming-in-china/