Virtual Gifts Help Young Chinese Reshape Society

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Virtual Gifts Help Young Chinese Reshape Society
In China, fans are eager to pay a new kind of pop star. This one is having a selfie taken with a Douyu video hostess at a 2017 festival in Wuhan.   © Getty Images

 

Livestreaming platform Wuhan Douyu is estimated to be worth $4.6bn.

 

BEIJING -- Wuhan Douyu Network Technology trades in live streams. This is one of its competitive advantages over first-generation video platforms like YouTube, which delivers recorded streams.

 

Its other advantage is a real money-spinner: It encourages viewers to shower cash on their favorite performers.

 

Douyu.com has hundreds of thousands of registered streamers. Of these, slightly more than 7,000 go live on a daily basis. The number of its registered viewers, meanwhile, has surpassed 200 million. Of these, 30 million visit the platform every day, a Douyu representative said.

 

While the company counts Chinese tech giant Tencent Holdings as an investor, its platform is far from unique in China, where 500 or so competitors have gathered a combined audience of about 500 million. Some analysts estimate this streaming and digital gifts market to be worth about $9 billion.

 

Douyu is considered a pioneer in the space. Around for a little more than four years, it has an estimated valuation of 30 billion yuan ($4.6 billion).

 

Viewers do not directly pay live-streamers. Rather they buy digital gifts from Douyu, then bestow these favors on their favorite presenters, be they musicians, commentators, lesson-givers or people with good stories to tell.

 

The ephemeral gifts have an exchange value, and the recipients can convert them into yuan. Douyu takes a 50% cut.

 

During a tour of Douyu's workplace, company representative Ren Jinghong mentioned Girls' Day, an observance that is catching on with students and is celebrated every March 7.

 

"This past Girls' Day," she said, "one hostess received more than 600,000 yuan worth of digital presents from a male viewer."

 

In other words, the fan spent nearly $92,000 indulging his infatuation.

 

An expensive gift on douyu.com is a rocket, and the Girls' Day star received 1,314 of these virtual toys, each worth 500 yuan.

 

While the Girls' Day generosity might be an aberration, the gifts do add up. Douyu's most popular hostess makes about $6 million a year on the platform.

 

With some of its live-streamers earning fortunes, Douyu is rapidly expanding its business. The platform's 2018 sales are expected to double from a year earlier to about $640 million.

 

The company of 2,000 or so employees (average age: 26) is preparing to go public. Some of its competitors have already held initial public offerings. Now Douyu's founders and top two executives want to follow the buzz they helped to create.

Life at a Chinese internet startup is relaxed, comfortable and youthful, at least it is at the fast-expanding video platform operator Wuhan Douyu Network Technology. (Photo by Shunsuke Tabeta)

 

The truth is, though, the buzz around this new market is not always positive. In one incident, a male viewer who lavished a hostess with gifts ended up killing her. Some content producers seem to go live with the sole intent of earning big gifts, and their broadcasts can turn inappropriate.

 

Douyu says it has 500 monitors who can spot and suspend or delete unsuitable streams within a minute of their going live.

 

This new generation of video platform providers also faces a political reality in which Chinese President Xi Jinping and his top lieutenants are tightening their control of the internet. In an act of compliance, Douyu has established a Communist Party organization within the company.

 

One employee said Douyu, based in Wuhan, the capital of Hubei Province, "renders the streaming service unavailable in some parts of the country [including Beijing] on June 4.” On that day in 1989 the government cracked down on pro-democracy demonstrators in Tiananmen Square. Beijingers generally avoid discussing this topic.

 

So it's better to be flexible, today's young Chinese seem to be saying. It is this trait, as well as a casual and easygoing nature, that has led to a new way of spending and making money online, and could end up reshaping society.

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