China’s Live Streaming Industry Is Booming – Here’s How It Works

 

Just as China sets the world pace in e-commerce, it’s doing the same for live streaming. More than 100 million viewers watch a live online video event every month, according to digital brand researcher L2. As an e-commerce tool, the typical live streaming format involves a celebrity demonstrating a product and answering questions from a digital audience. It takes place in real-time and usually on a smartphone, which accounts for some 95% of e-commerce activity in China. Live streaming has indeed become a powerful tool, with Deloitte estimating that China’s live streaming revenue will hit $4.4 billion this year, up 32% from 2017.

 

China is replete with live streaming webcasts, much of it non-commercial, such as young people discussing their lives, offering diet tips or demonstrating dance moves–similar to the role YouTube might play in the U.S. But live streaming has also become one of the most cost-effective tools for e-commerce in China, similar to what QVC produces, but with even greater variety and impact. Although there are multiple platforms and service providers, Alibaba’s Tmall marketplace has the largest market share, according to L2. Sina Weibo operates a short video streaming app called Miaopai, while the biggest independent service provider is Yizhibo.

 

Why are consumers and brands both embracing this medium?

 

First, there’s a functional advantage to live streaming. It allows experts to show the product being used, to talk through techniques and permutations, to demonstrate various techniques, and to point out the results. The audience can ask questions in anonymity, but the experience is interactive and immersive.

 

There’s also a feeling of authenticity that comes from live streaming. Remember, Chinese TV is entirely state-owned, with somewhat predictable plots and themes. And much of the advertising is scripted and airbrushed. Reviews and reactions of fellow consumers already weigh heavily on Chinese buyers’ purchasing decisions, and live streaming allows them to witness those reactions in real time. O.K., it is all a bit rehearsed, and celebrities are not exactly everyday people, but nothing beats live TV for surprises and emotional impact. Live streaming bridges the gap between advertising and a reality TV show. 

 

Consumers feel vicariously that they are actually handling the product themselves. They’re no longer picking a product off a shelf, they are now part of the process, shaping the outcome from the convenience of the living room sofa. The fact that it is real-time means the purchase can take place in real-time as well. The use of someone with public stature validates the results. The best live streaming allows room for spontaneity, be it side chatter, a joke, or even a small mistake. After all, this is how friends talk with one another.