Amid National Lockdown, Livestreamers See More Users, Less Spending
China’s livestreaming platforms have seen a surge in demand, as the country’s quarantined millions turn to online entertainment in ever-greater numbers. However, the economic disruption and uncertainty brought by the national lockdown mean that these hordes of new viewers may not translate into higher revenue.
In the first quarter of 2020, the four Nasdaq-listed Chinese livestreaming platform operators — Momo, Joyy, Douyu and Huya — have all seen more people using their platforms, and for longer. However, at least one of the companies expects its revenue to actually drop.
These companies’ platforms are all free to view, with a significant part of their revenue coming from commissions they take out of tips viewers send to performers.
Momo Inc., which also is also known for its namesake dating app, said last week that it expected its first quarter revenue to drop by as much as 7.3% to 3.45 billion yuan ($485 million). The company has been “experiencing some pressure on the revenue side due to the negative impact from the coronavirus outbreak,” chairman and CEO Yan Tang said in an earnings call last week held after the company released its earnings for the quarter ending Dec. 31. This was despite the company saying it expected to see strong growth in active users over the first quarter.
Tang said many of Momo’s livestreaming viewers have experienced a “salary adjustment” which has led them to cut spending.
Joyy Inc., which operates several livestreaming platforms including YY, expects its revenues for this year’s first quarter to be at least 6.75 billion yuan. Although that would be a year-on-year increase of 41.2%, it would represent a 10.8% drop from the previous quarter.
Chairman and CEO Li Xueling said the coronavirus epidemic hasn’t significantly impacted the firm’s business either in China or overseas. However, a source inside the company said that Joyy has also seen its usage spike and revenue drop. The majority of Joyy’s paying users work in small and mid-sized companies, which have been hit especially hard by the coronavirus epidemic, the source said.
In the last quarter of 2019, YY reported revenues of 7.6 billion yuan, an increase of 64%. As of end of last year, Joyy boasted 485 million monthly active users globally across its plethora of offerings.
The two other platforms, which are the smaller pair, have fared better. Unlike Momo and Joyy, which target a general audience, Huya Inc. and DouYu International Holdings Ltd. focus on video game livestreaming.
Dong Rongjie, Huya’s CEO and chairman, said in an earnings call last week that the coronavirus has had little negative impact on the company, given that its core user base is students.
“We think the impact is not so big based on the statistics that we saw … (students are) still getting classes at home and we can consider this specific time of the year as similar to winter holidays, or summer holidays. Historically these two kinds of school holidays are the times that we experience a user growth a lot,” Dong said.
Huya expected its monthly active users to reach a record 17 million for the first quarter. Dong has said he expected the company’s revenue to increase at least 45% to around 2.4 billion yuan during the period.
Similarly, Douyu expected its revenues to grow by at least 41% to up to 2.1 billion yuan for the period.
Contact reporter Mo Yelin (firstname.lastname@example.org) and editor Joshua Dummer (email@example.com)
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