China live streaming: Would-be internet stars boost billion-dollar market

Shu Zhang and Matthew Miller

* Live streaming sector has seen tremendous growth

* Attracts tens of thousands hoping to find stardom

* China's tech heavyweights are investing in sector

* This year could see sector consolidate, analysts say

BEIJING, April 12 (Reuters) - Jing Qi, a part-time presenter

on the live streaming platform Huajiao, underwent cosmetic

surgery in March to improve her chances of becoming an internet

celebrity.

After five hours of rhinoplasty and facial fat injections

that left her with gauze covering her nose, eyes, forehead and

cheeks, the 27-year-old said she felt "even worse than dead".

But the suffering was worth it.

Jing is among tens of thousands hoping to find online

stardom as an anchor on the live video streaming phenomenon

sweeping China's media.

The fastest-emerging internet sector barely existed in China

three years ago but last year produced revenues of more than 30

billion yuan ($4.3 billion) and according to an estimate by

investment bank China Renaissance Securities, is set to more

than triple that by 2020. That puts it on track to overtake

cinema box office receipts in a few year’s time.

"I want more people to watch me, to spend Huajiao coins on

me," Jing explained, referring to the virtual gifts her online

followers buy that she can later redeem in part for cash.

"In the end, I'll be able to marry a tall, handsome and rich

man," Jing said.

The rapid growth of live streaming in China has attracted a

rush of investment, led by China’s tech heavyweights, Tencent

Holdings, Alibaba Group Holding and Baidu Inc

. They hope live streaming can boost existing services

in e-commerce, social networking and gaming.

Tencent, the country’s biggest online gaming and social

networking company, is backing a slew of streaming and

interactive entertainment firms, including gaming platform

Douyu. Alibaba's Taobao marketplace launched a live-streaming

platform early last year, allowing sellers to promote products

directly to online viewers in real time.

The lure is some 344 million Chinese netizens – more than

the population of every country on the planet bar China and

India - who were watching live streaming sites in December. And

that is only about 47 percent of all Chinese Internet users.

There are about 150 live streaming platforms, most producing

entertainment shows.

The importance of live streaming in lower-tier cities is

greater than elsewhere in China. Access to the internet via a

mobile phone is the major, if not the only, gateway to shopping

and entertainment, said Karen Chan, equities analyst at

Jefferies Hong Kong.

Live streaming has also bolstered the growth of ancillary

businesses, including agencies looking to find the next live

streaming star, consumer loans, and even cosmetic surgery.

Deng Jian, chairman of Three Minute TV, an agency that

provides 1,000 trained anchors to more than three dozen

platforms, said his business operates a “militarised” production

machine to feed the live streaming industry.

At an office building in a suburb of Beijing, dozens of

Deng’s female anchors work each day around the clock in three

shifts. Each anchor sits in a small booth, decorated to appear

like a girl’s bedroom, facing a computer.

They sing and flirt with fans, encouraging them to buy

virtual gifts, like a rose, sportscar or villa. The cash for the

gifts is split by the platforms, agencies and the anchor.

Three Minute TV also arranges cosmetic surgery at partner

hospitals for its anchors, arranges small bank loans for the

surgery, photographs and markets the anchors and helps them find

acting opportunities Deng said.

After the spurt of growth in live streaming and the rush of

platforms it spawned, the arrival of tech giants is pointing to

consolidation in the sector, analysts said.

“Live streaming has always been a 'cash-burning' industry,”

a Douyu executive, who declined to be identified, told Reuters.

“After an industry growth spurt, very few live-streaming

platforms can survive until B round,” the executive said,

referring to the next stage of a company's financing.

Authorities have also clamped down on streaming sites that

provide illegal content, adding to the consolidation risk, said

iResearch analyst Tina Zhang.

In July, China's culture ministry announced that it had shut

down 4,313 online show rooms, firing or punishing more than

18,000 anchors. Twelve platforms, including heavyweights Panda

TV, 6.CN and Douyu, were punished and ordered to make changes

after offering illicit content that “promotes obscenity,

violence, abets crime and damages social morality”.

Still, the prospect of change in the sector hasn’t faded the

hopes of thousands of young Chinese who want to become internet

stars.

Jin Xing, the founder of cosmetic surgery app Soyoung, said

he estimates 95 percent of anchors have undergone cosmetic

surgery to improve their looks. The app connects cosmetic

surgery centres with prospective clients.

"Live streaming cannot be faked and cosmetic surgery

increases the chance of getting a virtual gift," said Jin, who

reckons about a fifth of Soyoung customers come from the live

streaming universe.

Jing, the Huajiao anchor, said her goal was to become famous

enough as a streaming anchor to open her own online e-commerce

store.

"Using 72 hours of pain in exchange for three to five years

of good looks is totally worthwhile," Jing said following her

cosmetic surgery.

(Reporting By Shu Zhang and Matthew Miller; Editing by Neil

Fullick)