Several Chinese online content platforms, including Tencent Music and NetEase’s Cloud Music, have removed live streaming features that are believed to facilitate illegal gambling activities. This move comes in response to a government crackdown on live streaming and online gambling, which was initiated in June. Despite the platforms’ claims to prohibit gambling, analysts reveal that popular virtual lucky draws often involve collusion between live streamers and viewers to manipulate outcomes. These features have significantly boosted the live streaming market’s popularity, which was valued at approximately 152 billion yuan ($21 billion) in 2022, according to Analysys, a research firm.
The actions taken by companies such as Tencent Music and Huya to disable live streaming features tied to games of chance have impacted their financial performance. In the second quarter, Tencent Music’s social entertainment revenues, which encompass live streaming, dropped by 24%, while Huya experienced a 16% decline compared to the same period in the previous year. Similarly, Cloud Music, mainly owned by NetEase, reported a 24% year-on-year decrease in social entertainment revenue, which constitutes roughly half of its total revenue for the second quarter. Despite the revenue setbacks, these companies did not explicitly mention the gambling crackdown in their earnings reports, and they have not provided additional comments on the matter.
A co-founder of a prominent live streaming platform in Guangzhou disclosed that several widely used live streaming and live chat apps had to suspend their services due to police investigations. Local media sources indicated that approximately 40 live chat apps were shut down between May and July for “business adjustment.” Analysts predict that the anti-gambling measures could result in a significant reduction of live streaming revenue, ranging from 20% to 70%, depending on each platform’s exposure. They estimate that the full impact of the crackdown will be felt over the course of two quarters: around one-third in Q2 and the remaining two-thirds in Q3.
In response to these challenges, Tencent mentioned plans to shift its live streaming business toward a more “music-centric” approach. Similarly, Huya expressed its intention to enhance the platform’s overall content and user experience, while adapting to the changing regulatory landscape.
(Source: Josh Ye | Reuters)
