Douyu, founded in 2014, is China’s second-largest live streaming platform. The company had about 250 million users as of the first quarter of this year.
Listed on Nasdaq last month, the Tencent-backed startup is currently valued at more than US$3 billion.
Douyu heavily relies on virtual gifts offered by followers to popular hosts, from which the social media platform takes a cut. Last year, up to 86 percent of its 3.15 billion yuan of revenue was generated from this source, while the rest was advertising income.
The site offers a wide range of content, anything from video gaming to make-up tutorials, much like YouTube. But top hosts are typically attractive young ladies. It is said that they easily make millions of yuan in tips. Douyu usually gets to share half of that.
Last week, a superstar named Qiao Biluo was doing a show as usual. Using computer generated masking, Qiao never reveals her face but always presents herself as a sexy girl.
But that day, a programming glitch gave her away. Fans were shocked when they found that their young goddess was actually a middle-aged woman. Photos she uploaded previously were all tweaked. Her girlish voice was the work of a voice changer.
One top fan, who had sent hundreds of thousands of yuan in virtual gifts (which can be cashed in) to her over time, was furious and shut down his Douyu account immediately.
Although new internet platforms and business models are mushrooming in China, there is apparently a lot of gray area in this thriving industry.
Investors in such ventures should beware of potential pitfalls. As a content consumer, the message is don’t trust what you see in the cyberworld.
The full article appeared in the Hong Kong Economic Journal on July 31
Translation by Julie Zhu
[Chinese version 中文版]
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