Preface

I am a software engineer by profession. Although I don't watch live streams very often myself, I have some knowledge about the ecosystem due to my previous work in related industries. Although this draft was written around 2018, I believe it is still applicable in 2020. Here, I will share my insights.

Why are live streams popular?

Many people have only a superficial understanding of the live streaming industry and think it is a profession pursued by those with low education or attractive appearances. In fact, the live streaming industry has evolved and developed its own unique ecosystem, which is quite different from the chaotic early days. Not only have stricter regulations been implemented, but the types of live streams have also become more diverse.

Features of live streaming

So why are live streams popular, and why do so many people send gifts? The simplest reason is that live streamers create "value". Viewers enjoy the entertainment provided during the live stream and show their support by sending gifts and tips.

Another reason is authenticity and interactivity. In gaming live streams, it is common to see viewers excited and engaged, which could be due to the streamer's humor, skill, or entertaining commentary. The transition from gaming live streams to general live streaming has only changed the form, but not the essence.

Many live streaming apps do not require viewers to pay (unless it is an adult-oriented platform), and most of them allow open chat functionality.

In real life, it is rare to have joyful interactions with strangers for free. Who would smile at you on the street for no reason? For those leading monotonous lives, working 9 to 5, watching live streams and interacting with streamers may be the most relaxing time of the day. In fact, most people prefer to silently listen rather than actively engage.

Popular live streamers can easily earn over 100,000 units of currency per month, and breaking the 200,000 or 300,000 mark is not a big issue with strong support from viewers.

However, the problem faced by the live streaming industry is similar to that of YouTube. When everyone sees a booming market, they rush in to get a piece of the pie. As the market becomes saturated, more and more inexperienced streamers try to join, resulting in the perception that most streamers are boring.

These smaller streamers may have talent, but they either lack visibility or quietly leave the scene.

Although female streamers dominate the live streaming industry, male streamers face tougher competition. Firstly, the majority of the audience is male, and secondly, male streamers need to have more talent or better communication skills to stand out.

Unlike YouTube, live streaming ecosystems are usually more closed, often tied to specific apps. For example, a popular streamer on one platform may lose half of their fan base when they switch to another platform.

Ways to make money

1. Receiving gifts

Most streamers earn money by receiving gifts and sharing the profits with the platform. However, platforms usually take a large commission, so without the support of generous viewers, the income may only be enough for a meal.

2. Signing contracts with platforms

By signing contracts with platforms, streamers can get a better profit share. Usually, they need to meet a minimum number of streaming hours per month and guarantee a certain income level, after which they rely on gifts to earn money.

3. Signing contracts with talent agencies and platforms

Directly signing with a platform often involves dealing with various details. In such cases, working with a talent agency can save a lot of trouble, although the agency will take a portion of the profits. However, finding a reputable agency is not easy.

4. Waiting for a generous sponsor

The income of a streamer often follows the 80:20 rule, where 80% of the income comes from 20% of the viewers, or even 90:10. Besides luck, continuous effort is necessary to attract generous sponsors.

Once a sponsor appears, it is common for the streamer to interact mainly with the sponsor. It makes sense since it is impossible to attend to all viewers in the live chat, and even a simple greeting may be missed. So, the streamer focuses on keeping the sponsor happy.

5. Offline interaction with viewers

As streamers gain popularity, viewers often desire more interaction. In the live streaming community, it is common for streamers to create groups, such as LINE groups, for their fans. However, joining these groups is not easy and often requires sending high-value gifts (e.g., sports cars, yachts, airplanes) as a membership requirement. Streamers can use these groups to enhance engagement, such as organizing exclusive fan meetings or playing games, to strengthen the bond with their fans.

I think this is somewhat similar to an unofficial version of YouTube's membership feature, which is currently more dependent on the streamer's own initiatives.

I will discuss my observations about the live streaming ecosystem in another article.

6. Making a breakthrough

For example, the platform "17 Live" sometimes has selection programs where winners can have the opportunity to release albums or appear on TV shows. These opportunities allow amateur streamers to gain visibility.

Challenges of live streaming

Hardware limitations

Most live streaming products primarily rely on mobile phones for broadcasting, but the front camera of phones usually has lower resolution, resulting in subpar image quality during live streams. Compared to YouTube, where even a basic GoPro or regular camera can deliver superior video quality, live streams often fall short. Some streamers who are more dedicated may invest in additional equipment such as microphones or simple audio interfaces, but many streamers simply go live without such enhancements, resulting in a significant difference in quality.

Network latency and data transmission

Due to the real-time nature of live streaming, efficient and stable servers and content delivery networks (CDNs) are required to handle the large amount of traffic. This means significant expenses for CDN fees, and if self-hosting is considered, the costs become even more substantial.

Live streams have inherent latency, and if the delay is too long, it can negatively affect the streamer-viewer experience. Additionally, if the system is not stable and causes buffering issues, it can easily lead to user attrition.

Therefore, startups in this field need substantial funding to afford such leverage. Independent developers face even greater challenges. Apart from hardware and infrastructure, basic features such as gifting systems, filters, comments, levels, and hearts are essential for live streaming applications. These requirements significantly increase the initial costs of setting up a live streaming platform.

Dominance of major sponsors

As mentioned earlier, the live streaming ecosystem is often dominated by major sponsors, resulting in streamers primarily interacting with them. The revenue of the company also depends on these sponsors, who usually wield more influence and control over the platform's development. This situation is less common in gaming live streams.

Afterword

The descriptions provided above mainly focus on general live streaming platforms. YouTube and Twitch, for example, have a different emphasis on live streaming, which is not covered in this article.