Chinese Tech Firms ‘Shut Down’ Livestream Features Amidst Crackdown

Large Chinese content platforms from firms including Tencent and NetEase have recorded significant revenue drops after being forced to shut down lucrative livestreaming features that could be used for gambling, according to industry analysts.

Platforms including Tencent Music and NetEase’s Cloud Music removed features such as virtual lucky draws following a Chinese government crackdown that began in June, amidst a broader crackdown on online gambling, analysts said.

The moves show that government regulators are continuing to closely scrutinise the activities of tech companies operating in the country, after authorities signalled the end of a wide-ranging crackdown designed to bring the tech sector into line with government objectives.

Features such as virtual lucky draws had expanded the popularity of livestreaming, a market surging in popularity across Asia and worth 152 billion yuan ($21bn, £17bn) in China alone last year, according to Analysys.

Crackdown

Analysts said the lucky draws were often manipulated by livestreamers who shared the prizes with winners.

As a result of government pressure Tencent Music and its Twitch-like game streaming platform Huya moved to “pre-emptively disable livestreaming features that contain games of chance”, said Morningstar analyst Ivan Su.

Tencent Music and Huya earlier this month reported quarterly social entertainment revenues down respectively by 24 percent and 16 percent year-on-year, without mentioning the gambling crackdown.

NetEase’s Cloud Music similarly reported a 24 percent year-on-year drop in social entertainment revenue for its second quarter.

‘Healthier’

In its earnings report Tencent said it was modifying its livestreaming business to be more “music-centric” and Huya said it was making the platform’s atmosphere “healthier”.

Cloud Music said it was reinforcing its internal controls mechanism and adopting “stricter monitoring over irregular user activities”.

An unnamed co-founder of a popular livestreaming platform in Guangzhou told Reuters that several popular livestreaming and live chat platforms had suspended services after police probes.

86Research said it expected the online gambling crackdown to eliminate 20 percent to 70 percent of livestreaming revenues, depending on the exposure of each platform, with the bulk of the impact being felt in the third quarter.