HONG KONG – Chinese online content platforms including Tencent Music and NetEase’s Cloud Music have removed live-streaming features that analysts say could be used for illegal gambling, at a hefty cost to their quarterly revenues.
Analysts say online content platforms pulled the plug on features such as virtual lucky draws after the government in June started cracking down on live-streaming, as part of a wider clampdown on online gambling.
While the platforms say they ban gambling, analysts say the extremely popular lucky draws are often manipulated by live streamers colluding with viewers to share the prize.
These features have increased the popularity of live-streaming, a market which was worth around 152 billion yuan (S$29 billion) in 2022, research firm Analysys said.
The crackdown spurred Tencent Music and Huya to “pre-emptively disable live-streaming features that contain games of chance”, said Mr Ivan Su, an analyst at Morningstar, cutting off a lucrative source of revenue.
In their second-quarter earnings posted last week, Tencent’s online music arm Tencent Music and its Twitch-like game broadcasting platform Huya said their social entertainment revenues, which include live-streaming, declined by 24 per cent and 16 per cent compared to the same year-ago period.
On Thursday, Cloud Music, a music streaming service majority owned by NetEase, reported social entertainment revenue, which accounts for about half of total revenue, also fell 24 per cent in the second quarter year-on-year.
None of these companies mentioned the gambling crackdown when they reported their earnings, and they did not respond to request for further comment.
However, the co-founder of a popular live-streaming platform in Guangzhou, who declined to be named citing the sensitivity of the topic, told Reuters that several popular live-streaming and live chat apps had to suspend services after police probes.
Local media has also reported that between May and July, about 40 live chat apps were shut down for “business adjustment”.
“We expect the anti-gambling crackdown… to eliminate 20 per cent to 70 per cent of live-streaming revenue, depending on each platform’s exposure,” Mr Charlie Chai, an analyst at 86Research, said.
“It should take two quarters for the impact to be fully absorbed a third in Q2, and the remaining two-thirds in Q3.”
In their earnings report, Tencent said it was adjusting its live-streaming business to become more “music-centric” while Huya said it was working to make the platform atmosphere “healthier”.