White Label, Red Envelope Virtual Gifting In The New Media Space

8. October 2017.








When was the last time you used, or heard anyone talk about, the livestreaming mobile app Periscope? In hindsight, that big trend may look like naught but a flash in the pan: a big fad that got consumers and media excited before fading out just as fast. When Facebook jumped on the bandwagon with its me-too live-streaming capability, consumers seemed to be over it before it arrived.

So, perhaps it will come as a surprise that livestreaming is not only alive and well, but could become the next big wave of social media monetization via virtual gifting, a practice where audience members can send personalized cash gifts to their favorite streamers.

Virtual gifting could be as simple a transaction as users essentially paying for content — for example, if a content producer holds a live engagement session that viewers can pay to (virtually) attend, similar to a live performance or concert. Both have the effect of bringing the fan closer to their favorite celebrities, so both are worth good money to many consumers — and one carries with it the possibility of actual, reciprocal engagement.

Other times, these virtual gifts are more like tips, given in amounts as small as $0.25 but averaging somewhere in the 10s of dollars during the course of a livestream event.

Charging users to view a micro-concert series or content creator meet and greet guarantees a fixed, up-front payment of a larger amount, whereas enabling smaller virtual gifts during a livestream gives them a way to let the content creator know what they like about his or her stream.

Todd Anderson, VP of Global Sales and Business Development at Agora.io, said that globally, there are 100 billion — that’s “billion” with a B — minutes of interactive broadcast going on every single month, and virtual gifting generates around $100 million per quarter. Anderson said it’s not uncommon for platforms that add virtual gifting to see quarterly revenues more than double.

In other words, Periscope was not the first platform to offer social livestreaming and it’s far from the last; it just happened to gain the most mainstream attention. Most of the action, said Anderson, is happening among non-publicly traded companies.

Red Envelope, White Label

Virtual gifting, according to Anderson, goes back to the genesis of virtual gaming — and beyond that, to the popular Chinese tradition of gifting cash in a red envelope to make it a little more personal, similar to how Americans will couch a check inside of a greeting card.

In the apps where users essentially pay for content, digital gifts get them a little closer, yet still remain largely impersonal — it’s just a transaction. But in other instances — again, dating apps in particular — it becomes extremely personal.

Anderson noted that one major problem on many dating apps is the disproportionate gender division of users. On a platform with more men than women, it gives women more control over the experience and an opportunity to connect with several people if they choose to create a broadcast, he said — almost as if they were on a dating show. Then, they have the power to choose from there who they would like to engage with further.

“It’s a social phenomenon,” Anderson said. “Anybody can be a star, and that idea has caught on.”

Anderson says the lack of enthusiasm for Facebook live, at least on the content creation and marketing side, is in part due to big media brands’ reluctance to help Facebook increase its revenues on the back of their content. Those major companies, he said, see it not as a value-creation vehicle, but as a value-destruction one.

Agora.io endeavors to offer an alternative: a white-label digital gifts mechanism that can be deployed by livestreaming platforms across the board. And while it may seem that the market could quickly become oversaturated by doing this, Anderson says that’s not a bad thing.

He envisions a future where livestreaming channels, like traditional television programming, appeal to different demographics rather than trying to be all things to all people (à la Facebook). Instead of a singular “livestreaming giant,” this marketplace would include many smaller niche players, many of whom would turn to Agora.io and companies like it to power the monetization aspects of their channels, Anderson said.

Where Is Livestream Virtual Gifting Headed Next?

Though there are a wide range of social apps that leverage livestreaming as a core service, Anderson said some of the biggest categories are social discovery and dating apps. That’s particularly true in China, where the popularity of live, interactive broadcast is skyrocketing, and has been for several years.

Now, the trend is beginning to put down roots in the U.S., though it’s still unclear whether it will grow as big as it has in China. However, it seems that’s a gamble many marketing executives are prepared to take as they look for monetization opportunities beyond traditional advertising.

Anderson said digital and online advertising is often far less effective than advertisers would like, and many are eyeing livestreaming monetization as a potential avenue for becoming more engaging.

First, livestreaming offers a granular data component — viewers often share demographic elements and interests, creating opportunities for more precise targeting. And second, advertisers are also seeing an opportunity for pre-roll injection — i.e., content creators taking 10 or 15 seconds to mention the product before they launch into their regularly scheduled programming.

There’s also eCommerce potential, Anderson said. Imagine home shopping in a live broadcast environment, or even more exciting, attending an auction. With low latency, it’s possible for people all over the world to participate in a shopping event or live virtual auction essentially in real-time, and Anderson said Agora.io is even in conversation with some of the major auction houses about this.

Anderson predicts that, over the next 18 months, virtual gifting on livestream platforms will grow from a $30 billion to $50 billion marketplace to a $100 billion to $200 billion one. Beyond that, who knows?

“We are going to see a proliferation of new apps with this at the core,” he said. “It’s a new media space. Today, a lot of great content is driving interaction; tomorrow, interaction becomes the content. And the ceiling on monetizability and value exchange in the medium … there may not be one.”

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