Top Live Streamer Xinba’s Massive Scandal Barely Affected Kuaishou’s IPO

February 8, 2021April 12, 2021 Kejie Yi

On February 5, Kuaishou, became the first Chinese short video platform to file an IPO in Hong Kong. After opening, its stock price quickly rose 194%, ranking NO.8 among Hong Kong stocks. On the next day (February 6), it surpassed Ping An Insurance Company (中国平安), becoming the NO.5. E-commerce live streaming is an important source of revenue for the platform. So why didn’t the massive scandal involving top live streamer Xinba and his team affect Kuaishou’s IPO?

And if Xinba and team are some of the top ranked e-commerce live streamers in China, why isn’t Kuaishou worried about losing them?

Kuaishou IPO — Kuaishou is the first Chinese short video platform to file an IPO. Source: WeChat account: 水滴产品进化营.

Kuaishou Revenue Streams

One of Kuaishou’s core monetization methods is live streaming. It first found great success with entertainment live streaming, earning money from virtual gifts that users send to streamers. It also developed e-commerce live streaming, earning money from sales on the platform.

The second type of monetization is advertisements and the last one is games. According to a game report (2020年移动游戏用户短视频行为调查研究报告), 82.5% of mobile game players in China overlap with short video app users.

In the first three quarters of 2020, Kuaishou’s revenue reached 40.7 billion RMB, among which livestreaming contributed 25.3 billion RMB (a combination of both virtual gifting and e-commerce revenue). The app’s revenue keeps growing from 8.3 billion RMB in 2017, to 20.3 billion in 2018 and in 2019, it reached 39.1 billion.

In the first 11 months of 2020, 333 billion RMB worth of goods were sold through live streams on Kuaishou, not far behind market leader Alibaba’s 500 billion.

Kuaishou Focused on Growing Advertising Business

Despite the overall growth, Kuaishou is decreasing the percentage of revenue coming from live streaming, instead focusing more on growing advertising. From 2017 to September 2020, The percentage of revenue from livestreaming went from 95.3% (2017), 91.7% (2018), 84.1% (2019) to 62.2% (2020).

Kuaishou’s booming ecommerce business has benefited from users’ high engagement with the platform. Kuaishou’s daily active users spend 85 minutes on it every day and open the app more than 10 times a day. Its users’ activiteness ranks NO.1 among Chinese socializing video platforms.

Xinba and His Team Members are 4 of the Top 10 Live Streamers in China

Xinba is Kuaishou’s top live streamer. In 2019, Xinba himself achieved 13.3 billion RMB in sales from livestreams. Xinba also manages an MCN which has created several other top live streamers on Kuaishou. In 2019 Kuaishou’s GMV was 59.6 billion RMB, so it is fair to say Xinba and his team contributed nearly a quarter of Kuaishou’s GMV.

And their success continued in 2020. According to a ranking of top e-commerce live streamers in China published by Jinri Wanghong (今日网红), Xinba and his team took up 4 of the TOP10 positions.

Xinba is the third largest live streamer in China — TOP20 live streamers in 2020. Source: 今日网红

In 2020, Xinba’s wife Chu Ruixue (初瑞雪) was estimated to generate 1.5-2.5 billion RMB in sales, 蛋蛋小盆友 an estimated 3-4 billion, 鹿 and estimated 2-2.5 billion, and 爱美食的猫妹妹 an estimated 1-1.5 billion RMB.

Xinba team members live streaming — Streamers on Xinba’s team. From left to right: 蛋蛋小盆友，爱美食的猫猫 and 初瑞雪.

Xinba Has a Deteriorating Relationship with Kuaishou

Yet while the situation appears rosy from the outside, Xinba’s relationship with Kuaishou changed in 2020. According to an employee at Kuaishou, the company isn’t worried about Xinba leaving the platform. They think what Xinba and his family contribute for the company is limited, and Xinba is full of risk, often putting the company in negative situations (referring to his scandals).

Why this change in attitude?

First, Xinba failed to keep up with Kuaishou’s rapid growth. Xinba became lazy after earning the title as the top live streamer on Kuaishou and decreased the frequency of his livestreams. In the third quarter of 2019, Xinba had 20 livestreams each month, and in the same quarter of 2020, Xinba only had 4 livestreams each month.

You can contrast this with Taobao Live’s top streamers Viya and Austin Li who live stream nearly every day.

And not only the frequency has changed, but also the length of his appearance on the livestreams decreased 49%. Xinba only shows up randomly on his apprentice’s livestreams and only big shopping festivals can motivate him to have one.

And the frequency of streams from his team members has dropped as well. At the moment, Xinba’s MCN has 10 live streamers and the total amount of livestream that they had from January to June in 2020 were around 120, while during this half year, Kuaishou had over 30M livestreams. The total GMV generated from these 10 live streamers was around 6.5 billion RMB, which only took up 6% of Kuaishou’s overall GMV during the same period. He is becoming less and less valuable to the platform.

Xinba’s Poor Attitude is a Risk

The second reason Kuashou wants to distance itself from Xinba is his attitude and temper. Xinba has acted rudely in public on multiple occasions.

In October 2020, Xinba held a concert to thank his loyal followers. The concert invited many top celebrities including Kris Wu (吴亦凡) and Deng Ziqi (邓紫棋). Xinba flared up because he felt a security guard mistreated his followers. Then he badly scolded the person and the hotel’s workers in public.

Xinba has become a risk for Kuaishou — Xinba was arguing with the security guard. Source: user.guancha.cn.

The same month, one of his live streamers 时大漂亮 sold fake bird’s nest on her livestream. At first, Xinba publicly scolded some WeChat Official Accounts who were spreading the news, claiming they were making it up. The turning point came on November 19, when a KOL Wang Hai (王海), who focuses on finding fake products, published a Weibo post saying Xinba’s bird’s nest was indeed sugar water. On November 27, after the truth came out, Xinba apologized to consumers while crying on a livestream.

The government took the case to court. They banned Xinba and 时大漂亮’s Kuaishou accounts for 60 days and fined Xinba and his team. This incident impacted his followers’ trust in him and his team. We predict they will likely see a large dip in livestreaming sales once they are able to resume.

Who Will Be Kuaishou’s Next Big Streamer?

Based on their declining performance and the recent scandal, it is likely that Xinba’s team will continue to lose their influence on Kuaishou. So who will rise to take their place? That is something we will be keeping an eye on!