Chinese internet regulators are cracking the whip on Short Video platforms.
Even as the nation celebrates the Chinese New Year holidays, short-video mobile applications have little to cheer about. These mobile applications were flying high till recently and are now facing the prospect of serious punishments doled out by the Chinese regulatory authorities.
Every rising Chinese short video applications, such as Huoshan Video, Tik Tok, and Kwai, went all out sponsoring various Chinese New Year gala events produced by several provincial-level TV stations. However, when the shows were aired later, the logos of these applications were covered; where applicable, the logos were removed from the list/backdrop of sponsors.
This is the third hard hit from Chinese cyberspace authorities on the short video market.
- Just before the Chinese New Year, Chinese cyberspace regulatory authorities ordered all video and live platforms to take down any content pertaining to former internet celebrity Li Tianyou. For most platforms, Li’s videos were synonymous with clicks and monetary contributions from fans. Obviously, losing his videos resulted in substantial financial losses.
- Going further back, on New Year’s Eve to be precise, regulatory authorities put an end to online trivia games offered by various short-video platforms.
These unexpected and harsh sanctions have severely damaged the strategic investments made by the Internet firms that created these short video applications.
Facing inevitable risks?
Rumors suggest that the recent sanctions have been triggered by Li Tianyou and his inappropriate videos advocating the use of drugs and violence. Moreover, these short video platforms are replete with vulgar, violent, and click-baiting content; such videos have the potential to negatively impact kids and young adults. The industry, it seems, relies on such videos to attract audiences.
Operating in a country with limited freedom of speech and expression, these Internet firms can little hope to win a fight against the regulatory authorities. Thus, these companies share a master-slave relationship with the regulators.
An uncertain future
The once promising short video industry – also referred to as Chinese Snapchats – has now been reduced to a matter of concern and speculation. Like with penny-stock investments, this industry now offers huge potential benefits bundled together with increasingly higher risks.
On the plus side, short video applications are amazingly adept at attracting and retaining users. The two key indicators – daily active users, and usage durations – can be easily increased. On the flip side, these internet firms will find it increasingly difficult to get additional funding from potential investors – which is required to attract new users. Investors would love to enter this industry provided the authorities don’t wield the whip again. .
Therefore, investing in this industry might feel like boxing blind-folded: You might hit the target if you are lucky, but there is no way to predict when and where you might get hit.